Supreme Court Confirms Uber Drivers are Workers

Background

On Friday 19 January, the Supreme Court unanimously dismissed Uber’s appeal. The claim was originally brought in 2016 by two Uber drivers, James Farrar and Yaseen Aslam, as a test case to establish their employment status. The Employment Tribunal found in favour of the drivers and held that they were workers. Uber appealed against that decision, which was subsequently upheld by the Employment Appeal Tribunal and Court of Appeal. A further appeal was made to the Supreme Court.

Uber’s position

Uber argued that drivers are independent contractors, who perform services solely for and under contracts made with passengers through the agency of Uber. Uber emphasised that drivers are free to work when they want and as much as they want. The company also relied on the wording of its standard written contracts with its drivers to support its position.

The Supreme Court decision

The Supreme Court has taken a purposive approach to the legislation. The Supreme Court found that the purpose of the Employment Right Act 1998 was to give protection to vulnerable individuals who have little or no say over their pay and working position due to the power imbalance. The reason why employees are in need of protection is because they are in the position of subordination and dependency in relation to their employers. The Supreme Court justices also observed that the legislation precludes employers from contracting out of these provisions. The Supreme Court accordingly found that Uber drivers were workers. This finding was based on five key aspects of the relationship between Uber and its drivers:

• Uber sets the fare for a ride and drivers are not permitted to increase it . Therefore, it is Uber who dictates how much drivers are paid for the work they do;

• The contract terms are imposed by Uber and drivers have no say in them;

• Once a driver has logged into the app, the driver’s choice about whether to accept requests for rides is constrained by Uber. Uber itself retain an absolute discretion to accept or decline any request for a ride, and imposes a penalty on a driver if too many trip requests are declined or cancelled by automatically logging the driver off the app for ten minutes;

• Uber exercises significant control over the way in which services are delivered. For example, any driver who fails to maintain a required average rating will receive a series of warnings, and if their rating does not improve, their relationship with Uber will be terminated;

• Uber restricts communications between passenger and driver to the minimum and takes active steps to prevent drivers from establishing any relationship with passengers.

The Supreme Court also stressed that the transportation service performed by drivers is very closely controlled by Uber and that the drivers are in a position of subordination and dependency to Uber. As they have little prospects to improve their economical situation through professional or entrepreneurial skills, the only way for them to increase their earnings is to work further hours for Uber and meet their targets and requirements.

The impact of the decision

The Uber ruling might have wider consequences for the gig economy. The Supreme Court adopted a very broad definition of a “worker” and other gig economy businesses will be directly impacted, as they will be assessing their liabilities in the light of the judgement. Importantly, the question before the Supreme Court was whether the two drivers were workers. They have not won the full protection of employment rights which is afforded to an employee. While it remains to be seen how Uber will react to the judgement, this ruling will have a significant impact on the gig economy.