The Supreme Court delivers Landmark Gig Economy Decision

Uber BV and others (Appellants) v Aslam and others (Respondents) [2021] UKSC 5

The Supreme Court has now handed down Judgment on the Uber case which will set a precedent for determining whether an individual is self-employed or a worker for the next decade.

The Supreme Court has upheld the Court of Appeal Judgment, that the drivers operating through the Uber platform were workers. This ruling will have substantial implications not just for the ‘gig economy’ companies but for future employment law on establishing worker status.

Background

The ‘gig economy’ is a broad term which refers to companies using online platforms to facilitate individuals providing a service on a short-term and receiving payment for completed tasks. Whilst gig economy companies such as Uber, Deliveroo and Pimlico Plumbers have been able to disrupt traditional business practices with modern technology, they have also been criticised for reducing employment rights.

Employment law recognises three distinct categories of individuals providing a service: (1) employee, (2) worker, and (3) self-employed independent contractor. Ultimately, the employment rights of an individual will be determined by their employment status.

Several Uber drivers brought claims for unlawful deductions from wages and for a failure to provide paid annual leave. The claimants argued that they were workers. Uber asserted that it was a technology platform which did not provide the service and so the Uber drivers were self-employed and not entitled to certain employment rights.

The Employment Tribunal found that the reality of the relationship between Uber and the drivers meant that the drivers were workers and consequently were entitled to greater employment rights. The Employment Tribunal commented that the “notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous”.

Uber appealed this decision to the Employment Appeal Tribunal and the Court of Appeal, and the original decision was upheld in both Judgments. However, in the Court of Appeal Underhilll LJ dissented as he was opposed to finding a worker relationship when it meant disregarding the contractual documentation.

In a final bid to protect their business model, Uber appealed to the Supreme Court.

Supreme Court Judgment   

In an unanimous decision the Supreme Court has dismissed the appeal. In upholding the findings of the previous Judgments, the final ruling has been given confirming that Uber drivers are ‘workers’.

Uber continued to rely on the wording of its contracts which characterises their business model as collecting payment on behalf of the driver and charging a “service fee” to the driver for the use of its app. However, the Supreme Court looked at the parties’ conduct to infer an employment relationship. The Court gave weight to the purpose of employment legislation to protect vulnerable workers.

The Court examined the relationship and found the drivers could be regarded as working for and under contracts with Uber. Uber through the app could dictate the price of fares, determine services, control the request for rides and restrict the communications between passengers and drivers. Together this demonstrated the drivers were not self-employed as suggested by the contractual documentation but were workers.

The Court also confirmed that drivers were working any period when the driver was logged into the app.

Comment

The landmark ruling provided the final word on the Uber case but may not be definitive in settling the ‘gig economy’ debate. Its likely that other companies will seek to argue the reality of the employment relationship is one where the individuals working for them are self-employed. However, the Uber ruling will represent a large hurdle to justify this argument.

When considering the employment status of an individual the reality of the employment relationship is what counts and  it is not as simple as what the contracts says. Employers must make an objective decision on the reality of the role an individual is working in, so they can properly understand what employment status they have.

Disruptive gig economy companies have continued to thrive in the COVID-19 pandemic, in particular the demand for delivery drivers has surged in lockdown. The Supreme Court ruling will have huge consequences for companies operating in the gig economy and may even lead to some companies having to reconsider and adjust their entire business models.

Uber will also face a vast compensation payment to account for unpaid minimum wage and holiday pay owed to Uber drivers. Employers should be aware that making a robust and fair decision on the employment status of an individual working for them at the outset could prevent costly litigation in due course.

The Uber ruling will guide and help to determine Employment Tribunal rulings on employment status for the next decade. Employers who fail to properly consider the Uber ruling and the reality of the employment relationship do so at their own peril.

Julie Bann is an experienced employment partner who regularly advises clients on all employment law-related issues from drafting and revising employment contracts and procedures to resolving internal disputes. Please contact Julie Bann if you wish to discuss the implications of this article in more detail.

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email enquiries@sharpepritchard.co.uk

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