Uber and Worker Status: what are the wider implications for the gig economy?

In a long-running dispute, a group of Uber drivers brought claims for unlawful deductions from wages regarding a failure to pay the national minimum wage (NMW) and for a failure to provide paid annual leave, arguing that their employment status was “workers” rather than “self-employed”.

Employment Status

Employment status matters in law because it determines what legal rights and protections an individual is entitled to. There are three main categories of employment status: “employees”, “workers” and “self-employed”.

The legal rights and protections that are accorded to each status varies, but essentially, employees receive the greatest level of protection while the self-employed largely do not benefit from employment protection rights.

Somewhere in the middle are workers, who are entitled to some valuable employment rights including:

  • National minimum wage.
  • The right to holiday pay and rest breaks.
  • Discrimination protection.
  • Protection from detriment in whistleblowing and, from 31 May 2021, in health and safety cases.
  • Pension auto-enrolment.

Uber Supreme Court of Justice Case

Uber’s main argument before the Supreme Court was that the drivers’ employment status was that of self-employed and not workers and therefore, they weren’t entitled to the employment rights set out above.

In advancing this argument they claimed that Uber BV acted solely as a technology provider with its subsidiary (Uber London) merely acting as a booking agent for the drivers that it approved. Uber relied on the wording of its standard written contracts for this interpretation which of course described the status of the drivers as self-employed.

The Supreme Court confirmed in its judgment that Uber drivers are not self-employed but are workers and therefore entitled to the valuable legal protections and rights.

In reaching its decision the Supreme Court provided that the purpose of most employment legislation is to protect vulnerable individuals who have little, or no, say over their pay and working conditions because they are in a subordinate and dependent position in relation to a person or organisation that controls their work. To rely on the terms of a written contract between the parties as the starting point for determining employment status would be to “reinstate the mischief which the legislation was enacted to prevent”. It is the very fact that the employer is often in a position to dictate the terms of the contract which means that statutory rights to the NMW, limits on working time and paid annual leave are needed.

The Uber drivers were held to be workers as they were in a position of subordination and dependency, with Uber exercising significant control. On the working time question, the court held that time spent working for Uber is not solely limited to the periods when the driver is actually driving passengers. It also includes any period when the driver is logged into the app within their designated territory and is ready and willing to accept trips. This time constituted “working time” for the purpose of the WTR and “unmeasured work” for the purpose of the NMW.

The Wider Implications

Following Uber, employment status analysis must start by considering who the legislation is intended to protect as workers. For example, to establish worker status under the Employment Rights Act, the individual must be obliged under a contract to “perform personally” any work or services for another party to the contract (section 230(3)(b)). All the facts should then be considered, including the contract and the conduct of the parties.

Significantly the contract between the parties is neither the starting point nor determinative, but is still relevant in considering all of the facts.

In Uber, whether the drivers were working under a contract in which they agreed to provide personal service was not in question. Uber therefore sits alongside the Pimlico Plumbers case, in which the Supreme Court confirmed that a conditional or occasional power of delegation or substitution can be consistent with personal performance still being the dominant purpose of a contract. A substitution clause alone however does not automatically prevent worker status arising, but a genuine unfettered right to substitute is inconsistent with providing services “personally” and a relevant factor that indicates self-employment.

In addition to looking at the written contract between the parties the Court will look at all of the surrounding circumstances of how the work is performed and delivered in determining employment status. The more control that is exercised by an employer, the greater the likelihood that worker status will be established. A brand-based company that exercises tight control over the people who deliver its product under its brand in order to ensure consistency of service will find it very hard to argue that those people are self-employed. It is the degree of control exercised by the employer that is key.

The court in Uber emphasised that the touchstone of subordination and dependence was the degree of control exercised; the greater the control, the stronger the case for worker status.

So, for businesses who have in place contracts which aim to determine the employment status of an individual worker it is important to reflect on the findings of the Supreme Court. Simply by describing an individual as “self-employed” in a written contract is not determinative. The contract is only one factor to be considered when determining employment status.

If you would like further advice on this case, contracts or any of the matters that arise out of employment status please contact Carmel Sunley of Sunley Workplace Solutions.