Worker status and the gig economy

Uber v Aslam: Supreme Court rules on worker status


As models of work evolve around ever-changing technology, the Supreme Court’s ruling in Uber v Aslam addresses the crucial question of employment status in the gig economy.

Background

There are three categories of individuals providing services under current employment law.

  • Employee
  • Worker
  • Self-employed independent contractor

The question of whether someone is an employee, worker or independent contractor is important because each category attracts different rights and obligations.

The highest category, which attracts the widest range of rights and obligations, is the ‘employee’ category; with independent contractors being at the other end of the spectrum, having very few rights or obligations.

‘Worker’ status is a middle category: it reflects that individuals are not employees; but they are not wholly independent and are entitled to some protection.

A worker is defined under the Employment Rights Act 1996/Employment Rights (Northern Ireland) Order 1996 as an individual who works under

  • a contract of employment; or
  • any other contract whereby they undertake personally to perform any work or services whose status is not that of a client or customer of any profession or business undertaking carried on by the individual.

This definition is replicated in the Working Time Regulations 1998/Working Time Regulations (Northern Ireland) 2016 and the National Minimum Wage Act 1998.

The arrival of so-called ‘platform work’ in the ‘gig economy’ has complicated the process of defining employment status due to the flexible nature of individuals’ ‘gigs’ and where individuals providing these services fall in the three categories outlined above.

Facts

The case involved disputes between the private taxi booking service accessible via a smart phone app, Uber, and multiple drivers, including Yaseen Aslam. The drivers brought claims against Uber in 2016 seeking payment of the national minimum wage and holiday pay.  In order to proceed with these claims, the drivers were required to demonstrate they were workers or employees, rather than self-employed contractors.

Uber contended that the drivers were self-employed contractors and that the smartphone app was a platform to connect self-employed drivers with app users. Uber stated that drivers entered into individual contracts with passengers to provide driving services. Drivers were under no obligation to use the app at any time, or to accept trips offered to them. Uber’s case is that drivers using its app are akin to a patchwork of small businesses, using the booking and payment services of the app - similar to other app based booking and payment services, such as AirBnB.

Employment Tribunal

Back in 2016, an employment tribunal held that the drivers were not self-employed contractors but were workers.

In reaching this conclusion, the employment tribunal found that each of the drivers’ working hours began whenever they were within their working territory, had the app switched on, and were ready and willing to accept trips. When the app was on and drivers were ready and willing to accept bookings, the drivers were ‘working’ and entitled to paid holiday and the National Minimum Wage.

The employment tribunal found that Uber’s contractual arrangements with the drivers did not correspond to the reality of the situation.

Employment Appeal Tribunal

Uber appealed to the Employment Appeal Tribunal (EAT). The EAT dismissed the appeal. The EAT rejected Uber’s argument that it was a technology platform, acting as an agent for drivers.

Court of Appeal

Uber appealed further to the Court of Appeal in 2018. The Court of Appeal dismissed Uber’s appeal, holding that the employment tribunal had correctly defined the relationship between the drivers and Uber. In particular, the Court of Appeal noted the “high degree of fiction” in the wording of the standard documentation between Uber and its drivers.  

The Court of Appeal found that Uber drivers were working for Uber when the app was turned on and the drivers were ready and willing to accept fares.

However, in a dissenting judgment, Lord Underhill offered a glimmer of hope to Uber: he said that he could not see any material difference between Uber and other taxi services; and he said that in his view, the drivers were only ‘working’ when they had accepted a particular trip. Lord Underhill suggested that if this meant that large swathes of platform technology workers were left unprotected, then maybe it was for government to reform the relevant legislation.

Supreme Court

In the last word in this litigation, the Supreme Court has today said that Uber drivers fall into the ‘middle’ category described above: they are not full blown employees of Uber, but they are ‘workers’ and therefore entitled to certain protections under employment law, the most significant of which are the entitlement to paid holiday and the national minimum wage.

In making its findings, the Supreme Court was persuaded by five key points.

1. When a fare is booked through the app, Uber sets the fare and determines how much the driver will be paid.

2. The contract terms under which the drivers work are dictated by Uber.

3. If a driver refuses a number of fares, there are a series of penalties imposed by Uber.

4. Uber exerts strict control over the way in which the drivers’ services are delivered.

5. Communication between the drivers and their customers is strictly limited to that which is necessary to deliver the services. There is no sense in which the drivers can develop a customer relationship with users of the app.

Taking these factors into account, the Supreme Court found that, whilst the drivers were not Uber’s employees (and therefore not entitled to the full range of employment protections) there was no sense in which they were operating as ‘small businesses’ simply being connected to customers through Uber’s technology. Uber exerted a high degree of control over the drivers, meaning that they were workers. Therefore, they were entitled to paid holiday and the National Minimum Wage.

Finally, the Supreme Court agreed that the drivers were working at all times when they had the Uber app switched on and they were ready and willing to work.

The full judgment is available here.

Comment

In the UK alone, there are 65,000 drivers who use Uber’s app. However, the judgment is not only critical for Uber and these drivers, but also other employers who are part of the growing ‘gig economy’.

The Supreme Court’s judgment is the final ruling on this litigation, and it is interesting to note that the Court focussed on the high degree of control exerted by Uber over its drivers. This decision will have a significant impact for all organisations which utilise an ‘on demand’ workforce.

Any organisation which utilises services from a contingent workforce should review those arrangements – whether provided through a technology platform or otherwise. If the reality is that the individuals are providing those services personally, under close controls, and the organisation is not a client or customer, then they are likely to be classed as ‘workers’. This means they would be entitled to a range of rights, including rest breaks, holiday pay, minimum wages and whistle-blower protections.

Contributors: Sarah Maddock and Amanda Applegate

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions.


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