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Landmark ruling for gig economy: Uber drivers entitled to valuable employment rights

Landmark ruling for gig economy: Uber drivers entitled to valuable employment rights

In a landmark decision, the Supreme Court has confirmed that the claimant Uber drivers are entitled to the rights and protection of workers and are not self-employed contractors, as Uber contended. The Supreme Court has also decided that the drivers are to be considered working, during any period when the driver was logged onto the Uber app, within the territory in which they were licenced to operate, and ready and willing to accept passengers. Uber’s position throughout the litigation has been that its drivers should only be considered working during time spent transporting passengers to their destinations.

Being identified as “workers” affords the Uber drivers valuable employment rights, including entitlement to paid annual leave, the right to receive the national minimum wage, and protection from being subjected to detrimental treatment for having made a protected disclosure ("whistleblowing"). The ramifications of this case could be substantial, not just for Uber drivers but for many other workers and businesses who operate similar business models within the gig economy.

Worker status

Employment law distinguishes between three types of people:

  • employees – those employed under a contract of employment;
  • self-employed people who are in business on their own account and undertake work for their clients or customers; and
  • workers - an intermediate group who provide their services as part of a profession or business carried on by someone else.

The general purpose of employment legislation is to protect vulnerable individuals from being paid too little for the work they do, being required to work excessive hours, or being subjected to other forms of unfair treatment. Employees are thought to need the most protection, given their subordinate and dependent position relative to their employer. Conversely, those who are genuinely self-employed are considered least in need of statutory protection, given their relative independence from the clients and customers who hire them.

Given the extent to which workers are dependent on, and under the control of, the person or undertaking for whom they perform their services, workers are also considered to be sufficiently vulnerable to merit statutory protection. In determining whether an individual falls within the definition of worker or self-employed, it stands to reason that, the greater the level of control, dependence and subordination, the more likely an individual will be identified as a worker. Control, dependence and subordination were critical areas considered by the Supreme Court in this case.

Five key indicators of control

In determining that the claimants, Mr Aslam and Mr Farrar, both Uber drivers in 2016, were workers, the Supreme Court was influenced by five key aspects of their working arrangements with Uber which, in the Supreme Court’s view, indicated a strong degree of control exerted by Uber over the service performed by its drivers. The Supreme Court was also cognisant of the standardised service that Uber offered to its passengers, in which its drivers were “perceived as substantially interchangeable and from which Uber, rather than individual drivers, obtains the benefit of customer loyalty and goodwill.” 

  1. Uber dictated the fare charged by a driver, which determined the driver’s pay. A driver had no control over how much income they generated other than by choosing when and for how long they worked.
  2. Uber imposed the contractual terms on which the drivers provided their services.
  3. Uber constrained the drivers' choice to accept or decline passenger journeys, by limiting the information provided to the driver (including the passenger’s destination) and penalising the driver for a low acceptance rate.
  4. Uber exercised significant control over the way in which drivers provided their services, including vetting the driver’s car and using passenger ratings to manage a driver’s performance.
  5. Uber restricted communication between drivers and passengers to prevent a driver establishing an independent relationship with a passenger beyond a single journey.

No overarching contract for extended periods

The Supreme Court acknowledged that the claimant drivers had a “substantial measure of autonomy and independence”. In particular, they could choose at what times and for how long they were logged onto the Uber app. There was no suggestion that the drivers were under any continuing obligation to work for Uber during periods when they were not logged onto the app (i.e. there was no “umbrella contract”). The drivers were only contractually bound to work for Uber during periods when they were logged onto the Uber app. Once logged onto the app, Uber dictated the terms on which the drivers provide their services to such a degree, and exerted sufficient control, for the Supreme Court to find that the drivers were indeed workers performing services for Uber, rather than independent contractors performing services directly to passengers.

When logged onto the Uber app, the drivers had a right to turn down passenger requests. Uber argued that this fact was fatal to a finding that the drivers were workers. The Supreme Court disagreed: an individual can still be a worker, even with the right to refuse jobs while purportedly working, provided “there is at least an obligation to do some amount of work”. This was certainly the case for the claimants. While logged onto the Uber app, drivers were required to be generally willing and available to take trips, and drivers were penalised if their percentage rate of acceptances fell below a level set by Uber.

When the drivers were considered “working”

Once the Supreme Court had determined that the claimant drivers were “workers”, it then had to decide whether the drivers were working from the moment they logged onto the Uber app (in their licenced territory) or only when they were transporting passengers.

It is firmly established case law that, for the purpose of the Working Time Regulations 1998, time spent “on call” counts as “working time” if the worker is required to be at or near their place of work which, for Uber drivers, was determined to be the place where their vehicle is located. In other words, the drivers’ “working time” for the purposes the WTR comprised any time the drivers were logged onto the Uber app within their licenced territories. The Supreme Court also confirmed the Tribunal’s decision that the drivers’ working time should be identified as “unmeasured work” for the purposes of calculating the national minimum wage.

Uber contended that its drivers should only be considered working when transporting passengers. Central to Uber’s argument was that, while logged onto the Uber app, its drivers were not prohibited from making themselves available to accept trip requests from another PHV operator (provided they maintained an acceptance rate that was acceptable to Uber). No evidence was put forward to support this argument and the Supreme Court was not persuaded, viewing the option to accept work from another PHV operator as largely theoretical.

Initial response to the judgment

In a statement released on 19 February 2021, Uber suggested that the Supreme Court’s decision on worker status was limited to “a small group of drivers using the Uber app in 2016”. Uber emphasised that, in recent years, it has made significant changes to its business model and that many aspects of the working arrangements identified in the judgment are no longer relevant (for example, Uber asserts that drivers now have full transparency over the price and destination of their trip, and, since 2017, there has been no repercussion for rejecting multiple consecutive trips.) However, many question whether Uber has made sufficient changes to its business model to render the Supreme Court’s findings as irrelevant to Uber’s drivers today.

Subsequently, Paul Scully MP, Parliamentary Under-Secretary of State for the Department for Business, Energy and Industrial Strategy (BEIS), has confirmed that “Uber will need to take action to align with the judgment”.

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