The Supreme Court has dismissed an appeal by Uber, unanimously ruling that its drivers are not independent contractors but “workers” for the purposes of the Employment Rights Act 1996 (“the Employment legislation”).
Uber BV (the parent company) and UK subsidiaries (including Uber London) had appealed against claims relating to employment status by private hire drivers who performed services booked through Uber’s app.
The test-case claimants had argued that they were “workers” for the purposes of the Employment legislation, and therefore that rights including national minimum wage and holiday pay should apply to them. The Employment Tribunal (in 2016) had agreed.
Uber’s appeals to the Employment Appeal Tribunal and Court of Appeal failed, and so Uber appealed to the Supreme Court. It argued that:
The Employment legislation defines a worker as an individual who has entered into or works (or has worked) under a contract of employment, or any other contract, whether express or implied and whether oral or in writing, whereby the individual undertakes to do or perform personally work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.
The critical issue in this case was whether, for the purposes of the definition, the claimants were working under contracts with Uber London whereby they undertook to perform services for Uber London; or whether, as Uber contended, they performed services solely for and under contracts made with passengers, through the agency of Uber London.
The Court held that the way in which a relationship is characterised in a written agreement is neither an appropriate starting point, nor conclusive, when determining whether someone meets the statutory definition of “worker”: “the efficacy of employment protection legislation “would be seriously undermined” if employers could “by the way in which the relationship is characterised in the written contract determine … whether or not the other party is to be classified as a worker”.
Whether a contract is a “worker’s contract” within the meaning of the relevant legislation “is not to be determined by applying ordinary principles of contract law”, but it is instead necessary to apply “a modern approach to statutory interpretation”. “The correct approach” in deciding whether a person is a worker is to consider all relevant information, including the general purpose of the (protective) legislation in question, and the operation of the relationship between the parties, alongside any written terms.
The Court considered whether drivers were “workers” under the legislation and, if so, when they were considered to be working.
The court ruled that Uber London contracted with passengers, and then engaged drivers to carry out bookings. As, on the facts, there was no written contract between the drivers and Uber London, the nature of their legal relationship had to be inferred from the parties’ conduct.
The judgment notes the aspects of the findings made by the Employment Tribunal which justified its conclusion that the claimants were “workers”. This included Uber setting the fares, allocating trips, monitoring and penalising drivers, and restricting contact between drivers and passengers. The service performed by drivers and offered to passengers through the app was therefore “very tightly defined and controlled” by Uber, and drivers were in a position of “subordination and dependency” in relation to Uber.
Uber’s appeal was dismissed.
The Supreme Court also held that the Tribunal was entitled to find that, on the facts, time spent by the claimants working for Uber was not limited to periods when driving passengers to their destinations, but included any period when logged into the app within the territory in which the driver was licensed to operate and was ready and willing to accept trips.
To qualify for automatic enrolment, an “eligible jobholder” must also be a “worker”. The definition of “worker” in auto-enrolment legislation is almost identical to that in the Employment legislation, and so the Uber judgment may have significant implications for workplace pensions.
Under the Pensions Act 2008, a “worker” is defined as any individual who works under a contract of employment, or any other contract by which the individual undertakes to do work or perform services personally for another party to the contract. However, in contrast to the Employment legislation, “earnings” for automatic enrolment purposes are defined in an exhaustive list which includes salary, wages. commission, bonuses and overtime as well as payments such as statutory sick pay. Where a worker has no qualifying earnings (earnings between £6,240 and £50,000 for the 2020/21 tax year), they fall into the “entitled worker” category meaning the auto-enrolment duty does not apply, but they have a right to join a pension scheme (without employer contributions being payable).
This judgment is significant in its discussion of how courts should determine worker status. It has made clear that a question of employment status must examine both the reality of the work, and the purpose of the underlying employment rights.
Uber may now face significant claims from those who worked for it during the relevant period (its terms have changed over the years). The employment status of other so-called gig-economy workers will of course depend on their own facts.