UK Supreme Court rules Uber drivers are ‘workers’
Uber BV (Uber) challenged the employment status of drivers who provide their services through the Uber application (Uber App).
The Supreme Court unanimously dismissed their appeal and upheld an Employment Tribunal’s Judgment that Uber drivers are ‘workers’ for the purposes of employment legislation. This decision will no doubt have a significant effect on the gig economy and force other companies to review the way that they engage contractors and workers.
Uber argued that they act solely as a technology provider with its subsidiary (Uber London) acting as a booking agent for approved drivers to use the Uber App. Uber contended that when a booking is made through the App a contract is formed between the driver and the passenger to provide transportation services to the passenger. The cost of the service is calculated by the Uber App and paid directly to the driver by the passenger. Uber explained that they deduct 20% of the fees from the driver as a service charge for allowing the driver to use their technology. Uber’s observation was that drivers are independent contractors who work under contracts made with customers and not with Uber. Uber relied on the wording of their written contracts with drivers to justify their assumption.
The Supreme Court ruled that it was wrong to treat written agreements as a starting point for determining whether or not someone is a ‘worker’. The nature of the legal relationship should be inferred from the parties’ conduct. There was no written contract between Uber London and the drivers and there was no evidence to suggest that Uber acted as a booking agent. The Supreme Court concluded that the correct inference was that Uber London contracts passengers and engages drivers to carry out the services. The Supreme Court looked at the relevant employment legislation and confirmed that its purpose was to protect subordinate individuals who are in a dependent position in relation to a person or organisation which exercise control over their work.
The Judgment emphasised five features of the findings made by the employment tribunal which supported the decision that Uber drivers are workers (paragraph 94-100 of the Judgment).
- Where a ride is booked through the Uber App, it is Uber that sets the fare and drivers are not permitted to charge more than the fare calculated by the Uber App. It is therefore Uber that dictates how much drivers are paid for the work they do.
- The contract terms on which drivers perform their services are imposed by Uber and drivers have no say in them.
- Once a driver has logged onto the Uber App, the driver’s choice about whether to accept requests for rides is constrained by Uber. One way in which this is done is by monitoring the driver’s rate of acceptance (and cancellation) of trip requests and imposing what amounts to a penalty if too many trip requests are declined or cancelled by automatically logging the driver off the Uber App for ten minutes, thereby preventing the driver from working until allowed to log back on.
- Uber also exercises significant control over the way in which drivers deliver their services. One of several methods mentioned in the judgment is the use of a rating system whereby passengers are asked to rate the driver on a scale of 1 to 5 after each trip. Any driver who fails to maintain a required average rating will receive a series of warnings and, if their average rating does not improve, eventually have their relationship with Uber terminated.
- Uber restricts communications between passenger and driver to the minimum necessary to perform the particular trip and takes.
The Supreme Court determined that drivers were in a position of subordination and dependency in relation to Uber and as a result, they had little to no way of improving their economic position. The only practical way that they could increase their earning would be to work longer hours and meet the performance expectations of Uber.
In consideration of the points made above, the Supreme Court concluded that Uber drivers were ‘workers’ under section 230(3) of the Employment Rights Act 1996 and Uber’s appeal was dismissed.
As a result of this Judgment, drivers may be entitled to at least the national minimum wage, paid annual leave and other additional employment rights as a ‘worker’ engaged by Uber. However, this does not mean that they will have ’employee’ rights, such as a right to claim for unfair dismissal or entitlement to any redundancy payment.
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