Supreme Court decision on employment status of Uber drivers

Gavel and weights

On Friday 19 February 2021, the Supreme Court handed down its judgment on the appeal by Uber against the Court of Appeal’s decision that their drivers were ‘workers’ rather than self-employed.

The Supreme Court unanimously rejected the appeal and found that Uber drivers are not self-employed but have ‘worker’ status which entitles them to many employment rights such as holiday pay, National Minimum Wage and more.

When looking at the judgement it’s important to remember that these decisions are reached by carefully analysing all the circumstances of each particular case. This analysis will often uncover factors pointing to different conclusions and this was true in the Uber case.

Factors pointing towards self-employment

  • Drivers signed a ‘services agreement’ which was very carefully drafted to avoid any employment rights liability, particularly regarding working time and National Minimum Wage rights. Under this agreement, Uber agreed to provide electronic services to the driver (described as ‘customer’), including access to the app and payment services, and the driver agreed to provide transport services to passengers (described as ‘users’)
  • Drivers provided their own vehicle and were responsible for its licensing and upkeep
  • They could work for other businesses
  • They decided when, how much and where to work
  • They were self-employed for tax purposes
  • They wore no uniform and did not have an Uber logo on their vehicle

Factors pointing towards worker status

  • Drivers went through an interview and onboarding process
  • They were given specific instructions on the types of vehicle which they could use
  • Too many rejections of trips was punished by preventing access to the app
  • Drivers with low ratings could be removed
  • Drivers were not permitted to exchange personal details with passengers
  • Substitution was not permitted

Although the fare was determined by Uber, the services agreement describes it as a ‘recommended amount’ which the driver could choose to reduce (but not increase) without the agreement of Uber. Uber would pass on the fare to the driver, less a ‘service fee’, calculated as a percentage of the fare.

Uber argued, as they have at every stage of the appeal process, that previous findings were incorrect as they involved disregarding, without any legal justification, “the clear and unambiguous terms of the written agreements”.

The significance of the ruling

The Supreme Court’s ruling that Uber’s drivers are workers could have a huge impact on the millions of people who work as part of the flexible ‘gig economy’ in the UK, giving them access to more rights.  And, by extension, will have far-reaching implications for the businesses that employ/use them.

The question of employment status is one that’s long been bubbling in the background, with the government’s programme of changes, the Good Work Plan, being a response to this evolution in some working practices. The Good Work Plan aims to provide greater protections to those working under more flexible arrangements – classed as ‘workers’. It implemented its first reforms back in April 2019 and since then, has significantly increased business owners’ obligations to workers, particularly around contracts and pay arrangements.  Further reforms are to be introduced in due course.

However, the ruling doesn’t mean that everyone who works under a flexible arrangement is a worker – as each set up is different and will be assessed on those individual arrangements.

Instead, it shows just how important the reality of the working relationship is in establishing employment status, it’s not just about what’s contained in a contract or service agreement.  Further, it should be remembered that even though this case was considering whether the Uber drivers were workers, in some cases the reality of the relationship might even mean that the person is classed as an employee.  For example, factors such as the person being required to work when they are asked to and there being significant control over how they do the work, could point towards an employment relationship and even greater employment rights.

Key take-away points for employers

  •  This judgement reinforces the fact that even the most carefully worded contract will not avoid the creation of an employment relationship if the facts of the working relationship point to this.
  • Although Uber drivers supplied their own vehicles, decided when to work and how much to work, they were subject to a significant degree of control which pointed away from them being genuinely self-employed.
  • The judgement is a reminder that decisions are based on an analysis of the facts in each case.

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