303: Supreme Court rules whether Uber drivers are workers

The Supreme Court recently considered whether Uber drivers are workers for the purposes of the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998.

When assessing employment status, the court held that the starting point is to remember that workers’ rights are created by statute rather than being a matter of contractual interpretation. The purpose of this legislation is to protect vulnerable individuals who are in a position of subordination and dependence in relation to another person who controls their work. Since written documentation is likely to have been drawn up by the party who holds the balance of power, it should not be relied on. Deciding worker status involves weighing up a number of different factors, but the Supreme Court highlighted the importance of control.

Looking at the practical reality of the relationship between Uber and its drivers, the Supreme Court considered whether the services provided by the drivers were so tightly defined and controlled by Uber that they should be classified as workers. The court noted, for example, that Uber dictated the fares charged by the drivers; constrained the drivers’ choice whether to accept or decline rides; exercised significant control over the way in which drivers provided their services; and restricted communications between drivers and their passengers to the bare minimum. Uber also imposed the contractual terms on which the drivers provided their services.

The Supreme Court rejected Uber’s argument that it acted simply as a booking agent for self-employed drivers and that drivers were contracting with their passengers rather than Uber and held unanimously that Uber drivers are workers for the purposes of the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998. This means that its drivers are entitled to receive the national minimum wage, paid holiday and whistleblowing protection, and that they may be eligible for pensions auto-enrolment.

More controversially, the Supreme Court also upheld the Tribunal’s decision that the drivers’ working time under the Working Time Regulations includes their waiting time as well as the time spent driving passengers. Drivers should therefore be paid for time when they are logged in to the Uber app, within their licensed territory, and ready to accept rides. However, Uber has confirmed that it will only pay drivers from when a passenger books a journey, in part because of its position that until then drivers are free to work for another delivery app. The drivers may therefore need to bring further legal action to enforce this part of the Supreme Court’s judgment.

This ruling is consistent with the decisions of all the lower courts and is not unexpected, highlighting again that courts will look beyond contractual labels to the reality of a working relationship. The outcome of employment status cases depends very much on the way in which individual employers operate their businesses. However, organisations in the gig economy operating in a similar way to Uber should be looking carefully at this decision in order to assess its impact on their business model and weighing up the legal, commercial and reputational risks of workers being wrongly classified as self-employed.