End of the road for Uber's appeal

In a long-anticipated decision, the Supreme Court in Uber BV and ors v Aslam and ors has today held that Uber drivers are workers and are working whilst logged into the Uber app and available for work.

The drivers in this test case argued that they were not independent contractors (as their contracts stated) but, rather, were workers and so entitled to rights such as national minimum wage, paid holiday entitlement and protection under whistleblowing legislation.

Employment law provides for three status of contract: employee, worker or self-employed independent contractor.

The case has significant consequences not only for Uber and its drivers (40,000 in the UK at the time of the 2016 Employment Tribunal hearing in this case) but also for other digital services platform models and the wider gig economy.

Key findings about the Uber model

The Employment Tribunal’s original findings of fact made it clear that the Uber model placed quite considerable constraints on Uber drivers, including:

  • Drivers logged into the app only having ten seconds to accept a trip as the closest driver before it is passed to the next closest driver.
  • The driver is not informed of the final destination until the passenger is collected.
  • Fares are automatically calculated by the app and drivers must not charge a higher fare but can charge a lower fare.
  • Uber makes a weekly payment to the driver of fares less a service fee, which in this case was 20%.
  • Drivers bear the financial risk of deviating from Uber’s prescribed route.
  • Drivers must not exchange contact details with passengers or make any post-job contact other than for prescribed reasons such as return of lost property for example.
  • Types of car used are vetted by Uber.
  • Uber owns and operates the technology involved and this is used as a means of exercising control over the drivers.
  • Uber operates a rating system.
What about the written contracts?

In summary, there were three key documents which the drivers signed up to: a “partner registration form” stating the driver agreed to the “Partner Terms” and a “Services Agreement” between Uber BV (the Netherlands entity which owns the rights in the app) and the driver which attempted to create a fiction of a contractual relationship between the passenger and the driver and designated the driver as an independent contractor. In fact, the Services Agreement goes so far as requiring the driver to agree that Uber does not provide transportation services.
Uber’s argument that it contracted as a booking agent for the drivers only was robustly rejected and a full consideration of these agency points and the relevant licensing regime is outwith the scope of this article.

In terms of interpreting written contracts in such cases, we know from the Supreme Court’s decision in Autoclenz Ltd v Belcher that the reality of the underlying relationship will be looked at where that is not consistent with the contract.

The Supreme Court has now put a significant new gloss on Autoclenz by finding that:

  • The question of determining worker status is in fact a question of statutory rather than contractual interpretation and the purpose of the legislation being invoked is to “protect vulnerable workers from being paid too little for the work they do, required to work excessive hours or subjected to other forms of unfair treatment (such as being victimized for whistleblowing)”.
  • Once this underlying purpose is recognised it is inconsistent to treat the terms of the contract as the starting point in assessing worker status not least because of the inability of individuals signing such contracts to influence their terms (or in many cases, even read or understand them).
  • To do otherwise would be to undermine via a contractual backdoor effectively the restrictions in such legislation on contracting out from or waiving such protections.
What about other digital services platforms?

An interesting analogy was drawn with digital platform providers of holiday accommodation. The Supreme Court rejected that as being an appropriate comparison with Uber’s services for the following reasons:

  • Accommodation services are not standardised and determined by the platform unlike Uber.
  • Aside from a service fee, the price for the accommodation is set by the accommodation supplier, unlike the Uber model.
  • Any ratings system would not be used as a system of internal performance measurement and control unlike the Uber model.
  • The accommodation platform would not ordinarily restrict communication between the owner and end-user in the way Uber did between the driver and customer.
  • This case was about the employment relationship which had different considerations (as above) than a commercial contract.

In other words, the accommodation suppliers would be in competition with each other and providing services to their customers rather than providing services to the platform.

When were the drivers working?

The Supreme Court found this to be the most difficult part of the appeal to determine but decided that the Uber drivers were working as soon as they logged into the Uber app, were in the authorised territory and were available for work rather than, as Uber argued, only when they were actually driving passengers.

Uber argued that this was wrong because nothing prevented the drivers from being logged into the app of a competitor service and working for that competitor.

The Supreme Court rejected that argument.

An interesting analogy was drawn with a 2018 CJEU case which found that firefighters on standby in their homes (which were required to be within 8 minutes travelling distance of the fire station) were working.

It agreed with the Employment Appeal Tribunal’s analysis that looking at the reality of the situation, rather than in abstract, Uber’s market share and the lack of evidence of the practicality of drivers doing this in the absence of evidence of other personal hire app transportation services meant the drivers were working whilst logged into the app.

The fact that drivers could reject work was not fatal to a finding of worker status because there was an obligation to do some work as shown by warning messages, a prescribed minimum trip acceptance level (80%) and ultimately being locked out of the app for falling below the prescribed level of acceptances or cancellations having accepted a trip.

Given the constraints the Employment Tribunal had found were placed on drivers under the Uber model (referred to above), the Supreme Court concluded that the transportation service provided by the drivers was “a classic form of subordination that is characteristic of employment relationships”, and “very tightly defined and controlled by Uber” such as to provide “a standardised service to passengers in which drivers are perceived as substantially interchangeable and from which Uber, rather than individual drivers, obtains the benefit of customer loyalty and goodwill.”

NMW issue

For completeness, the Supreme Court found that the Employment Tribunal was entitled to find that this working time was correctly categorised as “unmeasured work”.

Conclusion

As the dust settles on five years of litigation, employers concerned about working status issues should take away the following points in particular:

  • Going to great lengths in a written agreement to designate someone as a self-employed independent contractor and protect against claims to the contrary is pretty futile. The starting point in assessing worker status is not the contract but the relevant legislation.
  • Getting status issues wrong can be expensive and expose an organisation to significant claims for holiday pay and potentially for NMW.
  • The scope of what constitutes “working time” can be interpreted very broadly.

How can we help?

If you have any questions or concerns about what this judgment means for you or your organisation, or if you'd like further information on employment status, please get in touch with our Employment team.

Latest updates from @MacRoberts