In an important judgment for those working in the gig economy, the Supreme Court agreed with the lower courts in Uber v Aslam that Uber drivers are workers, not self-employed contractors. In doing so, it has challenged the business model adopted by Uber.
The crucial issue in this case was whether the Uber drivers worked under a contract to perform work or services for Uber London in order to be entitled to the national minimum wage, statutory holidays and protection from being subject to a detriment.
The court held that the starting point for determining whether a claimant is a worker is whether they fall within the statutory definition, not how the relationship is characterised in a written contract. As such, courts must focus on whether claimants fall within the definition of a worker under the relevant legislation – in this case, the National Minimum Wage Act 1998, the Working Time Regulations 1998 and the Employment Rights Act 1996.
In adopting this approach, the purpose of employment legislation must be taken into account. The court was in no doubt that it “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 victimised for whistleblowing.)”
To rely solely on the written contract would not only fail to recognise the inequality of bargaining power, but also undermine the very purpose of the legislation to provide statutory protection for vulnerable workers.
As the court put it: “The efficacy of such protection would be seriously undermined if the putative employer 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. Laws such as the National Minimum Wage Act were manifestly enacted to protect those whom Parliament considers to be in need of protection and not just those who are designated by their employer as qualifying for it.”
This does not mean that the terms of a written agreement should be ignored but it does mean that a signed contract does not necessarily represent the true working relationship and terms, particularly those which purport to “exclude or limit statutory protections by preventing the contract from being interpreted as a contract of employment or other worker’s contract, are of no effect and must be disregarded.”
Key to whether Uber drivers were workers for the purposes of the legislation was whether they were in a position of subordination and dependence. The benchmark is the degree of control which Uber had over the drivers. The greater the control, the stronger the case for classifying the individual as a “worker”.
The degree of control will depend on the facts and in this case the court considered that the tribunal was justified in finding that Uber drivers were workers given that Uber fixed the rate of pay, the terms on which drivers performed their services, limited the ability of drivers to choose whether to accept requests for rides, determined the types of car the driver could use and prevented the driver from establishing a relationship with the passenger.
Significantly the court also upheld the tribunal’s finding on working time namely that the drivers were working from the moment they logged onto the Uber app.
The judgment is a wake-up call for employers who seek to rely on written contracts as evidence of an individual’s employment status. The approach of the court may also apply when determining whether there is a contract of employment as defined in section 230 of the Employment Rights Act 1996.
Thompsons will provide a fuller summary of the decision in a future LELR.
Read the judgment in full here.