What do we already know?
We updated you in our January 2019 Newsletter Case update (1): Employment status – UBER drivers confirmed ‘workers’ on the Court of Appeal’s decision in Uber v Aslam that drivers who provide services to the online taxi firm, Uber, are ‘workers’, rather than self-employed.
Uber appealed to the Supreme Court against the Court of Appeal’s decision.
The Supreme Court has given its decision in Uber v Aslam (available here) that Uber drivers are ‘workers’, rather than self-employed.
The Supreme Court held that it is wrong, in principle, to treat the written agreement as a starting point in deciding whether an individual is a worker. The correct approach is to consider the purpose of the employment legislation. This is intended to give protection to vulnerable individuals who have little or no say over their pay and working conditions because they are in a subordinate position to the organisation who exercises control over their work.
In particular the Supreme Court considered five aspects of the Tribunal’s original decision which justified its conclusions:
- Uber sets the fares for each ride the drivers carry out and the drivers are not permitted to set their own prices as they would if they were self-employed;
- Uber sets the terms and conditions of using its service;
- Drivers face penalties for cancelling or not accepting rides – sometimes preventing them from working;
- Uber has significant control over the way that drivers work, as they face a rating system. If a drivers’ Uber rating falls below a certain level they face penalties or termination of their contract;
- Uber takes active steps to prevent drivers and passengers from having an agreement outside of the Uber app; and
- Lord Leggatt said the relationship between Uber and drivers is one of “subordination and dependency” and noted that drivers have little ability to increase their professional skills, and can only boost their earnings by carrying out more work for Uber.
This means that, as ‘workers’, Uber drivers are entitled to many of the basic employment law rights that workers share with employees. These include the minimum wage, 5.6 weeks’ paid annual leave, whistleblowing protection and similar rights.
These particular workers will now be able to claim backpay for the minimum wages they were denied, calculated on their entire working day, not just when they had a rider in their cabs.
Uber would have always known that its model of treating their workers as self-employed was a challenging one under UK law and no doubt they and their lawyers have been preparing for this decision for many years. In some ways, it is surprising that it took this long to be confirmed. But then, it does take a long time for a case to reach the Supreme Court.
The Uber decision will not have been a surprise to any employment lawyer, since it is based on a set of previous cases and a clear direction of travel that has been apparent in similar judgments in the last few years.
What is helpful is that the case put a very clear final nail in the coffin of the traditional argument that the courts and tribunals should start by taking the contractual documents at face value and only look for ‘worker’ status if the activities of the parties to that contract differed substantially. These contractual documents of course claimed that the worker was entirely self-employed for all purposes. The Uber case makes clear that the contractual documents are no longer the starting point, and that the courts and tribunals should go straight to the reality of the relationship, day to day.
That ‘reality test’ shows these workers are not thousands of mini businesses in their own right, but people who worked for Uber, under a great deal of control.
This case is also another useful reminder, as we face the April implementation of the IR35 changes for larger employers, that the ‘duck test’ (i.e. if it walks like, sounds like and looks like a duck, it’s probably a duck!) is now firmly established for disputes around who is an employee/worker, as opposed to self-employed.
We have been working with many businesses recently, large and small, to help them review and improve their approach to – and tolerance of – those who ask to work as self-employed contractors. As a very quick rule of thumb:
- If the contractor works for other clients at the same time as you, do the work the way they want to do it, has their own limited company, uses some or all of their own kit, own website, does their own sales and marketing and charges you a fixed price for the project, they are very likely to be self-employed for both tax purposes and employment rights purposes.
- If they only work for you, use (some of) your kit, work the way you tell them to, don’t sell their services via their own website and sales activities, and get paid by you by the hour/day/week, then they are very likely to be either your worker or your employee.