A reminder on employment status: the Supreme Court’s landmark Uber decision

On 19 February 2021, the Supreme Court handed down an historic judgment which is a resounding victory for Uber drivers, and will no doubt have implications across the gig economy now that the employment status of Uber drivers has been confirmed.

What happened?

Uber has long argued that it acts as a booking agent, through which its drivers, as self-employed contractors, perform services under contracts made with passengers. Uber relied on the wording of its contracts between Uber and drivers and between Uber and passengers.

However, the Supreme Court rejected this argument, focusing not on the terms of the contracts but on the wider purpose of employment legislation, which is to give protection to vulnerable individuals whose work is controlled by a person or organisation. This led the Supreme Court to focus on the day-to-day realities of the working relationship between Uber and its drivers.
The judgment emphasises five key findings of the Employment Tribunal below, namely that Uber:

  • sets the fare and therefore the rate of pay of its drivers;
  • imposes contractual terms without giving drivers a say;
  • constrains its drivers’ choice of when to work (by penalising certain drivers with a time-out);
  • controls how the service is delivered (through driver ratings, which if below the required standard, could see the drivers’ relationship with Uber terminated); and
  • restricts communication between drivers and passengers.

The Supreme Court ultimately concluded that the service performed by Uber’s drivers is tightly controlled by Uber, therefore concluding that the Employment Tribunal and Court of Appeal rightly found that the drivers were “workers”.

What does this mean?

This judgment acts as helpful reminder of the basic principle in employment law, namely that there are three employment statuses: (1) those who are self-employed, (2) those who are workers and (3) those who are employees.

As workers, and not self-employed contractors, Uber drivers are entitled to basic rights such as minimum wage (including backpay of up to six years if claimed in the country court), up to 5.6 weeks’ paid annual leave each year, rest breaks, pension auto-enrolment and whistleblowing protections. Additionally, the Supreme Court judgment also confirmed that Uber drivers were working from the moment they were available for work in their area to the time when they switch their apps off at the end of the day – crucially, this is not limited to when the Uber drivers have passengers in their vehicles.

This judgment does not give Uber drivers ‘employee’ rights, such as the right to redundancy pay or to claim unfair dismissal. However, the judgment is undoubtedly a victory for Uber workers and workers in the gig economy generally and will likely see a flood of similar claims – with employers therefore potentially having to pay out years’ worth of minimum wage and holiday pay backpay.

What should employers and individuals be doing now?

Employers and individuals should be considering their working relationships and assessing the reality of the same. It is not enough to label an individual as self-employed, if the reality of the situation is different. The parties should be alive to their true relationships and the potential rights and obligations attached. Employers may need to accept the additional rights (and costs) associated with engaging workers or alternatively reconsider their fundamental structure, by ensuring that any self-employed contractors they engage are truly that. The Judgment does not automatically mean that all self-employed individuals are workers, as each case will rest on the facts. However, if a self-employed person is in fact a worker, they will have additional employment rights and could be due payments of compensation and back pay for annual leave, pension and minimum wage, for example.

If you are an employer or staff member with any queries on the Uber judgment or employment status, please feel free to contact our experienced employment team for specialist advice and assistance by calling one of the three numbers at the top of this page or by email: employment@curzongreen.co.uk.