The results are in: Uber has lost its appeal over the worker status of its drivers.
On 19 February 2021, the Supreme Court handed down its long-awaited decision on the employment status of Uber drivers and unanimously dismissed Uber’s appeal.[1] The ruling was Uber's last appeal; the Supreme Court is the UK’s highest court, and it has the final say on legal matters.
The two key questions answered by the Supreme Court were as follows.
Question |
Answer |
1. Did the drivers work for Uber under workers’ contracts or did they provide services as independent contractors?
|
Uber drivers on 2016 contractual terms are “limb (b)” workers, and not self-employed contractors as Uber has long asserted. |
2. If the drivers are workers, what qualified as “working time” for the drivers? |
Uber drivers’ “working time” is not limited to time actually driving passengers but includes any period when a driver was logged in and ready and willing to accept trips. |
The result was not unexpected – in reaching these conclusions, the Supreme Court agreed with the lower courts – but it is nonetheless important. Worker status carries specific entitlements, rights and compliance obligations, which Uber have not previously observed or paid in respect of their drivers. The decision has potentially far-reaching implications for the gig economy and other employers.
Below we unpack the findings of the Supreme Court and the reactions of the parties and consider the wider implications for businesses.
For a summary of the background to the claim and the journey to the Supreme Court, see our previous article.
The Supreme Court said that not only was the original employment tribunal entitled to find that the claimant drivers were workers, but also that it was in fact the only conclusion which it could reasonably have reached. In reaching this conclusion, the court made the following findings.
Uber London is not a booking agent for drivers
“Uber” is comprised of different legal entities; this case primarily involved Uber London Ltd (“Uber London”) and its parent company, Uber BV, a Dutch corporation. Uber argued that Uber London acted only as a “booking agent” for drivers and that drivers entered a separate contract with the passenger in relation to each trip.
The Supreme Court rejected this argument because there was no evidence to support Uber’s assertion that drivers conferred authority on Uber London to act as the drivers'’ agent.
The court noted that there was no written agreement between the drivers and Uber London. The relevant contracts were between: (1) Uber BV and each driver; and (2) each rider, Uber BV and the relevant local Uber Company.
The court concluded that, in relation to any booking Uber London accepted, it contracted as a principal with the passenger to provide services. Uber London would have no way of performing the contract without either employees or subcontractors to perform driving services for it. This finding alone was fatal to Uber's appeal, but the court nevertheless went on to consider a number of wider issues related to worker status.
Contractual terms are relevant but not determinative
The decision emphasises that the purpose of underlying working time / national minimum wage legislation was to give protection to employees and workers – that is, to vulnerable people who have little or no say over their working conditions because they are subordinate to an organisation which exercises control.
In light of this, it would be inconsistent to treat the written contract as the deciding factor when determining status; rather, the court was required to take account of the objective situation of the individual and all the circumstances of their work – the wording of the contractual documents, whilst relevant, are not conclusive.[2] The court also noted that:
It was therefore relevant that the terms between Uber and the drivers were drafted by Uber’s lawyers and presented to drivers as containing terms which they had to accept in order to use, or continue to use, the Uber app. The court found:
The court went further to make the point that, in these circumstances, to treat the contractual terms as determinative of status “would in effect be to accord Uber power to determine for itself whether or not the legislation designed to protect workers will apply to its drivers”.[3]
Uber exerts significant control over the drivers
Despite the contractual wording (examined further below), the court concluded Uber exercised control and the relationship with drivers was one of subordination.
The factors in Uber's model demonstrating control were as follows:
The court concluded that: “Taking these factors together, it can be seen that the transportation service performed by drivers and offered to passengers through the Uber app is very tightly defined and controlled by Uber”.[9]
The system was designed to ensure that Uber, rather than individual drivers, obtained the benefit of customer loyalty and goodwill, and there was no opportunity for drivers to develop their economic position other than by working longer hours and continuously complying with Uber’s standards and KPIs.
Uber’s model is distinguishable from hotel and minicab booking websites
Uber’s attempt to compare itself to a digital platform operating as a booking agent for suppliers of hotel accommodation was not accepted by the court. The case on which Uber relied concerned VAT liability, not employment rights, and was therefore subject to different policy considerations. Also, the case did not support Uber’s argument because the platform models referred to operate in a materially different way to Uber’s model.
The court also held that the two minicab cases on which Uber relied similarly did not advance Uber’s case as the facts were very different.
Time logged on, ready and willing to drive, equates to working time
Having concluded the drivers were workers, the court found that “working time” is not limited to time actually driving passengers, but also includes any period when a driver is logged in and ready and willing to accept trips.
As a result, the employment tribunal had been entitled to find that all the time spent by a driver both driving passengers and "on duty" logged in to the Uber app in their permitted PHV area and available to accept a trip request, was "working time" under the applicable legislation.
Multi-apping is unresolved
The Supreme Court noted the difficulties with multi-apping (that is, where a driver is at the same time logged in to both the Uber app and a similar app for a competitor of Uber providing similar services) but considered this to be a matter of fact and degree.
In this case, no evidence had been provided to the original tribunal to show that there was another such competitor or that the drivers in question had been able to log in to both apps, and so the tribunal was justified in its findings on “working time”.
The significance of this decision is less the outcome (which was largely foreseen), and more that there is no further right of appeal. Uber has run out of road and must now deal with a definitive ruling that the drivers on its 2016 terms are workers under UK employment legislation.
This particular case will now go back to the employment tribunal to determine compensation due to the 25 or so drivers in the case for holiday pay and national minimum wage, but the wider consequences of this judgment for Uber are potentially huge.
As noted above, the Supreme Court is the highest court in the UK and Uber cannot appeal the decision.
We expect Uber will update their driver terms in light of the decision and it remains to be seen whether it will adapt its model entirely. Any changes to the model are likely to be costly – and Uber are already aware of this. Ahead of listing its shares in the US in 2019, it noted in related security filings that if it had to classify drivers as workers, it would "incur significant additional expenses" in compensating the drivers for things such as the minimum wage and overtime, and that "any such reclassification would require us [Uber] to fundamentally change our business model, and consequently have an adverse effect on our business and financial condition”.[11]
Further, as might be expected, Uber’s response so far has been to downplay the decision and to assert that it only applies to “a small number of drivers who used the app in 2016” [12] on the basis it has made changes to the way in which it operates, albeit Uber have not as yet provided any real detail on this position. Any such future cases are likely to depend on the extent to which Uber has managed to alter its level of control and the relationship of subordination with drivers, but given the wide-reaching findings in the Supreme Court’s decision, it is difficult to see how the few changes Uber has highlighted in its statements would lead to a different finding on worker status for other Uber drivers.
Whilst Uber’s market share remains substantial, there are arguably more competitors in today’s UK market than in 2016 and multi-apping is, accordingly, more prevalent amongst drivers. Uber may therefore seek to distinguish drivers who multi-app from those who don’t.
Either way, it appears Uber are not backing down. Given the number of claims waiting in the wings, neither it seems are the drivers.
[1] Lord Kitchen heard the appeal but fell ill prior to the judgment being handed down. The Supreme Court determined that they were still quorate without him.
[2] Paragraphs 86-89
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[6] Paragraphs 96-7
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[9] Paragraph 77
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[11] See p.28 of Uber’s filing with the US Securities and Exchange Commission here: https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm#toc647752_2
[12] See Uber’s statement here: https://www.uber.com/en-GB/blog/supreme-court-verdict/