Uber: Drivers are workers

What does this decision mean for Uber? What’s next?

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.

1. Thousands of linked holiday pay cases by Uber drivers have been stayed pending the outcome in the Supreme Court and will now be reactivated, and the result is likely to invite more Uber drivers to pursue both unpaid holiday and national minimum wage claims.
2. Workers also have other key protections and rights, such as whistleblower and equality law protection and the right to receive a written statement of terms.  Following the High Court’s decision earlier this year in IWGB v Secretary of State for Work and Pensions, workers also have health and safety protection (especially relevant in the context of the COVID-19 pandemic). These may give rise to further causes of action against Uber, the latter may add to the complexity of claims and costs Uber faces.
3. In addition to claims in respect of holiday and minimum wage entitlements (which were raised in this case), the judgment may also create tax and pensions liabilities for Uber.  Whilst the tests are different, there is the prospect that drivers would also be deemed “eligible jobholders” under auto-enrolment legislation or “employees” under tax legislation.
4. On top of this, the decision may have implications for Uber’s liability for driver actions, and it will have to consider the extent to which it will need to manage these risks and to carry out right to work and other checks for drivers going forward.
5. The decision may also allow drivers to apply for statutory recognition for collective bargaining purposes.  It is worth noting both the position the CAC adopted in the Deliveroo case (see our Frontline edition on this here) and that a number of new and established unions are active in this field.
6. This will send a clear message to interested parties around the world and may give confidence to taxi drivers already embroiled in similar claims and embolden others to take action.

Is there a way around it?

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.

Final remarks

• More broadly, the Supreme Court’s deliberate and repeated reference to giving effect to the purpose or intention of the underlying employment legislation, and its focus on form over substance, is a clear indictor of its view that the courts should and will continue to seek to protect workers despite the wording of any documents they sign.  This is a timely reminder that employers should be wary of relying solely or heavily on contractual terms to avoid duties and liabilities.

• Whilst we would expect Uber to issue new terms following this decision, as the court has noted contractual terms are not determinative of status – the courts can and will look behind the terms at the reality of the working arrangements and are adept at doing so.  There are fundamental aspects of Uber’s business model that would need to change in order to avoid worker status, and it remains to be seen whether Uber are prepared to sufficiently adapt their model so as to avoid drivers being deemed workers and whether they can do so whilst maintaining a viable business proposition.

• The decision and findings in this case were fact-specific – this is not a one-size fits all judgment.  The findings with regard to working time are particularly fact-sensitive and should be approached with caution.  They are a key area for further litigation in this space.  That said, the direction of travel is clear and this is a decision that other employers, and particularly the gig economy, should ignore at their peril.

• Interestingly, the judgment distinguished Uber's model, where the product is standardised, from operators who offer customers access and bookings to a range of service providers.

• The Supreme Court is ‘woke’; it gave a specific explanation of its use of the masculine pronouns when referring to Uber drivers in this judgment in circumstances – doing so for brevity where all the claimant drivers are male. 

What should my business do?

1. Gig economy operators, digital platforms and other businesses operating with a similar structure to Uber and which purport to operate at arms-length should review their terms, working arrangements and business models to assess the level of risk and potential cost with regard to worker status. 
2. You should consider what, if any, steps you need to take in order to protect your business, and how you will implement those changes (including any associated costs).
3. Consider what communications you need to make to your workforce, and plan these carefully – communications can be a practical step in managing the risk of claims but can also increase these risks if not properly considered.
4. If you identify a particular risk with regard to historic national minimum wage, holiday pay or other pay entitlements, it would be worth considering the quantum of any such claims and setting aside a contingency fund.
5. If you are acquiring or disposing of a business that is affected by this decision, consider what additional steps you will take in terms of due diligence and allocation of liabilities.