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Uber’s Supreme Court loss demonstrates the difficulties in defining employment

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The Supreme Court handed down its long-anticipated judgment in the case of Uber BV and others v Aslam and others on 19 February.

The judgment confirmed that Uber drivers are workers under English employment legislation and are therefore entitled to receive national minimum wage and paid annual leave. This is a significant ruling for the drivers and an equally significant blow for Uber, which may now face an employment tribunal’s ruling on financial compensation.

The case, which was first brought in 2016, focuses on the vexed question of employment status and in particular, what is a “worker” for the purposes of the Employment Rights Act 1996.  The law recognises three main types of employment status: employee, worker and the self-employed.

There are many reasons why an employer would want to call an individual self-employed. It’s cheaper and less complicated and those classed as self-employed do not benefit from statutory protections such as national minimum wage, sick pay, paid holidays or pension auto-enrolment. Employer’s National Insurance contributions are not payable.

Uber labelled its drivers as ‘self-employed’. The label placed on a working relationship is not determinative of employment status.


Uber's legal battle, a timeline of events:

January 2018: Working hours cap

December 2018: Court of appeal ruling

May 2019: GDPR requests


The appropriate status applicable to any individual is determined by looking at the legally recognised definitions of each type of employment status, the contract and where there is a dispute as to whether a written term is genuine, the facts of the relationship between the individual and their ‘employer’. 

The facts of the relationship between Uber and the drivers were complicated. Uber considered its model to be similar to that of a travel agent, acting as an intermediary between the driver and the passenger. Therefore no ‘employment’ relationship existed.  

The contractual arrangements were equally complex, involving Uber companies based in the UK and Europe; an assumption that all drivers were supplied via their own intermediary company, and documents that could constitute contractual terms between Uber, the fictitious intermediary and the individual driver as well as between the driver and passenger.

As part of the case, the tribunal considered matters such as driver induction, driver rules of conduct, the operation of the Uber app, the billing and payment arrangements used by Uber as well as both VAT law and private hire vehicles regulation to ascertain the true nature of the relationship.

The original judgment in 2016 found that while the Uber app was switched on and the drivers were ready to accept passengers the drivers were workers. This judgment was upheld by the EAT and the Court of Appeal, with one Judge dissenting. 

The disagreement between the judges illustrates just how difficult the case was and the fact that current legal definitions of employment status do not lend themselves to new models of working that are found in gig economy businesses.  It also highlights how difficult it is to determine the difference between a worker and those who are genuinely self-employed.

This case was always going to be divisive. It is a victory for the protection of the low paid, vulnerable worker. But for some, it may be seen as a defeat for entrepreneurialism and technological and sociological progress.

The rapid growth of the gig economy has caused a number of high-profile employment status cases.  In 2016, the government launched a review of modern working practices, specifically to consider how employment practices need to change in order to keep pace with modern business models, resulting ultimately in its 2018 policy paper The Good Work Plan.

In this the government committed to refining employment status tests.  However, no legislative progress has yet been made to do so.  Perhaps the Uber case will accelerate the government’s considerations on this troublesome issue.

 

Helen Wyatt is employment partner at Keystone Law