Uber Drivers are Workers: Supreme Court slams the brakes on Uber’s operating model

March 25, 2021

2 min read

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What's going on here?

In a unanimous judgment, the Supreme Court has dismissed Uber’s appeal that its drivers are self-employed, thereby confirming that drivers have the employment status of workers. This affords Uber drivers the legal right to demand fundamental worker entitlements such as National Minimum Wage (NMW) and Holiday Pay.

What does this mean?

Uber tried to argue its app is merely a taxi-hailing platform, acting as the “booking agent” connecting drivers with their passengers. But the reality of the working relationship between Uber and its drivers suggests otherwise. Specifically, Uber dictates the terms drivers must accept in order to use the app. This includes the fare charged and the choice to accept/reject trips, all while monitoring drivers’ service via passenger ratings. In addition, driver identities must be verified, preventing their work from being substitutable; a distinct trait of contractor work.

Due to this level of control and subordination to Uber, its drivers were held not to be independent contractors, and thus not self-employed. Furthermore, the courts ruled that a driver’s working time begins and finishes when they are logged in and able to accept bookings. Before, Uber drivers were only paid commissions from each completed trip.

Uber itself has continued to label its drivers as self-employed, both in new terms and conditions implemented while this case was ongoing and in a statement to drivers after this ruling. However, critically, the courts have taken a purposive approach to the current worker protections in place, disregarding the “self-employed” label from Uber and looking beyond strict contractual obligations.

What's the big picture effect?

One footnote to the Supreme Court’s ruling is that it was only for the group represented, it does not obligate Uber to compensate all drivers in England and Wales. Nonetheless, Uber BV v Aslam [2021] UKSC5 still acts as a test case (a legal action with the purpose of setting a precedent), so it does leave the road clear for around 40,000 drivers to claim back pay for Holiday Pay and NMW from 2015 onwards.

Moreover, the fact that this is a unanimous decision (agreed by all judges without dissent) is noteworthy too, given that split opinions exist elsewhere over the employment status of Uber drivers. In California, a state ballot enabled gig economy firms to continue classifying their staff as contractors in the wake of  a bill that had extended labour protection laws. By contrast, the Supreme Court decision in favour of Uber drivers is being interpreted as giving the green light to other UK gig economy workers.

In setting this judicial trend, it is expected the lower courts would be encouraged by this precedent and take a similar view for other atypical workers in future cases. Though many freelance or consultancy roles could be considered “atypical”, the Uber case will have more pertinent repercussions for gig workers since they are considered to be more economically vulnerable and so need protecting by the law. Conversely, there may be an adverse impact on the overall number of gig employment opportunities available because extra entitlements would inevitably increase costs to these employers.

Could this be the end of the road for the gig economy? Time to belt up for a bumpy (and likely litigious) ride ahead.

Report written by Seb Stacey

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