A U-turn for the gig-economy? What the Uber Supreme Court decision means for your business.
The Supreme Court confirmed last month that drivers for Uber are not ‘self-employed’ but are engaged as workers by the company.
In a much anticipated decision on employment rights in the so-called ‘gig economy’ the Supreme Court confirmed last month that drivers for ride-hailing app Uber are not ‘self-employed’ service providers but are in fact engaged as workers by the company.
This ruling prompted Uber to announce this week (17 March 2021) that the company was ‘willing to change’ and will guarantee it’s 70,000 UK drivers at least the National Living Wage (£8.72 an hour) when they are carrying out trips, holiday pay and automatic enrolment into a pension plan.
So, will this U-turn shake-up the wider gig-economy, and the type of task-based working that has become common across many sectors in the UK?
What happened in the Supreme Court?
By now, you will probably be familiar with the way Uber work. In short, the company operates a digital platform to provide transport services. Drivers sign up online and are connected with customers through a mobile phone app.
Uber has maintained, throughout the five-year lifespan of this case, that their drivers are self-employed, primarily on the basis that the company does not control when and how the drivers work. The company argued it is no different than a ‘traditional’ minicab company (albeit on a larger scale, using different technology) and acted as ‘agent’ for the drivers and not as an employer.
However, the Supreme Court, like the Employment Appeal Tribunal and Court of Appeal before it, upheld the decision of the employment tribunal that the drivers are engaged as workers by the company.
The Supreme Court set out a number of key factors that it had taken into account in concluding the drivers were workers, including:
- Uber determined the amount the drivers were paid for their work;
- Uber exercised significant control over the way the drivers delivered their services; for example by use of a ‘rating’ system that could lead to warnings or eventual termination of the driver’s engagement.
- The drivers’ ability to refuse work when logged into the app was constrained by the company;
- Uber actively restricted communication between drivers and their customers outside the framework of the app.
In reality, the drivers were not ‘in business on their own account’ but were incorporated into Uber’s business model.
Importantly, the Supreme Court also confirmed that the drivers were ‘working’ not only when driving passengers but also whenever the app was on and they were waiting for a job to be allocated.
What does this mean for me?
The question of whether an individual is self-employed or is a worker is crucial, as the latter are entitled to certain employment-related benefits such as paid annual leave, rest breaks, the national minimum/living wage, to be auto-enrolled into a qualifying pension scheme, and not to be detrimentally treated for whistleblowing.
This Judgment clearly emphasises that what you say in your contracts and other documents will not decide the status of the individuals who work for you. A tribunal’s starting point must be the reality of the individual’s working arrangements and how these align with the statutory provisions governing what ‘worker status’ looks like.
The Supreme Court decision finally marks the ‘end of the road’ for this long-running claim, as there is no further avenue of appeal open to the employer. This may explain why the company has finally decided to make ‘on the ground’ changes to its pay practices and ways of working.
Notably, the company’s commitment to pay the National Living Wage only extends to actual driving time, which sits uncomfortably with the Supreme Court’s finding that the drivers’ waiting time is also working time, and has sparked allegation from the IWGB (a trade union representing independent workers) that Uber is still taking drivers for a ride.
Whilst this Judgment certainly seems to signify a re-balancing of power between employers and their staff in the ‘gig-economy’ space, it does not necessarily herald the end of flexible, task-based working. The Supreme Court stressed that the purpose of employment status legislation is to protect ‘vulnerable individuals who are in a subordinate and dependant position’ to the businesses they work for. This is a clear signal to future courts and tribunals to interrogate contractual arrangements closely and to make sure that skilful drafting is not being used to misrepresent an individual’s employment status.
However, it still remains perfectly possible, with clarity and transparency, to put together flexible working and pay arrangements that suit both your organisation and your workforce.
Clearly, this decision has pushed the gig-economy back into the spotlight, and may encourage further claims. If you are concerned about the employment status of the staff you engage, or the employment-related benefits they currently receive, we would be happy to advise you.
If you need guidance on the employment status of your staff, please contact our employment law solicitors.