Uber has been unsuccessful at the Supreme Court in its appeal against a finding that the taxi drivers it supplies are “workers” within the meaning of employment legislation.

Uber argued that the taxi drivers providing its service were self employed contractors and that Uber is a booking agent, providing the drivers with access to the Uber app and payment services.  Uber provided the courts with documents, including a “Partner Agreement” and “Services Agreement” to evidence their argument that the drivers were self employed.

However, the Supreme Court said that the task for the tribunals and the courts was to determine whether the claimants fell within the definition of a “worker”, irrespective of what had been contractually agreed.

The general purpose of the relevant employment legislation is to protect vulnerable workers from being paid too little for the work they do or subjected to other forms of unfair treatment.

It would be inconsistent with the purpose of this legislation to treat the terms of a written contract as the starting point in deciding whether an individual falls within the definition of a “worker”.

An employer is often in a position to dictate contract terms and the individual performing the work has little or no ability to influence those terms.  The effectiveness of the protection under employment legislation would be seriously undermined if the company could, by the way in which the relationship is characterised in the written contract, determine whether or not the individual is to be classified as a worker. Laws such as the National Minimum Wage Act were enacted to protect those whom Parliament considers to be in need of protection and not just those who are designated by their employer as qualifying for it.

This confirms that the claimant Uber drivers in this case are entitled to:

• 5.6 weeks’ paid annual leave each year
• a maximum 48 hour average working week, and rest breaks
• the national minimum wage (and the national living wage)
• protection of the whistleblowing legislation.

An employment tribunal had held in 2016 that Uber drivers were workers, and Uber unsuccessfully appealed this decision to the Employment Appeals Tribunal, the Court of Appeal and now the Supreme Court.  In deciding that the drivers were “workers”, the Employment Tribunal based its assessment essentially on the control Uber required to have over drivers, including the following:

1. Uber interviews and recruits its drivers.
2. Uber controls the key passenger information, including the trip destination, and excluded drivers from it.
3. Uber required drivers to accept trips and not cancel trips, and enforced this requirement by logging off from the App drivers who did so.
4. Uber dictates the route that must be followed by the driver.
5. Uber fixes the fare and the driver cannot negotiate a higher sum.
6. Uber imposes a number of conditions on drivers (including the standard of car they must use and quality standards).
7. Uber puts drivers through a rating system which effectively amounts to a performance/disciplinary procedure.
8. Uber dealt with customer refunds, sometimes without discussing the matter with the driver, when the driver’s income would be affected.
9. Uber handles customer complaints, including complaints about the driver.

The Supreme Court has confirmed what we knew; that where an individual claims to have worker or employment status, the tribunal will not look simply at the written documents, but at what happens in practice.   We can be sure that the Supreme Court decision will be quoted in  employment tribunal decisions on employment status in future.

It is important to correctly determine employment status to avoid unexpected liability for the minimum wage, holiday pay, income tax and employer national insurance contributions.

It is important also to bear in mind that from 6 April 2021, there will be a duty on employers to categorise the employment status of persons they engage under the IR35 rules.  From this date, the hirer/employer must decide whether that person is truly a self-employed consultant responsible for their own tax affairs, or whether the person is in fact and employee or worker, for whom PAYE and Employers National Insurance should be paid.   The new rules will affect medium and large organisations (turnover in excess of £10.2 million) in all sectors of the economy.

We are often asked by clients to review working arrangements and advise on employment status so if you are in any doubt about whether or not someone you engage can truly be said to be self-employed, please contact us.