Uber: what does it mean for the rest of us?

In February, the Supreme Court handed down judgment in Uber BV v Aslam [2021] UKSC 5, a ruling heralded as a landmark for the gig economy. The key questions were:

(a) Did Uber drivers come within the statutory definition of “worker”; and

(b) If they were workers, were they working as soon as they logged into the Uber app or only when driving passengers?

The court decided the answer to both questions was 'yes'. Uber drivers (and likely other workers who work in a similar way) were entitled to 'worker rights', such as paid holiday and national minimum wage.

So, how significant is this decision and what are the wider implications for employers?

The background

In the UK, individuals may be hired in three main ways: as employees, non-employed workers (generally referred to as 'workers') and independent contractors. The distinctions are important as each category has a different level of legal protection. 

Only employees have the right not to be unfairly dismissed. They also have all the rights workers have, including, for example, national minimum wage, statutory holiday pay and protection for whistleblowing.

In contrast, as independent contractors are in business on their own account, working for their own customers and clients, they do not enjoy any of these rights.   

Categorising staff as workers or employees also impacts tax and national insurance status. It can also lead to vicarious liability for their acts or omissions. 

What is a worker?

In summary, workers provide personal services to a party that isn’t a client or customer of the business.   

Recent cases such as Pimlico Plumbers [2018] UKSC 29 and Dewhurst v Citysprint UK Ltd ET/220512/2016 (05 January 2017) tackled who is and is not a worker in specific circumstances. They made it clear this is fact-sensitive and dependant on various factors.

Relevant factors include the extent to which the individual is integrated into a business and whether they have an unfettered right to send a substitute to work in their place, take on financial risk, provide their own equipment or work for others.

A key factor in whether a worker is providing their personal service to another party, is the extent to which they are 'controlled' by them and are their 'subordinate' – are free to accept or decline work and to decide how they carry it out?

Ordinary rules don’t apply

Uber relied on the contract terms in place between the Uber entities and drivers and between Uber and its end user customers. These terms stated the drivers were providing the transport services themselves and Uber was only responsible for fare collection, the app and acting as booking agent.

However, following Autoclenz Limited v Belcher [2009] EWCA Civ 1046, the court reiterated that when determining whether a person is entitled to statutory employment rights, the court should look beyond the contract terms and look at all the circumstances.

Relevance of the contract 

The court held contract terms should not be the starting point. In Uber, this was largely because there were no contractual terms between the drivers and the entity holding the taxi licence.

The court justified this approach by saying if the starting point for interpreting employment status was the contract, this might allow employers to contract out of and undermine protections afforded by employment legislation.   

In reaching this view, the power imbalance between employees and employers was considered, including the fact employers typically decide the terms of the employment contract.

The court also highlighted specific provisions in employment legislation which restrict parties contracting out of their protection and made clear that provisions seeking to restrict or exclude such claims are void and should be treated as such.  

This means the wording in the employment contract should not be the starting point in determining such employment rights and is just one part of the factual matrix to be taken into account.

Control

In considering whether the Uber drivers were workers, the court found the determining factor was the amount of control Uber held over how the drivers worked.

It found Uber had tight control over this. Notably, though, this was based on Uber’s practices in 2016, when the original tribunal case was heard. It held, based on the 2016 facts:

·       The remuneration and contractual terms were fixed by Uber.

·       Although the drivers could choose when they worked, once logged into the app, Uber controlled their ability to accept requests for rides and there was a penalty for low acceptance rates (they would be locked out of the app for 10 minutes).

·       Uber controlled how the services were provided. For example, the type of car, the technology used and the way the ratings system was used (as a disciplinary system).

·       Uber restricted communication between the passenger and driver to the minimum necessary.

Working time

After determining that the drivers were workers, the court considered how much of their time was working time for which they should be paid national minimum wage.

Uber contended only time when the drivers were actually driving was working time. However, the court held drivers were effectively “on call” and working from the time they logged on to the app, irrespective of whether they were driving customers. This raises practical and legal issues.

Broadly, the National Minimum Wage Act defines 'working time' as any time the worker is working and at the employer’s disposal, carrying out their activity or duties.

However, a worker engaged via an app may log on to more than one app at once (known as multi-apping) to increase their potential supply of work and earning power.

If the judgment is taken at face value, those workers could claim national minimum wage and holiday pay from both. From a legal perspective, it is hard to see how, if a worker is multi-apping, they could be at both businesses’ disposal at the same time.

Unfortunately, this is unresolved as the original tribunal had not heard evidence on multi-apping (since the evidence was based on the 2016 market), but it did indicate multi-apping using a competitor app is likely to preclude relevant workers claiming this is as working time.

The decision to count all logged-in time would also create problems when coupled with the driver’s ability to refuse trips, since presumably a driver could log in and repeatedly refuse jobs, while earning a minimum wage. This did not form part of the court’s analysis.

Practical steps

The judgment has a clear and direct impact on Uber and similar businesses, but there is a broader relevance. It is a clear reminder businesses should continue to approach worker status issues with caution.

Businesses should consider the following:

·       Keep under review how atypical staff (non-employees) are engaged. This includes not just their contract terms, since this is just one of the factors a court would take into account. Crucially, contractual terms must match how staff are engaged in practice.

·       Certain businesses will recently have carried out an audit in view of the extension of the IR35 rules, which may be useful. This should be extended to those not caught by the IR35 rules, such as directly engaged contractors.

·       Each worker status case is fact-specific, so consider whether working practices can be changed to reduce the risk staff are likely to be workers. Could you minimise the control you have, an important factor in the Uber case? Of course, these must be genuine and workable changes and not a sham to avoid worker status.

Employers and lawyers should watch for further developments, such as in relation to multi-apping. Despite the court making clear it will take a purposive approach to protect employees, the recent case of Royal Mencap Society v Tomlinson-Blake [2021] UKSC 8, in which workers on sleep-in shifts were only entitled to the national minimum wage for the hours they were required to be awake, suggests this may not be entirely one-sided in the future. 

Natasha Adom is senior counsel and Raoul Parekh is a partner at specialist employment firm, GQ|Littler.

Uber is a client of GQ|Littler, but GQ|Littler did not act for Uber in the litigation referred to above