UK Supreme Court confirms Uber drivers' 'worker' status

The decision by the UK's highest court, in a 'test case' brought by Yaseen Aslam and James Farrar, means that the drivers are entitled to certain rights based on their status, including to paid annual leave and the UK minimum wage. 'Worker' status is also a minimum condition of an individual being a 'jobholder' under pensions auto-enrolment legislation, alongside income and age thresholds.

The case will now return to the employment tribunal, which will determine the extent of the drivers' entitlements.

The Supreme Court based its decision on the degree of 'control' exercised by Uber over the service provided by the drivers to their passengers. It also found that the drivers were working whenever they were connected to the Uber app and available for work in the area in which they were licensed to operate, and not only when transporting passengers.

Employment law expert Anne Sammon of Pinsent Masons, the law firm behind Out-Law, said that the decision was a significant one, but did not mean the end of the 'gig economy' model of service provision.

"Whilst the decision suggests that organisations trying to resist claims of worker status will face some challenges in doing so, it does not signal the end of the gig economy," she said. "Those organisations that, for example, genuinely act as technology platforms connecting service providers and customers, and do not exercise the degree of control that the Supreme Court noted that Uber does over its drivers, may well still be able to show that the service providers are not workers."

"Attempts to ensure that standardised service levels are provided and fees charged, though, are likely to be more problematic, given the control required to do so, which, following this decision, may result in a finding that such service providers are workers," she said.

The drivers were required to agree to terms with Uber as part of the company's 'onboarding' process stating that they, not Uber, were solely responsible for providing transportation services to passengers, and entered into "a legal and direct business relationship" with each passenger to which Uber was not a party. However, in October 2016, an employment tribunal found that these terms "did not correspond with the reality" of the relationship between each driver and Uber. Rather, the drivers were 'workers' who, although not employed under contracts of employment, worked for Uber under 'workers' contracts' as defined by the 1996 Employment Rights Act (ERA).

The tribunal's decision was later upheld by the Employment Appeal Tribunal (EAT) and a majority of judges in the Court of Appeal, who ruled that the employment tribunal was "not only entitled, but correct" to come to the conclusions that it did.

The Supreme Court, in its judgment, said that determining the correct legal status of the drivers required "applying the words of the statute to the facts of the individual case". Lord Leggatt, giving the unanimous judgment of the court, said that, in doing so, it "is necessary both to view the facts realistically and to keep in mind the purpose of the legislation" – that is, to protect "vulnerable workers".

"[A] touchstone of such subordination and dependence is (as has long been recognised in employment law) the degree of control exercised by the putative employer over the work or services performed by the individual concerned," Lord Leggatt said. "The greater the extent of such control, the stronger the case for classifying the individual as a 'worker' who is employed under a 'worker's contract'."

Although the drivers were free to choose when, how much and where to work, the judge said that the employment tribunal's findings justified its conclusion that the drivers were 'workers' at times when they were working. Lord Leggatt said that five of the tribunal's findings were particularly relevant: the drivers' remuneration is fixed by Uber; drivers are required to accept terms "dictated by" Uber; a driver's choice about which requests for rides to accept is constrained by Uber; Uber has a significant degreed of control over the way in which drivers deliver their services; and drivers are prevented by Uber from "establishing any relationship with a passenger capable of extending beyond an individual ride".

"Taking these factors together, it can be seen that the transportation service performed by drivers and offered to passengers through the Uber app is very tightly defined and controlled by Uber," the judge said. "Furthermore, it is designed and organised in such a way as to provide a standardised service to passengers in which drivers are perceived as substantially interchangeable and from which Uber, rather than individual drivers, obtains the benefit of customer loyalty and goodwill."

"From the drivers' point of view, the same factors … mean that they have little or no ability to improve their economic position through professional or entrepreneurial skill. In practice the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber's measures of performance," he said.

While logged into the Uber app, drivers were "required to be generally willing and available to take trips", with repeated failures to accept trip requests treated as a breach of that requirement, with consequences up to and including termination of the Uber-driver relationship. While there was nothing preventing drivers from working via other app-based transportation services at the same time, a lack of competitors meant that "as a matter of practical reality" they were unable to do so at the relevant time. Time spent logged into the app and available for work was therefore 'working time' for the purposes of the 1998 Working Time Regulations, according to the Supreme Court.

Employment law expert Stuart Neilson of Pinsent Masons said that the "purposive" approach taken by the judges to the relevant employment legislation may have wider ramifications for the future direction of UK employment law.

"By this, the court meant that in the employment law field, it is appropriate to look at the purpose the legislation is trying to achieve and then to interpret the legislation in a manner that accords with that purpose," he said.

"According to the Supreme Court the purpose behind the Working Time Regulations, the National Minimum Wage Regulations and the protections afforded to whistle-blowers is to protect vulnerable workers. That purpose can best be achieved by applying the law in a way that is likely to maximise the protection of vulnerable workers. The broader impact of this purposive approach is likely to be less reliance upon what a contract states and a greater focus on what actually happens in practice," he said.

"Adopting a purposive approach to the interpretation of employment law has always been an accepted part of how UK tribunals and courts should interpret EU-derived legal rights. The decision in Uber arguably extends that further so that it applies to all UK employment law. The irony is that, just as the UK has left the EU, we are adopting an approach to the interpretation of employment rights in the UK very much in keeping with that adopted in the EU," he said.