Uber Case: Workers or Self Employed Contractors?

06/12/2023Zara James

Uber BV and others (Appellants) v Aslam and others (Respondents)

 

In February 2021, the Supreme Court ruled in a landmark judgement that Uber drivers were workers and not self-employed contractors. This decision changed the way Uber engages their drivers and has shaped the way future tribunals determine employment status.

 

Case Background

In 2016, Uber drivers Mr Aslam, Mr Farrar and others submitted a claim to the Employment Tribunal questioning their employment status.

Uber believed their drivers to be self-employed independent contractors. However, the Employment Tribunal disagreed. They stated that, according to employment legislation, Uber drivers should be classed as workers.

This decision meant that Uber had to pay drivers at least minimum wage, give paid annual leave and provide other protections that workers benefit from, such as unauthorised deductions from pay or discrimination. 

In 2018, Uber appealed this decision and the Employment Appeal Tribunal confirmed, again, that Uber drivers are workers. 

In 2020, Uber put forward their final appeal. On 19 February 2021, the Supreme Court ruled for the last time that Uber drivers are workers and not self-employed independent contractors.

Supreme Court ruling: worker or self-employed?

There are three employment statuses, determined by the Employments Right Act 1996 and based on legislation and case law. 

  1. Employee: where it can be determined a contract of employment exists. Employees are entitled to all employment rights subject to qualifying periods. 
  2. Worker: where it can be determined that any other contract where the individual performs work or services personally for someone else. Workers are entitled to core day one statutory employment rights. 
  3. Self employed: not defined in the legislation but understood as people who have their own profession or business and enter into contract with clients or customers to provide work or services for them and/or not obliged to do the work they contract personally.  

The Supreme Court made the decision that Uber drivers are workers and not self-employed contractors based on the following key findings:

  • Written Contract

Uber and the drivers had a written contract stating Uber was an ‘independent company’ and drivers were the ‘customer’ of Uber, who received access to the app in return for a service. There was a second contract between the drivers and the passengers. Uber argued this meant drivers independently contracted with their passengers, working for them and not Uber. This would mean drivers were self-employed. 

The Supreme Court did not agree. They stated that, when determining employment status, the focus should not be on the written agreement but should take into consideration the full picture of a working relationship. 

  • Control over Pay

Uber controlled how much drivers were paid and drivers could not charge passengers any more. Uber set the fixed fare for each trip and the service fee that was deducted from the fares. If the passenger complained, Uber controlled whether the fare was fully or partially refunded, not the driver.

  • Control over Contractual Terms

Uber drivers were required to accept and sign a standard written agreement, where contractual terms that control the services of drivers were set out. These terms were imposed and not negotiated, and drivers had no rights to amend the terms. 

  • Control over Work

Once drivers had logged into the app, Uber controlled their choice over whether to accept or decline a passenger journey. The passenger destination wasn’t revealed until a driver accepted the journey, therefore a driver could not decline a request based on destination. Drivers were also penalised if they declined or cancelled too many journey requests, which led to warning messages for drivers to improve their performance. Uber could also log drivers off the app if they deemed driver performance hadn’t improved. 

The court also concluded Uber drivers’ working time was not just limited to when they are driving passengers to destinations. It also includes any time they are logged into the app and waiting to accept journey requests. 

  • Control over Delivery of Service

Uber had a significant amount of control over the way drivers deliver their service. Uber used a customer rating system to monitor driver performance. If a driver’s ratings were low, access to the app could be removed by Uber. Uber also guided the driver to the passenger’s location and set out the route for the journey. If the driver didn’t follow this route, it led to negative customer feedback via the Uber rating system. Regular low ratings eventually lead to termination. 

  • Control over Relationships

Uber limited communication between the driver and the passenger, which ensured no business relationship developed. Uber managed complaints and any further interactions beyond the individual journey.

There are many factors that are considered when testing employment status, but the Uber case clearly demonstrates that high levels of control when engaging individuals means that employment status leans heavily towards worker status.

This decision by the Supreme Court has led to Uber having to change terms for drivers working with them causing significant disruption to their business model.

How to Determine Employment Status?

This Uber case demonstrates how difficult it can be to determine employment status correctly. Failing to recognise the correct employment status can lead to costly court cases and fines. Employment law is enforced by the courts, tribunals and various other bodies, such as trade unions, so should not be ignored.  

Employment status is determined by the nature of the working relationship between an employer or engager, and an individual. Read in more detail about employment status and how employment status is determined on our blog here.

How can Indigo help?

When determining employment status, Indigo shows due diligence and compliance throughout the process. This ensures employment status decisions are correct and alleviates the pressure from making an incorrect decision, and facing costly court cases and fines.

 

Please get in touch for a free Business Compliance Health Check, or to speak to one of our industry experts if you have any queries about employment status.

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