1. It relates directly to tens of thousands of individuals, both directly (who are drivers for Uber) and for hundreds of thousands of others, who are involved within the ‘gig-economy’.
2. It provides confirmation that within employment law, the written contract is not sacrosanct, and that the reality of the relationship can override the written word. Uber has now resulted in any written document in employment status cases to be relegated to a factor which is merely taken into account as part of the overall picture, rather than the key document which is front and centre of the argument as it was previously.
3. No amount of jargon or clever legal drafting in a document will circumvent statutory protection to workers in employment law.
Employment Rights & Background to the Case
Mr Aslam, and others, brought claims against Uber for the National Minimum Wage, holiday pay, and other rights associated with being workers. Uber contested the claims, stating that the Claimants were not ‘workers’, but self-employed contractors. It submitted that Uber was nothing more than an App which facilitated individuals (customers) finding self-employed drivers, for the purposes of providing them transportation to a destination.
In the employment tribunal hearing in 2016, the tribunal found that the drivers were ‘workers’ of Uber, and not self-employed contractors all operating individually. The Tribunal found that they were entitled to all the statutory protections provided to workers.
Uber appealed to the Employment Appeal Tribunal. In 2017 the EAT affirmed the decision of the employment tribunal and concluded once more that the drivers were workers. Uber appealed the decision, and in 2018 the Court of Appeal dismissed Uber’s appeal and once more found in favour of the drivers.
Uber appealed for the final time, and the case was heard in the Supreme Court in July 2020. On 19th February 2021 the Supreme Court handed down its judgment, and concluded, with finality on the argument, that Uber drivers were workers, and entitled to the rights afforded to having worker status.
In short, the Supreme Court have concluded that;
- 1. Uber drivers are workers as defined by Employment Rights Act 1996 and entitled to the relevant rights, and able to sue on those rights.
- 2. Uber is not an intermediary, or an agent.
- 3. Uber drivers are entitled to be paid NMW from the moment they log on to the App, until the point they log off.
- 4. Any clauses which directly or indirectly deter an individual from bringing a claim is a void term.
Employment Rights & The Law
In employment law there are three types of individual, those who are;
a.) Truly self-employed contractors (who have no real ‘employment law’ rights).
b.) Workers (who have many employment rights such as NMW, holiday pay, Whistleblowing, Equality Act protection, but not unfair dismissal).
c.) Employees (who have full employment rights under legislation).
The battleground in this case lay in the question of whether the drivers were truly self-employed contractors, all individually providing a service, or were they workers, in which case where they had to personally provide the work, but there was less obligation to provide and complete the work.
The facts in the relationship between Uber and drivers is where the argument was won and lost in this case. Unlike in other gig economy cases where there was some right of substitution, in the Uber situation personal service was conceded, due to the fact of the licensing arrangements with councils for taxi drivers. The right of substitution is still an important factor, but not a defining factor. Uber does not appear to override Pimlico Plumbers which also decided that those plumbers working for the firm were not truly self employed, but were entitled to ‘worker status’ even though they did not have to personally provide the services. It can be read alongside it, and goes further and advances the arguments in Plimlico Plumbers.
The rationale behind the decision is based on examining the reality of the particular situation including the following points;
- 1. Uber operated a ‘driver offence process’ which could lead to warnings and deactivation on the App.
- 2. Drivers were unable to contract out their work.
- 3. Uber controlled the fare price.
- 4. Uber often controlled the route to take.
- 5. Uber handled any complaints.
- 6. When logged on, drivers had to accept work or face repercussions.
- 7. Uber controlled the type / colour of the vehicle used.
The purpose of NMW legislation, whistleblowing, discrimination etc. is there to protect the vulnerable and the Supreme Court decided to take a purposeful approach to considering whether someone is a worker, and therefore entitled to this protection.
The starting point in making decisions of status is now no longer the written contract, but the factual reality of the situation between the parties. Not what they hoped it to be, or planned for, but the actual day to day reality of the situation.
By considering the real relationship between the parties, the court decided drivers were subordinate to and dependent on Uber. Uber controlled so much in the relationship that it was therefore inconsistent with being truly self employed and the drivers were deemed to be ‘workers’ and entitled to the accompanying employment rights. The correct legal argument was deemed to be not a contractual argument (or rather, what the terms of the contract said and how the wording is interpreted) but a statutory argument (do the facts demonstrate subordination and control). It is this change which means that it will have an impact far beyond merely ‘gig-economy’ cases. In short, forget the cleverly worded documents by a lawyer, concentrate on giving effect to the purpose of employment legislation and what really went on in any particular case.
The Supreme Court wholly rejected the idea that Uber was a provider of technology services and payment collector and a booking agent only or the idea that the contractual paperwork prepared by Uber made clear the true arrangement between the parties. Instead, it followed the modern approach to considering any contractual relationship by looking beyond the paperwork, and at the actual reality of the situation.
Impact on Uber
Statements from Uber initially tried to limit the decision to just the drivers involved in the litigation. Later, Uber have now confirmed that they will be paying holiday pay, National Minimum Wage and pension contributions to their drivers. What they notably stated, however, is that the period by which they will calculate the NMW is for the of time from accepting a trip, and taking into account expenses. What they appear not be doing, and appearing to fail to comply with the Supreme Court’s judgment, is calculating NMW based on the time from when they switch on the App, and when they close it at the end of the ‘shift’.
This will no doubt be subject of future litigation, especially if drivers are logged into several different Apps at the same time. The calculations of these sums will no doubt, unfortunately, keep the courts busy for several years to come. It is unlikely that there will be any seismic change imminently. Whilst in theory the monies due to HMRC and 40,000+ drivers are monumental, any change is clearly gradual rather than revolutionary.
Due to the Supreme Court finding, it would appear that Uber have been providing a service, which accrues VAT in the UK. HMRC may well now investigate significant sums of VAT which appear to be owed to them, and holiday pay and NMW owed to the drivers. Pension contributions could also be owed to many drivers. All eyes are now on HMRC to see whether a formal investigation into Uber begins.
There is a nuance which on face value appears strange. In Uber, the predominantly male drivers will have ‘waiting time ‘ or ‘logged on time’ used in the calculations for the NMW. In the Mencap Supreme Court judgment only a couple of weeks later relating to ‘sleep ins’ in care homes (and predominantly female workers) the rest time was not to be taken into consideration when calculating the NMW. Whilst the law is different in these areas, this is an uncomfortable discrepancy.
The Supreme Court also confirmed that for the period of the driver being logged on to the App, until they logged off, it was deemed to be working time and therefore entitled to the NMW for that whole period, and not for the time when specifically dealing with a fare. The drivers were entitled to the NMW for ‘waiting time’ as they were, in essence, on call and ready to work.
Impact on Employment Law
In employment law there had been an argument over whether any contract was sacrosanct, or, because of the imbalance in the relationship, the contract should not be taken as gospel. In Autoclenz, the Supreme Court stated that where there was inconsistency between the contract and the reality of the situation, then the Tribunal were able to consider the reality of the situation and it could take precedence. In Uber, the Supreme Court has gone further, and stated that the Tribunal should take a purposeful approach to the law, and review the facts and reality of a situation, and apply them to the law, rather than reviewing a document between the parties and reaching a conclusion based on the contract. The contract is now no longer the primary source for reaching a decision, or even a significant factor, and has been downgraded to perhaps being simply wholly ignored.
Lawyers have often been asked to draft contracts or documents designed to establish an individual is ‘self employed’ no matter the reality of a situation. In essence, this practice has been wholly undermined by this judgment, in that the tribunal will give greater importance and precedence on the factual relationship above any written document. In short, companies will need to consider whether they wish for the contractor to be subordinate and dependent on them, and for them to have control over them, in which case they will be a worker, or they don’t, in which case, the individual could be, perhaps, truly self employed.
No amount of ‘clever wording’, or clauses deterring the individual from bringing a claim, will be considered by the tribunal as a relevant factor. The contract, in this regard, is irrelevant if it fails to mirror the reality of the situation for the purposes of the question of ‘status’.
A company now has a binary decision to make when considering individuals with whom they work. Do they want the individual to be a subordinate and dependent on them, and have control over that individual, on issues such as on pricing, uniform, how the task is completed, standards of work and a disciplinary process etc, or, is the company happy for the individual to control pricing, timing, process, etc. If the company want to have any control over an individual, then costs such as NMW, holiday pay etc will be due to the individual.
Employment Rights & Lessons for Employers
Employers cannot simply rely on the wording of a contract. The Tribunals and courts will look beyond what is written down, and will examine the reality of the working relationship. It means that companies will now find it harder to ‘dress up’ one type of relationship as something else on paper. Simply put, they will not be able to rely on a signed document being treated sacrosanct when determining employment status.
It means that companies cannot use simple ‘off the peg’ contracts for individuals, but will need to spend time creating bespoke documents which mirror the reality of the situation.
If you are a Wirehouse clients and require advice on your contracts, or would like them to be reviewed in light of this judgment, please do contact Wirehouse HR Advice Line. If you are not a Wirehouse client and need advice and support surrounding employment rights and your existing contracts, get in touch with our HR and Employment Law team.