The Supreme Court has held in Uber BV v Aslam and ors that, when trying to decide whether individuals are workers and so entitled to the National Minimum Wage (NMW) and other employment rights, tribunals must first consider whether they fall within the statutory definition rather than how the relationship is characterised in the documentation.
Uber provides a range of passenger transportation options through a smartphone app which customers can download in order to book a private hire vehicle (PHV). It operates through different legal entities such as Uber London Ltd (ULL) and Uber BV, its parent company.
Although the contractual terms between Uber and the drivers are complicated, essentially they provide that the drivers are independent contractors who work under contracts made with customers. According to the company, Uber BV simply provides the technology while ULL acts as the booking agent for drivers approved by it to use the app.
A number of Uber drivers in London brought tribunal claims arguing that they were workers under section 230(3)(b) of the Employment Rights Act. As such, they were entitled to be paid the NMW and to have their working time calculated according to the Working Time Regulations (WTR).
Section 230(3) of the Employment Rights Act 1996 defines a ‘worker’ as an individual who has entered into or works under (or, where the employment has ceased, worked under):
- A contract of employment (known as a limb (a) worker); or
- Any other contract, whether express or implied, and (if express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual (known as a limb (b) worker).
Decisions of lower courts
Finding in favour of the drivers, the tribunal held that they were working under a contract with ULL and that the contractual documentation did not represent the reality of the working relationship. In particular, it found that Uber drivers were required to accept trips, that they had to follow certain conditions and that Uber accepted the risk in relation to refunds or disputes of fares. The tribunal therefore found that Uber drivers were workers from the moment they switched on the Uber app, were within the territory in which they were authorised to work (in this case, London) and were able and willing to accept assignments.
The EAT (weekly LELR 553) rejected Uber’s argument that they acted as an agent which put the drivers in touch with passengers and upheld the tribunals finding that the Uber drivers were workers. By a majority, the Court of Appeal (weekly LELR 608) rejected Uber’s appeal but allowed a further appeal to the Supreme Court.
Decision of Supreme Court
The Supreme Court (weekly LELR 710) rejected Uber’s argument that it acted solely as a booking agent for drivers and that the contract was between the driver and the passenger. It found that the only contractual arrangement compatible with the licensing regime was between ULL, as the licensed operator and the individual driver who agreed to carry out the booking for ULL.
The Supreme Court followed the 2011 judgment in the Thompsons case of Autoclenz Ltd v Belcher (weekly LELR 233) which held that employment tribunals were entitled to look beyond the terms of the written contract to determine who was a worker, but went further holding that the starting point for determining who is a worker is whether they fall within the statutory definition. This was because the rights which the Uber drivers were asserting were statutory and not contractual rights.
In the view of the Supreme Court, to rely solely on the written contract would not only fail to recognise the inequality of bargaining power, but also undermine the very purpose of the legislation, which is to provide statutory protection for vulnerable workers. That includes protection from being paid too little for the work they do, from being required to work excessive hours or other forms of unfair treatment (such as being subject to a detriment for whistleblowing). The National Minimum Wage Act 1998, the Working Time Regulations 1998 and the Employment Rights Act 1996 were enacted to protect those who needed the law, not just those whom the employer deemed eligible.
Significantly, the Supreme Court held that the provisions in the legislation which restrict employers from contracting out of statutory rights apply to any agreement where the intention is to limit or exclude statutory employment rights.
This does not mean that the terms of a written agreement should be ignored, but it does mean that if a signed contract does not represent the true working relationship or they exclude or limit statutory protections by preventing the contract from being interpreted as a contract of employment or other worker’s contract, they must be treated as having no effect and must be disregarded.
Applying this approach to the facts of this case, the court held that the following findings justified its conclusion that the Uber drivers were workers:
- Uber sets the fare and drivers cannot charge more than the fare calculated by the app. As such, Uber dictates how much drivers are paid.
- The contract terms on which drivers perform their services are imposed by Uber and the drivers have no say in them.
- Once a driver has logged onto the app, Uber monitors their rate of acceptance of trip requests and imposes what amounts to a penalty if they decline too many by automatically logging the driver out of the app for ten minutes.
- Uber also has significant control over the way in which drivers deliver the services, including the use of a ratings system which can result in warnings and the relationship being terminated.
- Uber takes active steps to stop drivers from establishing any relationship with a passenger beyond the individual ride.
Taken together, these factors indicated a service that was tightly defined and controlled by Uber, with drivers in a position of subordination. As such, the tribunal was right to find that the drivers were workers.
The Supreme Court also held that, with regard to working time, the tribunal was entitled to find that time spent by the drivers was not limited to periods when they were actually driving passengers to their destinations, but also included any period when the driver was logged into the Uber app within the territory in which they were licensed to operate and were ready and willing to accept trips. Given Uber’s practice of logging off drivers who failed to accept a certain level of trips this had been a reasonable conclusion of the tribunal.
This is a significant judgment and sets the test for all tribunals to follow when determining whether someone is a worker. Importantly it means that tribunals should have at the forefront of any analysis of the worker’s status the purpose of the legislation, namely to protect vulnerable workers who are subordinate to and dependent upon the employer.
The judgment is a warning to employers who think they can contract out of employment rights for groups of workers such as independent contractors particularly where the employer retains a high degree of control over them.