Backhouse Jones Watermark

Uber drivers are workers not self-employed, Supreme Court rules

19 February

On the 19 February 2021, the Supreme Court has handed down its decision in the Aslam v Uber case, which will set the approach for Employment Tribunals in the determination of ‘worker’ status for the next decade. 

The Supreme Court has reached broadly the same conclusion as earlier Courts that Uber drivers are workers and not independent self-employed drivers. This did not perhaps surprise many lawyers.  

This ruling means that that some Uber drivers are entitled to claim the minimum wage including backpay. Additionally, these drivers are entitled to be paid for their entire working day and not just when they had a rider in the cab.  

These drivers can also claim 5.6 weeks paid annual leave each year and will have access to other rights including whistleblowing and the right to union representation.  

Uber drivers may well, as a result, claim substantial backpay, through the Employment Tribunal or the County Court. 

This judgment does not however, afford workers the rights reserved for employees, such as the right to a redundancy payment or to claim unfair dismissal. 

The Judgment confirmed the established principle that when an Employment Tribunal is deciding the employment status of an individual, the Tribunal should examine the reality of the relationship between the parties, and not be bound by what the documentation states. Also, it confirmed in the circumstances of this case that Uber drivers are workers from the moment they switch on their apps and are available for work in their area, up until the time when they switch their apps off at the end of the day. It can be seen that this will have a significant impact on for example the minimum wage and working time calculations! 

Uber had argued that the Courts had previously been mistaken in law by disregarding the characterisation of the relationship in the written contract between Uber and the drivers, and between the Uber company and the passengers. It was highlighted that written agreements entered into had stated that the role of Uber is to provide technology services and act as a payment collection agent for the driver. The agreement further stated that the role of Uber (London) was to act as booking agent for the drivers. 

In dismissing the appeal, the Supreme Court unanimously held that the way in which a relationship is characterised in a written agreement is not the appropriate starting point in applying the statutory definition of a “worker” and should never be treated as conclusive, even if the facts of the case are consistent with more than one possible legal classification. The Court observed that the working of employment protection legislation would be seriously undermined if potential employers were given the power to determine for themselves whether legislation designed to protect workers should apply to those who provide services for them. 

The Court noted that the vulnerabilities of workers which create the need for statutory protection are subordination to and dependence on another person and the degree of control exercised by that person. 

Although Uber drivers could decide when and where they worked, the Tribunal had been entitled to find that during the periods when they were performing driving services, the drivers were working for and under contracts with Uber. 

The facts demonstrated that the transportation service provided by drivers and offered to passengers through the Uber app was very tightly defined and controlled by Uber and that the drivers had little or no ability to improve their individual economic position through professional or entrepreneurial skill. 

The case had been closely watched because of its ramifications for the ‘gig economy’, in which companies like Uber rely on a sprawling labour force of independent contractors to provide car rides, deliver food and even clean homes. 

Overall, this landmark case means that Uber drivers are entitled to minimum wage, paid holidays and union representation.  

Wider implications 

Supreme Court judgment on an issue as widespread as worker/business relations is almost inevitably going to have significant implications beyond the specific parties to the appeal. 

From a goods and passenger operator point of view, using drivers on a “self-employed” basis has already come under very close scrutiny by the regulator and the Upper Tribunal. This case increases the need for businesses that use such relationships to look closely at these and also note the potential for claims now and covering historic periods of time. Concerned operators may want to consider this ruling and seek legal advice. 

Other legal trends affecting status 

Furthermore ‘self-employed drivers are a major focus for both HMRC and the Office of the Traffic Commissioner. In the case of Bridgestep Limited, it was decided by the Upper Tribunal in line with the Traffic Commissioner’s decision in that case, that unless the individual is an owner-driver, it is very rare for a lorry driver to be legally considered self-employed. In this case, the Traffic Commissioner revoked the operator’s licence, and the Transport Manager lost his repute, which was later upheld by the Upper Tribunal. There were other compliance issues in the case, but this Tribunal decision highlights the Traffic Commissioner’s stance, and this decision is reinforced by the Senior Traffic Commissioner’s statutory guidance which highlights this as a potential issue of fair competition. It also confirms there can be serious consequences for any operators and their operator’s licences. 

It does have to be noted that Bridgestep was not a case looking at the detail of ‘worker’ or ‘employee’ status it was looking at the question of genuinely self-employed status. This Uber Judgment may facilitate a better understanding for all parties of the three states of relationship between a driver and an operator (self-employed contractor, worker, employee). As the Supreme Court said the outcome is not simply one based on the documents but is to be decided based on the actual facts and nature of the real working relationship.  

In addition, the operator/driver point of view appears to be echoed in the tax jurisdiction, in that drivers cannot be selfemployed unless they hold their own licence and operate their own vehicle. There could therefore be possible HMRC investigations resulting in tax implications and potential penalties where operators get this issue wrongThe Uber ruling coincidentally coincides with the impending IR35 legislation changes. You can access our previous articles covering topics such as IR35 in greater detail on our website. 

Subcontractor or Worker 

In the Uber case the drivers did hold their own Private Hire licence and own/supply their own licensed vehicle.  Uber drivers were not employeestherefore, they were found to be ‘workers’ but as seen above this has very significant historic and ongoing economic repercussions for Uber.  

This is important because in some transport operations, sub-contracting relationships where drivers own and operate their own vehicles (sometimes supplied through the main contractor) in fact operate exclusively for that main contractor in liveried vehicles and operate to very strict contractual controls.  

It is very important that those relationships are urgently reviewed in light of the detail of the Uber judgment here from all parties’ points of view. Legal advice is of course available.  

If you need any advice on the above, please contact a member of our Employment team at employment@backhouses.co.uk and 01254 828 300. 

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