19 Feb 2021
Uber has been ordered to classify drivers as workers, rather than contractors, in what is a landmark ruling for the so-called "gig economy".
The decision means tens of thousands of Uber drivers are set to be entitled to minimum wage and holiday pay.
The ruling could leave Uber facing a hefty compensation bill, and have wider consequences for the gig economy.
In a long-running legal battle, Uber had appealed to the Supreme Court after losing three earlier rounds.
Delivering his judgement, Lord Leggatt said that the Supreme Court unanimously dismissed Uber's appeal that it was an intermediary party and stated that drivers should be considered to be working not only when driving a passenger, but whenever logged in to the app.
It is estimated that drivers could now by due as much as £12,000 each in backdated pay.
Nicola Gray, an employment law partner with Aberdein Considine, said the decision now provides "the final word on the worker status of these Uber drivers" and brings a serious warning to those operating in the gig economy.
"Tribunals are now obliged to adopt a purposive approach when interpreting the legislation governing worker protection in the UK," she said.
"This is achieved by looking at the practical arrangements between the parties rather than the contract as a starting point to determine the status of such individuals. In this case, the Supreme Court emphasised five findings of the Court of Appeal to justify the determination of “worker status” including the degree of control retained by Uber and the imbalance of power in “agreeing” the driver’s contract with Uber."
She added: "Moreover, the decision brings some serious consequences in respect of working time and national minimum wage calculations as the Supreme Court ruled that the Uber drivers were 'working' from the point they logged on to the app to the point they logged off and not, as Uber claimed, only when they were carrying passengers, thus enabling the workers to claim national minimum wage for their entire working day and not only when carrying passengers.
"The application of worker status to these individuals provides additional protections including the right to rest breaks, paid annual leave, written statements of particulars, payslips, pension provision where eligible and whistleblowing protection."
Looking at five key factors, the court determined that drivers were in a position of subordination to Uber where the only way they could increase their earnings would be to work longer hours.
First, where a ride is booked through the Uber app, it is Uber that sets the fare and drivers are not permitted to charge more than the fare calculated by the Uber app. It is therefore Uber which dictates how much drivers are paid for the work they do.
Second, the contract terms on which drivers perform their services are imposed by Uber and drivers have no say in them.
Third, once a driver has logged onto the Uber app, the driver’s choice about whether to accept requests for rides is constrained by Uber. One way in which this is done is by monitoring the driver’s rate of acceptance (and cancellation) of trip requests and imposing what amounts to a penalty if too many trip requests are declined or cancelled by automatically logging the driver off the Uber app for ten minutes, thereby preventing the driver from working until allowed to log back on.
Fourth, Uber also exercises significant control over the way in which drivers deliver their services. One of several methods mentioned in the judgment is the use of a ratings system whereby passengers are asked to rate the driver on a scale of 1 to 5 after each trip. Any driver who fails to maintain a required average rating will receive a series of warnings and, if their average rating does not improve, eventually have their relationship with Uber terminated.
A fifth significant factor is that Uber restricts communications between passenger and driver to the minimum necessary to perform the particular trip and takes active steps to prevent drivers from establishing any relationship with a passenger capable of extending beyond an individual ride.
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