On January the 19th, in what is being called a landmark labor law case, the UK Supreme Court ruled that Uber drivers are to be treated as workers rather than self-employed. This means that thousands of Uber drivers will be entitled to minimum wage and holiday pay.
This case will set a precedent and has wider implications for the gig economy.
What happened before the Supreme Court judgment?
The ruling came after several lost appeals made by Uber BV.
In 2016, two former Uber drivers, James Farrah and Yaseen Aslam took Uber to an employment tribunal in which it was ruled that Uber drivers will be entitled to holiday pay, paid rest breaks, and the national minimum wage.
Then, in November 2017, the tech giant appealed the decision, but the Employment Tribunal Appeal upheld the ruling.
In December 2018, Uber took the case to the Court of Appeal who also upheld the decision by the employment tribunal.
Finally, in February 2021, the UK Supreme Court, the UK’s highest court, unanimously
dismissed Uber’s appeal, meaning that the decision in 2016 was upheld and Uber could not make any further appeals.
What happened and why did the Supreme Court dismiss the appeal?
Relying on its standard written contracts between Uber BV and drivers and between the Uber companies and passengers, Uber argued that Uber drivers act as independent contractors who work under contracts made with customers and do not work for Uber. In summary, it argued that it is a “booking agent” which hires self-employed contractors that provide transport.
Taking a multifactorial approach, the UK Supreme Court dismissed the appeal on several grounds and emphasized the findings made by the employment tribunal in 2016. The employment tribunal found that “the terms on which Uber relies do not correspond with the reality of the relationship between the organization and the drivers.”
The UK Supreme Court also examined factors such as Uber setting the fare which decides how much drivers could earn an Uber setting the contract terms which the drivers have no control over.
The court also considered the star rating. They suggested that as a system it exists only for the internal use by Uber company since “passengers are not offered a choice of a driver with, for example, a higher price charged for the services of a driver who is more highly rated.” Uber uses the ratings to manage performance and can terminate the relationship in the case of unsatisfactory passenger feedback.
Under the ruling, drivers will also be considered to be working not just when driving a passenger but also whenever they are logged into the app.
The decision rested on the degree of control that the company has over its drivers and the court ultimately ruled that “drivers are in a position of subordination and dependency concerning Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill.”
What does this mean for Uber?
The short-term impact is that an employment tribunal will decide how much compensation will be awarded to the 25 drivers involved in the case, and the floodgates have been opened for around 1,000 similar claims against Uber meaning that the company could be met with hefty compensation fees.
The long-term impact is a little more complicated.
One option for the company is to loosen the restrictions and the degree of control that it enjoys over its drivers which would allow them to be legitimately self-employed in the eyes of the law. In doing this, there may a pathway for revisiting the judgment. However, it is unlikely that Uber will be able to retain its uniform service if it takes this approach.
The alternative is to raise prices for passengers to cover additional expenses, such as holiday pay, to ensure that Uber is operating within its newly imposed legal parameters.
In a statement following the judgment, the company has pledged to “launch a nationwide consultation to seek the views of all active drivers who use our app in the UK”. They will share the outcome and their next steps over the coming weeks.
What implications does this ruling have?
The UK Supreme Court ruling will have implications for the gig economy. The gig economy, i.e., an economy that survives on short-term contracts and freelance work, is now being called into question. This is hardly surprising since the validity of workers’ rights under the gig economy has been scrutinized in the past. This case is likely to bring forward a string of analogous claims which have previously been unsuccessful such as Deliveroo’s 2017 victory in classing their riders as self-employed.
The gig economy, praised for its flexibility, is one of the fastest-growing sectors of the economy in recent years, but it provides little in terms of financial security for workers. If this ruling does indeed change what is, in essence, an employment policy issue, it is perhaps not the place of the courts to change the law and this is a question for Parliament to address. The future of the gig economy remains uncertain, but it is evident that the law requires updating, clarity, and greater protection for its workers.
Donate & Support