Uber Bv & Others (Appellants) V Aslam & Others (Respondents) [2021] Uksc 5

Upshot

This is a case that was rendered by the UK Supreme Court which held that Uber drivers are “workers” for Uber from the time they log on to the app until the time that they log off.

Background to the Appeal

The appeal concerned the employment status of private hire vehicle drivers who provide their services through the Uber smartphone application (the “Uber app”). The main question for determination was whether an Uber driver is a worker for the purposes of UK employment legislation which gives “workers” rights to be paid at least the national minimum wage, to receive annual paid leave and to benefit from certain other protections. The Supreme Court also considered the related question of what time counts, if drivers are “workers”, as working time for the purpose of the relevant rights.

Uber BV is a Dutch company which owns the technology behind the Uber app whereas Uber London Ltd is a UK subsidiary licensed to operate private hire vehicles in London. The claimants in the suit, Mr Aslam and Mr Farrar, at the relevant times were licensed to drive private hire vehicles in London and did so using the Uber app.

Uber’s Arguments in the case

Uber argued that Uber BV acted solely as a technology provider with its subsidiary, Uber London, acting as a booking agent for drivers who are approved by Uber London to use the Uber app. Uber further argued that, when a ride is booked through the Uber app, a contract is thereby made directly between the driver and the passenger whereby the driver agrees to provide transportation services to the passenger. The fare is calculated by the Uber app and paid by the passenger to Uber BV, which deducts part (20% in this instance) i.e., what Uber called “service charge” and pays the balance to the driver.

Uber also argued that drivers are free to work when they want and as much or as little as they want and therefore were independent contractors who work under contracts made with customers and therefore do not work for Uber.

Determination

The Supreme Court unanimously dismissed Uber’s appeal finding that the claimants fell within the definition of a “worker” in section 230(3) of the Employment Rights Act 1996. Further, The Court disagreed with Uber stating that as on the facts, there was no written contract between the drivers and Uber London, the nature of their legal relationship had to be inferred from the parties’ conduct and there was no factual basis for asserting that Uber London acted as an agent for drivers. In the Court’s view, the correct inference was that Uber London contracts with passengers and engages drivers to carry out bookings for it.

Further, the Court found that it is wrong, in principle, to treat the written agreements as a starting point in deciding whether an individual is a “worker”. The correct starting point is to consider the purpose of the relevant employment legislation, which in this case, was to give protection to vulnerable individuals who have little or no say over their pay and working conditions because they are in a subordinate and dependent position in relation to a person or organisation which exercises control over their work.

Control of uber drivers by Uber was evidenced by the below facts;

1. 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.
2. The contract terms on which drivers perform their services are imposed by Uber and drivers have no say in them.
3. 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/or 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.
4. Uber exercises significant control over the way in which drivers deliver their services such as 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.
5. Finally, 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.

Taking these factors together, the transportation service performed by drivers and offered to passengers through the Uber app is very tightly defined and controlled by Uber. Drivers are in a position of subordination and dependency in relation to Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill. In practice the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance.

The Supreme Court also held that time spent by the claimants working for Uber was not limited (as Uber argued) to periods when they were actually driving passengers to their destinations, but included any period when the driver was logged into the Uber app within the territory in which the driver was licensed to operate and was ready and willing to accept trips.

Conclusion

Even though each case turns on its own facts, this judgement changes the general landscape for businesses operating in the gig economy such as Airbnb, Amazon Flex, Glovo, Sendy etc. They generally have two options. They can either accept the burden of the extra costs associated with engaging workers (they could opt to transfer the incurred costs to consumers), or they can restructure their business model.

Accepting the burden of the extra costs associated with engaging workers means that companies such as Uber will now have to provide their workers with all the statutory benefits to which workers are entitled. Labour and tax related costs will shoot up tremendously and therefore affect profitability. Other risks that Uber and other similar companies are likely to be exposed to are acts of their workers such as in road accidents caused by negligent drivers. Worse, (potential) investors in such companies may panic and affect their share prices.

Restructuring their business model may mean job losses for many drivers as the company is likely to pull out of markets which follow/adopt the judgement. Uber and similar companies may decide not to pull out but instead leverage on technology such as the self-drive cars program by Uber. Drivers may gain on hand but lose on the other.

Policy makers may take the cue and come up with legislation around the gig economy affecting everyone within this eco-system. Tax net for governments will certainly widen. For instance, Income tax for drivers will now be on the menu.

NOTE

The full judgment of the Court is available at: http://supremecourt.uk/decided-cases/index.html