Uber has lost its employment tribunal appeal today (19 February), reaffirming earlier rulings that drivers who brought the case are workers, not independent contractors.
Six justices at the UK supreme court unanimously dismissed Uber’s appeal against a landmark 2016 employment tribunal ruling that Uber’s drivers should be classed as workers with statutory benefits.
The ruling has major ramifications for Uber’s business model, along with the wider gig economy in the UK. European Union lawmakers are also actively pursuing how to improve conditions for gig workers, with today’s ruling only increasing pressure to clarify the law around gig work.
The Uber case is one of a string of cases challenging the self-employed status of gig-economy workers in the UK, including action against the minicab firm Addison Lee and the delivery groups CitySprint, Excel and eCourier.
The Uber case began when two Uber drivers, Farrar and Yaseen Aslam, took Uber to court on behalf of a group of about 20 others who argued they were employed by the San Francisco-based company, rather than working for themselves.
The appeal concerned the employment status of private hire vehicle drivers who provide their services through the Uber smartphone application. The main question raised is whether an Uber driver is a “worker” for the purposes of 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.
At the time of the tribunal hearing in 2016, the number of Uber drivers operating in the UK was estimated to be around 40,000, of whom around 30,000 were operating in the London area. The definition of a “worker” in section 230(3) of the Employment Rights Act 1996 and other relevant legislation includes anyone employed under a contract of employment but also extends to some individuals who are self-employed.
In particular, the definition includes an individual who works under a contract “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”.
The employment tribunal found that Mr Aslam and Mr Farrar satisfied this test and worked under worker’s contracts for Uber London. The Employment Appeal Tribunal and the Court of Appeal (by a majority) dismissed Uber’s appeals.
Uber argued that Uber BV acted solely as a technology provider with its subsidiary acting as a booking agent for drivers who are approved by Uber London to use the Uber app. Uber 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.
To support its case, Uber relied on the wording of its standard written contracts between Uber BV and drivers and between the Uber companies and passengers. Uber also emphasised that drivers are free to work when they want and as much or as little as they want. In summary, Uber argued that drivers are independent contractors who work under contracts made with customers and do not work for Uber. The Supreme Court disagreed.
Judges criticised the controversial contracts Uber asked drivers to sign, saying they “can be seen to have as their object precluding a driver from claiming rights conferred on workers by the applicable legislation”.
The supreme court said any attempt by organisations to draft artificial contracts intended to side-step basic protections were void and unenforceable.
In the judgement the court emphasized a number of aspects of that ruling as important, which included: Pay/renumeration – Uber drivers are not free to set the price of rides; contractual terms of the performance of the service, again, drivers are not free to set these; Uber does; and Uber’s control over service provision, such as via the use of algorithmic management of logged in drivers and through ownership of the technology infrastructure. The court also flagged how Uber restricts communications between driver and passenger to a bare minimum.
In the judgment, Lord Leggatt said he was not convinced that the contractual arrangements Uber conducted with drivers were compliant with the regulatory regime supervised by Transport for London.
James Farrar, the co-lead claimant and general secretary of the App Drivers and Couriers union, said: “This ruling will fundamentally reorder the gig economy and bring an end to rife exploitation of workers by means of algorithmic and contract trickery. Uber drivers are cruelly sold a false dream of endless flexibility and entrepreneurial freedom.
“The reality has been illegally low pay, dangerously long hours and intense digital surveillance. I am delighted that workers at last have some remedy because of this ruling, but the government must urgently strengthen the law so that gig workers may also have access to sick pay and protection from unfair dismissal.”
Frances O’Grady, the general secretary of the TUC, said: “No company is above the law. Uber must play by the rules and stop denying its drivers basic rights at work.
“This ruling is an important win for gig economy workers and for common decency. Sham self-employment exploits people and lets companies dodge paying their fair share of tax.”
Uber has argued that the ruling applies to only a small number of workers involved directly in the case and that it is not obliged to apply its findings to its other drivers.
Jamie Heywood, Uber’s regional general manager for northern and eastern Europe, said: “We respect the court’s decision which focused on a small number of drivers who used the Uber app in 2016. Since then, we have made some significant changes to our business, guided by drivers every step of the way. These include giving even more control over how they earn and providing new protections like free insurance in case of sickness or injury.
“We are committed to doing more and will now consult with every active driver across the UK to understand the changes they want to see.”
The case will return to the employment tribunal, which will determine the level of compensation for the workers. Leigh Day, the law firm representing more than 2,000 workers with claims linked to the case, said they could each be due up to £12,000.
The Supreme Court did raise the scenario of how to calculate working time if ride-hailing drivers are logged onto multiple competing apps simultaneously, with the judge writing: “I have concluded that this question cannot be answered in the abstract.” However, in the case of Uber, its dominant market share in London has made the question moot for this particular legal challenge.
In recent days — and likely in anticipation of this verdict — the company has kicked off a major lobbying effort in Europe calling for deregulation of platform work.
It argues that without a carve out from employment laws platforms’ hands are tied over how far they can go to offer workers a better deal.
Uber says it’s pushing for some of the same ‘principles’ that featured in the Prop 22 ballot initiative which ride-hailing giants Uber and Lyft spend hundreds of millions of dollars pushing in California, going on to win a carve out for delivery and transport work from employment reclassification there last year.
However, responding to Uber’s EU white paper this week, the academic research group, Fairwork, accused it of downplaying its ability to make changes to improve working conditions on its platform.
It said the tech giant is trying to legitimize a lower level of protection for platform workers than most European workers benefit from — urging lawmakers to focus on expanding and strengthening employment protections, not watering them down.
Uber will not be able to launch further appeals against this UK ruling.
Report by Chris Hargreaves. firstname.lastname@example.org