The Uber Battle
Marina Rameh discusses the recent Supreme Court decision to class Uber drivers as 'workers' and the ramifications in the commercial world.
On 19th February 2021, the Supreme Court unanimously dismissed Uber’s appeal in the case Uber BV v Aslam[1]; confirming the status of Uber drivers as workers rather than self-employed drivers. As a consequence, the drivers are entitled to worker’s rights, including the minimum wage and paid annual leave.[2] This ruling is a significant intervention as the original contract between Uber and the drivers explicitly states that Uber acts as an agent enabling a contract for the provision of transportation services.[3]
This decision impacts the level of control companies have over the interpretation of their contracts. Considering the rise of services provided through digital platforms, the outcome of this case is of significant importance to the future of English commercial law. This piece will discuss the decision of Uber BV v Aslam in detail and consider its commercial implications.
In 2016, former Uber drivers James Farrar and Yaseen Aslam initiated proceedings against Uber. At first instance, the Employment Tribunal found that the drivers were in fact workers. The case then proceeded to the Court of Appeal where the question revolved around the definition of a ‘worker’ under the Employment Rights Act 1996.[4] Uber then appealed to the Supreme Court, which unanimously found that Uber drivers are in fact workers for the purposes of domestic legislation.[5]
What is a worker?
The term ‘worker’, as defined under s.230(3) of the Employment Rights Act 1996, includes an individual who has entered into or works under a contract of employment or any other contract through which the individual performs any work or services for another party whose status under the contract is not that of a client or a customer.[6] The decision in Bates van Winkelhof v Clyde & Co LLP[7] interprets the definition as construing three types of people under employment law. The first type includes those employed under an employment contract. The second type is those who are self-employed. The third category is a hybrid of the previous two, whereby the worker is self-employed and provides their services through a third party.[8] Uber claimed that the drivers did not satisfy any of the categories mentioned above, arguing that there was an agency relationship between Uber London and its drivers.[9]
Was there an agency relationship or was Uber London an employer?
Lord Leggatt deemed that there was no agency relationship, and even if there was, Uber London was not authorised to act as a booking agent to its drivers. The document that could give rise to this relationship was the ‘Rider Terms’. This was a document containing the contractual relationship between Uber and its passengers, not including the drivers. Uber London purported to act as “disclosed agents for the Transportation Provider”. The Supreme Court found that this term was not sufficient to give rise to an agency relationship. The drivers never had access to the Rider Terms and subsequently never consented to this relationship. Given that there was no contract of agency between Uber London and the drivers, this could only be implied by the parties’ conduct.
For there to be an implied agency relationship, the principle of apparent authority would have to be satisfied. This is not the case, as the employment tribunal found no evidence that the drivers conferred authority to Uber to act on their behalf.[10] Given this agency relationship could not be found, the only outcome left was therefore that of an employment relationship, where Uber London were the employers of the drivers.
The Supreme Court brought emphasis to the employment tribunal’s reasoning for finding that the drivers satisfied the description of workers. The court considered the following five factors as evidence of Uber’s control over its drivers, and that this relationship should therefore comply with the necessary regulatory regime.[11]
1. The remuneration of the Uber drivers is set by Uber – the drivers have no say in it.
Uber also sets the amount of its own “service-fee”.[12]
2. Contractual terms of drivers’ performance is dictated by Uber. The terms on which they transport the passengers is imposed by Uber.[13]
3. The choice of when and where the driver is to work is restricted by Uber once the driver has logged on to the App.[14]
4. Uber exercises a substantial amount of control over the way in which the drivers deliver their services. This includes the guidelines on which car the driver can use as well as the application being solely owned by Uber.[15]
5. Uber also restricts communication between the driver and the passenger to a minimum level, preventing any independent relationship between the driver and passenger past the ride.[16]
These factors led the court to conclude that Uber drivers instead fall in the category of ‘worker’. Despite Uber’s legal team arguing that the drivers were providing an independent service, the court found otherwise.
Impact
Following the Supreme Court’s decision, Uber has conceded to the treatment of its drivers as workers. This means that drivers will receive minimum wage, holiday pay and pension contributions. Considering Uber drivers as workers puts into question other business models that companies have adhered to in the past. Ridesharing companies could suffer from miscategorising its drivers as independent contractors. Last year, the Guardian emphasised Uber’s doomed business model from an American perspective, and this view has now reached the UK.[17] Frances O’Grady, General Secretary of the Trades Union Congress, highlights the decision as a reminder that “it is not up to employers to decide when protection applies to those who work for them.”[18]
However, not all has been smooth sailing since the decision in February. There are still some disparities in calculating the worker’s working hours.[19] Uber has taken the approach that a driver is working from the moment they accept a ride on the app. On the other hand, the Supreme Court decided that a driver should be paid for the time they are logged onto the app and available to drive passengers.[20] O’Grady criticises Uber’s stance as ‘cherry-picking’ from the court’s decision.[21]
In an interview with TechCrunch, Farrar - the driver who brought the case against Uber - stated that the issue is yet to be resolved and that a return to the Employment Tribunal may be necessary to ensure that drivers are paid what they are legally entitled to.[22] As the employment concerns progress, it is important to be alert to the effects on the gig economy emerging from this case, as fewer companies may be willing to enter into relationships without a fixed contract.
Written by Marina Rameh.
[1] [2021] UKSC 5. [2] ibid. [3] ibid, [28]. [4] Mary-Ann Russon, 'Uber Drivers Are Workers Not Self-Employed, Supreme Court Rules' (BBC News, 2021) <https://www.bbc.com/news/business-56123668> accessed 2 March 2021. [5] Uber BV v Aslam [2021] UKSC 5. [6] Employment Rights Act 1996, s.230(3) [7] [2014] UKSC 32. [8] Uber BV v Aslam [2021] UKSC 5 [38]. [9] ibid, [43]. [10] ibid,[54]. [11] ibid, [102]. [12] ibid, [94]. [13] ibid, [95]. [14] ibid, [96]. [15] ibid, [98] [16] ibid, [100]. [17] Aaron Benanav, 'Why Uber's Business Model Is Doomed' (the Guardian, 2020) <https://www.theguardian.com/commentisfree/2020/aug/24/gig-economy-uber-lyft-insecurity-crisis> accessed 2 April 2021. [18] Frances O'Grady, 'Uber Treating Their Drivers As Workers Must Set A Precedent For The Rest Of The Gig Economy' (inews.co.uk, 2021) <https://inews.co.uk/opinion/uber-drivers-workers-precedent-gig-economy-917928> accessed 22 March 2021. [19] Caroline Davies, 'Uber 'Willing To Change' As Drivers Get Minimum Wage, Holiday Pay And Pensions' (BBC News, 2021) <https://www.bbc.com/news/business-56412397> accessed 22 March 2021. [20] Kirsten Korosec and Natasha Lomas, 'Techcrunch Is Now A Part Of Verizon Media' (Techcrunch.com, 2021) <https://techcrunch.com/2021/03/16/uber-says-it-will-treat-uk-drivers-as-workers-in-wake-of-supreme-court-ruling/> accessed 22 March 2021. [21] ibid. [22] ibid.