Uber Drivers Are 'Workers'; Not Independent Contractors : United Kingdom Supreme Court

The United Kingdom Supreme Court held on Friday that Uber drivers are "workers" 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

The seven judges of the Supreme Court unanimously dismissed the argument of Uber company that the drivers should be regarded as independent contractors or self-employed.

The matter pertained to whether Uber drivers will come under the definition of a "worker" in section 230(3) of the Employment Rights Act 1996. 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 the parties the case - 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. Challenging these decision, Uber approached the Supreme Court.

Uber's arguments

Uber argued that it acted solely as a technology provider and a booking agent for drivers. 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 these cases) and pays the balance to the driver. Uber characterised this process as collecting payment on behalf of the driver and charging a "service fee" to the driver for the use of its technology and other services. Uber also emphasised that drivers are free to work when they want and as much or as little as they want.

Court disagrees with Uber

The Court observed that the correct approach is to consider the purpose of the relevant employment legislation.

"That purpose is 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. The legislation also precludes employers, frequently in a stronger bargaining position, from contracting out of these protections", the Court observed.

The Court took note of five factors in the relationship between Uber company and the drivers.

1. 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.
2. Second, the contract terms on which drivers perform their services are imposed by Uber and drivers have no say in them.
3. 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.
4. Fourth, Uber also exercises significant control over the way in which drivers deliver their services. There is a 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. 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 rides.

Taking these factors together, the top court observed that 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 considers that comparisons made by Uber with digital platforms which act as booking agents for hotels and other accommodation and with minicab drivers do not advance its case. The drivers were rightly found to be "workers"", the judgment observed.

Click here to read/download the judgment