What Might The Supreme Court Uber Decision Mean For Employment Status?

Ride-hailing app Uber suffered a setback following the Supreme Court’s judgment in their long-running legal dispute with (some of) their drivers back in February 2021.  The Supreme Court ruled that the Employment Tribunal was entitled to find that the claimant drivers could be regarded as statutory workers. People with worker status are entitled to some employment rights, such as the national minimum or living wage, paid annual and sickness leave and so on.

This is one of a number of employment status cases to have made the press in recent years. They tend to revolve around the question of whether the claimants are statutory workers, commonly referred to as ‘limb b workers’, under S230(3)(b) of the Employment Rights Act 1996.

Generally speaking, there are 3 basic elements to consider for worker status.  Firstly, there is a contract where an individual agrees to perform work or services for the other party.  Secondly, the individual has an obligation to provide the services personally. Thirdly, the other party is not a client or customer of the individual.

In the Uber case, personal service was not a live issue, and it was not suggested that Uber London was a client or customer of the claimant drivers.  Instead, the crucial question in this case was whether the claimant drivers were working under contracts with Uber London to perform services for it; or whether they were providing services for and under contracts with passengers with Uber London acting more as an agent. 

The Supreme Court rejected the agent argument.  The agreement was not explicitly an agency agreement, but in any event, the regulatory environment around private hire services effectively precluded it.  Instead, Uber contracts with passengers and engages drivers to perform the services.

The judgment covered quite a lot of ground, including discussion of statutory interpretation.  In some ways this discussion sought to clarify and perhaps expand on the Supreme Court’s earlier Autoclenz decision, which encourages the courts to consider all relevant circumstances including the purpose of relevant legislation. 

Briefly, in the Uber case, the Supreme Court said that the correct approach is to consider the purpose of the relevant employment legislation.  Ultimately, that purpose is to protect otherwise vulnerable people who have little or no say over their pay and working conditions.  This vulnerability exists because they are in a subordinate and dependent position relative to a person or organisation which exercises control over their work. On that basis, courts and tribunals must analyse the relationship between the parties. 

In their analysis, the Supreme Court emphasised a number of findings from the Employment Tribunal about the nature and extent of the control exerted by Uber over the drivers. Taken together, the Supreme Court considered that the drivers’ services were tightly defined and controlled by Uber.  The drivers were in fact in a heavily subordinate position and dependent on Uber to the extent that they could not improve their economic position through their own professional or entrepreneurial skill.  Moreover, Uber took steps to minimise contact between drivers and passengers.

Conclusions

The Autoclenz decision was criticised for an approach that only encouraged courts to look behind any written contract where its terms conflicted with reality.  This latest decision, by contrast, seems to encourage courts to consider the type of relationship between businesses and their putative workers more generally.  The concepts of subordination and dependency will clearly be relevant going forward in an assessment of whether an individual is vulnerable.

It is, of course, completely understandable that businesses will want to ensure that services are provided consistently and to a reasonable standard at a reasonable cost.  However, in light of the Supreme Court’s ruling in Uber, businesses should carefully consider their working practices and the (general) extent to which they are exerting control over the services of any suppliers or sub-contractors.

If you have any questions about the Uber case, or wish to discuss employment status principles please get in contact.

GuildHUB is an information resource, provided free of charge by The Guild, for accounting professionals and their clients.  If you wish to contact The Guild, please email contact@trusttheguild.com.

The content of this article is for guidance only and shall not constitute advice. Please seek independent advice or contact GuildHUB for information about its services.

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Guest Contributor: Edward Hodgson

12/2021
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