Supreme court makes its decision on private hire drivers’ legal rights
The ongoing legal battle between Uber and its private hire drivers has arrived at its final destination now that the Supreme Court has confirmed private hire drivers operating through the Uber platform are workers for the purpose of basic statutory employment rights.
Where did the journey start?
The so-called gig economy aims to provide individuals with a degree of flexibility in terms of when and who they work for and to enable businesses to be able to control resources and costs in line with operational needs and budgets. Freedom of choice and the ability of the parties to negotiate unhindered was heralded as positive step for the labour market and the economy. However, the mutual benefits the gig economy provided to both parties over the last few years appear to have lost their appeal. Concerns have been voiced about individuals providing their services in this way not having the same basic rights as employees and workers as they are operating on a self-employed basis. Only employees and workers enjoy basic rights, including the right to be paid holiday pay and the minimum wage and to be protected from deductions being made from their wages.
As a consequence of these perceived inequalities, the tribunal and court system has been asked to determine in a number of cases over the last few years whether individuals are genuinely self-employed or are workers who are entitled to some basic legal rights in relation to the pay. Interestingly, many of the cases have involved couriers and taxi drivers.
The start of the legal journey for Uber
The dispute between Uber and its drivers reads like a travel journal through the UK tribunal and courts system. The journey started in the Employment Tribunal in 2016 when a number of Uber drivers brought claims for unlawful deduction of wages, alleging they were not being paid the national minimum wage and they were entitled to holiday pay. It was also asserted that they had the right not to suffer a whistleblowing detriment. To benefit from these rights the drivers would have to persuade the Employment Tribunal that they were workers and not self-employed.
In simple terms, Uber’s position was that:
• The drivers were not workers. Uber asserted that it acted as an intermediary providing a booking and payment platform for self-employed drivers using the Uber app to provide their taxi services to passengers. To support the commercial arrangement, Uber had in place complex contractual documentation.
• Any working time was limited. Uber asserted that working time could only be when the driver was actually driving a passenger.
The Employment Tribunal did not agree with Uber and having considered all the facts was satisfied that …..
the drivers were workers for and under contracts with Uber due to the following five key factors ….
• Uber fixed the fare
• Uber’s contractual terms with the drivers were non-negotiable
• Uber issued penalties if drivers did not accept rides when available to work
• Uber issued warnings or could terminate the arrangement where the provision of the services was sub-standard
• Uber limited the communications between a driver and passenger to a minimum
the drivers’ working time was when they were …
• located within their agreed territory
• available for bookings or waiting for bookings
• signed into the Uber App
Uber’s contractual documentation which purported to establish the self-employed status of the drivers was disregarded on the basis it did not reflect the reality of their relationship with Uber.
At the time the claim was brought, Uber had some 30,000 drivers on its books in London and some 40,000 across the UK as a whole. Not unexpectedly given the financial ramifications of this decision involving the real risk of multiple back pay claims, Uber appealed to the Employment Appeal Tribunal (“EAT”).
What happened at the next stop?
The EAT agreed with the tribunal’s decision and dismissed Uber’s appeal. The EAT was not prepared to accept Uber’s argument that it was simply an intermediary putting passenger in touch with drivers and the contractual documentation reflected this.
Uber continued with its journey to the Court of Appeal
Not satisfied with the EAT’s decision, Uber appealed to the Court of Appeal on the same grounds that it had to the EAT. However, there was no moving the judiciary on this issue and the Court of Appeal in a majority decision was satisfied that the drivers were workers.
The following was noted:
• Uber was running a transportation business using the driver to provide the service from which it earned a profit. It was not accepted that Uber was providing a service to the drivers.
• There was no contract between the driver and passenger.
• The contractual documentation did not reflect the reality. The Court of Appeal noted that the contract showed a “high degree of fiction”.
• The drivers were workers when the Uber App was turned on and they were available to accept bookings in their territory.
The Supreme Court was not prepared to change the previous decisions
Uber argued that there had been no legal justification for ignoring the contractual documentation which reflected the true status of the drivers i.e., self-employed. It argued that the terms on which they were engaged were clear and unambiguous. Uber’s appeal to the Supreme Court was however unsuccessful.
The Supreme Court was unanimous in its decision that the drivers were workers and the following was noted:
• The rights asserted by the drivers were statutory rights under the Employment Rights Act 1996, the Woking Time Regulations 1998 and the National Minimum Wage Act 1998 and not contractual rights. The task was to consider what the legislation said and not what the contract provided.
• When interpreting the statute, it was necessary to give effect to the purpose of the legislation. The legislation relied upon in this case was introduced to protect vulnerable individuals who would have little say over their terms and conditions.
• The legislation in question prevents the parties contracting out of the statutory rights. To allow this would result in the return of the mischief which the legislation had been introduced to prevent.
• It was a question of fact whether the drivers were workers or self-employed, to be decided by the Employment Tribunal. Based on the facts the Tribunal was entitled to decide that the drivers were workers and this was the only reasonable conclusion that could have been arrived at.
• The Employment Tribunal had correctly concluded that the drivers’ working times was when they were logged on to the Uber App, in their territory and ready to start work.
Are businesses prepared for the Supreme Court’s decision?
Uber’s position has been rejected at every level of the UK legal system. The Supreme Court’s decision will have been welcomed by many because it will redress the perceived imbalance by ensuring a larger proportion of the current labour market will have access to basic working rights and protection. While the sentiment is right that the most vulnerable in our society need protecting, in today’s economy is it right that the courts can take away freedom of choice and deny the parties the right to strike a deal and freely enter into a contract which works for them both?
In fullness of time, there is a possibility that a significant number of people who are reliant on the gig-economy to earn a living will be disadvantaged as organisations previously reliant on flexible labour will look at other ways of resourcing their operations. The reluctance to use this group of individuals who are looking for work will be due to the financial and legal risks bearing in mind the agenda appears to have been firmly set about expanding the group of individuals who should have worker rights. Opportunities for those individuals who genuinely want to be part of the gig-economy because it gives them the freedom to choose when and how they work to allow for a better work life balance, to support their health needs or to manage their childcare or caring responsibilities may become limited.
Organisations which have relied heavily on the gig-economy for additional people resources will no doubt be taking stock of what this decision may mean for their operations including dusting off their contracts to identify if they now have any value, assessing the potential future costs to the payroll and the possible risk of legal claims for historical pay claims.
FGS’ legal team includes specialists in employment law who can assist you to identify the legal and financial risks arising from those you engage with for their services and help you to create a strategic plan to minimise these risks.
If you require further advice about protecting your business from worker status challenges, please feel free to call us on 0808 172 9322 for a no obligation discussion.
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This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.