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Your Uber is Here (after taking a U-turn)

Uber BV and others (Appellants) v Aslam and others (Respondents) [2021] UKSC 5

The Supreme Court’s long-awaited decision in the Uber case may have significant repercussions for the so-called gig economy. Uber had appealed the Employment Tribunal’s findings that drivers were “workers” for the purposes of the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998.  The relevant legislation is expressed so as to apply not only to individuals who have entered into an employment contract but also to individuals who have entered into “workers contracts”.  If Uber drivers were indeed “workers” they were entitled to some of the protections afforded by employment legislation, including the right to a minimum wage and paid annual leave. The Supreme Court was presented with two issues: whether Uber drivers were workers; and, if so, what periods counted as their working time.

Uber BV is a Dutch company, which owns the technology behind the Uber app. Uber London Ltd is a subsidiary of Uber BV which is licensed to operate private hire vehicles in London. Uber Britannia Ltd is similarly licensed to operate outside London. According to Uber, drivers were independent contractors. Uber BV argued that they were a technology provider and that the local subsidiaries simply acted as a booking agent for the drivers. When a customer booked a ride through the app a contract for the provision of transportation services was formed directly between the driver and the passenger. Passengers are required to accept Uber’s written terms and conditions, which state that: the passenger enters into a transportation contract with the driver; Uber BV grants passengers a licence to use the app; and, the local subsidiary acts as a booking agent for the driver. The passenger pays the fare to Uber who deduct part of it as a service fee for use of the app and other services. Uber also argued that drivers were only “working” when they were actually transporting passengers.

Drivers entered a written contract with Uber BV but had no written contract with Uber London / Britannia. Therefore, the relationship with the local Uber company had to be inferred. Uber argued that the starting point in determining the relationship was the written contract with Uber BV. The Supreme Court has now confirmed that this is not the correct approach. Case law has previously indicated that ordinary principles of contract construction do not apply to employment contracts. The rights that “workers” enjoy are not contractual rights but are derived from legislation. The correct approach, therefore, is to consider the purpose of the legislation.

The actual purpose of the contract is gleaned from the factual and legal context: all of the circumstances of the case.  The purpose of the legislation is to protect vulnerable individuals who have limited say over their working conditions. A distinction is drawn between workers and independent contractors – with the latter not being protected by the legislation.  A worker-employer relationship will tend to have a hierarchical quality: the worker is subordinate / dependent, and the employer exercises a degree of control over the work and services provided. That such legislation generally prevents an employer from contracting out of their legislative obligations lends further weight to the conclusion that the contract cannot be the starting point: it is not up to employers to decide who qualifies for protection under employment law.

Five factors highlighted the subordinate position of drivers:

  • Uber calculated the fare that drivers were permitted to charge;
  • Uber imposed their contract terms on drivers;
  • Limitations were imposed on drivers’ freedom of choice to accept a fare because Uber applied penalties to drivers who declined or cancelled too often;
  • Uber exercised considerable control over the way in which drivers delivered their services;
  • Uber restricted direct communications between drivers and passengers.

There was held to be no basis for finding that Uber London acted as an agent for the drivers. The correct inference was that Uber London contracted with passengers and then engaged drivers to carry out the booking.

The Court also upheld the Employment Tribunal’s finding on the secondary issue of what constituted working time. Applying the “irreducible minimum of obligation” test, drivers were “working” when logged into the app and ready and willing to take bookings. Given that Uber’s own introductory material informed new drivers that this is when they were considered to be “on duty”, the Court’s decision on this issue can have come as no surprise. It is at this point of logging on that drivers enter a “workers contract” with the local Uber company.

Charlotte Walker
25 Canada Square Chambers
17 March 2020

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