Supreme Court of United Kingdom held Uber driver is a “worker” and not an “independent contractor” thus entitled to all employment benefits

In an interesting judgment titled “Uber BV and others (Appellants) v Aslam and others (Respondents)” [2021] UKSC 5, a Full Bench of seven judges of United Kingdom (UK) Supreme Court, on February 19, 2021, dismissed an appeal filed by Uber wherein it had challenged the decision of the Employment Appellate Tribunal, which was confirmed by Court of Appeal.

In the case, the Appellants, a member of Uber group of companies, were providing private hire vehicle booking services in the UK. Appellants claimed that Uber group of companies operating internationally provide a smartphone app, which connects passengers to drivers and allows them to book journeys. The Respondents, Mr. Yaseen Aslam and other drivers, who were drivers and were active users of app (also members of the GMB union), brought an employment action against Uber contending that, during the periods covered by their claims, they were “workers” for the purposes of the Employment Rights Act, 1996, the National Minimum Wage Act, 1998 and the Working Time Regulations, 1998. They (Respondents in the appeal before UK Supreme Court) claimed that they were entitled to minimum wage, paid leave and other legal protections. On the contrary, the Appellants (Uber) argued that the Respondents were independent, third party contractors and not “workers”.

Following a preliminary hearing, the Employment Tribunal found that the Respondents were “workers”and that they were “working” whenever they (a) had the Appellants’ app switched on; (b) were within the territory in which they were authorised to work; and (c) were able and willing to accept assignments. These findings were upheld by the Employment Appellate Tribunal and the Court of Appeal, against which the Appellants (Uber) then appealed to the UK Supreme Court.

The main question raised before the Supreme Court was whether an Uber driver is a “worker” 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 Supreme Court also considered the related question of what time counts, if drivers are “workers”, as working time for the purpose of the relevant rights.

Responding to the first question as to whether Uber driver is a worker, it was contended by Uber that Uber BV acted solely as a technology provider with its subsidiary (Uber UK entity in this case) acting as a booking agent for drivers who are approved by Uber entities in London/UK to use the Uber app. In the event a ride is booked through the Uber app, a contract is 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 characterizes 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. To support its case, Uber relied on the wording of its standard written contracts between Uber BV and drivers and between the Uber companies and passengers. Uber also emphasized that drivers are free to work when they want and as much or as little as they want. In summary, Uber argued that drivers are independent contractors who work under contracts made with customers and do not work for Uber.

Supreme Court disagreed with the said contentions and observed that as on the facts there was no written contract between the drivers and Uber’s relevant entity(s) in London/UK, the nature of their legal relationship had to be inferred from the parties’ conduct. The Supreme Court held that the correct approach was to consider the purpose of the relevant employment legislation which was to give protection to vulnerable individuals who had little or no say over their pay and working conditions because they were in a subordinate and dependent position in relation to a person or organization which exercises control over their work. The legislation also precludes employers, frequently in a stronger bargaining position, from contracting out of these protections.

The UK Supreme Court emphasized on five aspects of the findings made by the Employment Appellate Tribunal which justified its conclusion that the claimants (Respondents before UK Supreme Court) were working for and under contracts with Uber:

(i) when 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;

(ii) the contract terms on which drivers perform their services are imposed by Uber and drivers have no
say in them;

(iii) 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;

(iv) Uber exercises significant control over the way in which drivers deliver their services. One of several methods mentioned in the judgment is the 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; and

(v) another significant aspect was 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 ride.

Considering all the above factors, it was held by UK Supreme Court 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.

UK Supreme Court considered that comparisons made by Uber with digital platforms which act as booking agents for hotels and other accommodation and with minicab drivers did not advance its case. The drivers were rightly found to be “workers”.

Further, UK Supreme Court held that the Employment Tribunal was entitled to find that time spent by the
claimants working for Uber was not limited (as Uber argued) to periods when they were actually driving
passengers to their destinations, but included any period when the driver was logged into the Uber app
within the territory in which the driver was licensed to operate and was ready and willing to accept trips.

Basis the above, the appeal of Uber was thus dismissed.

Owing to this judgment, more than 45,000 Uber drivers in London will now be considered as workers and as a result entitled to minimum wage, fixed working hours, rest breaks, paid leave and a range of other benefits.

Anhad Law-A Perspective:

It is a landmark judgment in the field of employment law holding how “workers” in the gig economy could possibly be defined, especially in the modern and fast increasing technology-influenced workplace. This judgment could possibly have implications for ‘gig economy’ and a much wider-reaching impact in the field of employment law, having vital importance for those employers, who provide a platform (App) based services or such similar, on demand companies, as well as employees who are associated with such platforms / companies.

Significantly, even in India the new Code on Social Security, 2020 (awaiting notification) for the first time recognizes and extends the benefits of social security to categories of workers who being India’s freelance workforce or the informal sector, by virtue of being considered not falling in the framework of traditional employer-employee relationship, remained outside the purview of any such employee benefits. As per the referred Code, the definition of ‘gig workers’ includes any person who (i) performs work or participates in a work arrangement, and (ii) earns from such activities, outside of a traditional employer-employee relationship. The Code also refers to ‘platform workers’.

Considering that millions of people around the world are employed in “gig economy”, an economy based on short-term contracts or freelance workers who have become so vital during the Covid-19 time, in contrast to traditional employment relationships, this judgment could become a landmark judgement and basis for gig or platform workers, to demand similar protections (as available in a traditional employer-employee relationship), in several other economies worldwide, including India. It is, however, yet to be seen how Indian courts would respond to claims/demands received, if any, and whether aspects considered by the UK Supreme Court would be relevant for India. Nonetheless, the determining aspects, held by the UK Supreme Court, could become relevant for similarly placed Indian companies, who may need to examine whether, such aspects are relevant for them or not.

-Manishi Pathak, Founding Partner & Ranjan Jha, Partner

Disclaimer: These are personal views of authors and do not constitute a legal opinion, analysis or interpretation. This is an initiative to share developments in the world of law.