In a landmark decision with potentially wide-ranging implications for Uber and the gig economy at large, the Supreme Court ruled that Uber drivers are workers under s.230(3) ERA despite complex contractual terms suggesting that these drivers were self-employed contractors.
This decision will not only impact upon the way in which employment status is determined, but could also give rise to many historic claims relating to pay with 40,000 Uber drivers suddenly provided with rights they did not enjoy previously.
What did the Supreme Court say and what does it mean?
The court made it clear that when an individual’s employment status needs to be determined, the written terms of the applicable contract are not conclusive and all relevant circumstances must be taken into account (including relevant statutory provisions).
This approach provides greater freedom to construe the true nature of the agreement between the parties which will now be determined by looking at the reality of the relationship in practice (of which a written contract only forms one part). The ruling emphasised that a modern approach to determining employment status is required, bearing in mind the protective nature of statutory provisions.
With this in mind, the court found that the reality of the relationship between Uber and its drivers was not one of independent contractors (as suggested by the written terms and conditions), noting the level of control Uber has as well as the level of dependency shown by drivers. As a consequence, the court agreed with the tribunal’s initial decision that the relationship was that of worker under s.230(3) ERA.
What rights do Uber workers now have?
This decision therefore confirms that Uber drivers are not self-employed contractors (who fall outside the vast majority of employment protections) but workers who can rely on some statutory employment protections.
Under the ERA, a worker has the right not to suffer from unlawful deductions from wages, has whistleblowing protections, has a right to be accompanied to a disciplinary or grievance hearing and is entitled to a written statement of particulars of employment. Uber drivers will now enjoy all of these rights following the Supreme Court’s decision.
In addition to the above, and as claimed by the Uber drivers in this claim, as workers Uber drivers are also now entitled to paid holiday under the Working Time Regulations 1998 (‘WTR’) and to receive the National Minimum Wage (‘NMW’).
How can workers pursue these rights and how is pay calculated?
The above rights can be pursued by workers within the employment tribunal, though a worker could also bring a breach of contract claim in the civil courts regarding pay (though the civil proceedings carry potential costs consequences and are more formal).
In relation to the Uber litigation, this will now return to the employment tribunal so that it can calculate how much is owed to the claimant drivers in back pay made up of the NMW and holiday pay.
Generally, under WTR a worker is entitled to be paid at the rate of ‘a week’s pay’ for each week of holiday. Given that Uber drivers do not have regular hours, a week’s pay is calculated by working out the average weekly pay over the previous 52 complete weeks. This can be a complicated process and weeks in which no remuneration is earned do not count. If, such as in the Uber case, there is a claim for holiday pay which has not been paid for a long period of time, there is currently a two year cap on the amount of pay that can be claimed.
In relation to the NMW, this calculation involves working out an hourly rate of pay by referring to a pay reference period (e.g. weekly or monthly) and dividing the payments received by the hours worked during that reference period. Importantly for the purposes of calculating such rights, the Supreme Court ruled that the drivers were working when they were logged into the Uber app, were in the area where they were authorised to use it, and were ready and willing to accept trips – not only when they were actually driving.
There is no cap on the amount of historical back pay that may owed, therefore there could be a significant liability for Uber following the tribunal’s calculation of the same.
Conclusion
The Supreme Court’s decision makes it clear that a practical approach must be taken when considering employment status and the ruling that Uber drivers are workers will significantly impact the business models of gig economy companies.
The case will also give rise to historic and complicated calculations of NMW and holiday pay which could result in Uber being liable for a significant amount of back pay.
If you have any questions please contact Jonothan Scollen at [email protected].
