April 8, 2021

Uber BV and ors v Aslam and ors, Supreme Court

The Supreme Court upholds an employment tribunal’s decision that Uber drivers are
‘workers’ for the purpose of rights under the Employment Rights Act 1996, the Working Time Regulations 1998 and the National Minimum Wage Act 1998. The determination of ‘worker’ status under this legislation is a question of statutory, not contractual, interpretation, and it is therefore wrong in principle to treat the written agreement as a starting point.

The correct approach is to consider the purpose of the legislation, which is to give protection to vulnerable individuals who are in a subordinate and dependent position in relation to a person or organisation who exercises control over their work. Applying that approach, the tribunal’s findings of fact justified its conclusion that the drivers were working for and under contracts with Uber.

The Court also upholds the tribunal’s finding that the drivers’ working time includes all of the time that they are in the territory in which they are authorised to work, logged into the Uber app, and ready and willing to accept work.

Supreme Court tackles false self-employment.

Cases we wait a long time for can turn out to be a disappointment, but the Supreme Court’s decision in Uber BV and ors v Aslam and ors, reported on page 8 of this Brief, bucks that trend. The result itself was no shock. At every stage of the litigation, the characterisation of Uber as an agent finding passengers for a network of 30,000 drivers operating as independent contractors has been rejected in favour of the view thatthe drivers work for, and are heavily controlled by, Uber.

What came as a surprise was the path by which the Supreme Court reached the conclusion that the drivers were workers. Having rejected the idea that there was an agency relationship between Uber and the drivers, it went on to set out a new approach to determining worker status, which shifts the emphasis away from written documentation.

A more comprehensive defeat for Uber is hard to imagine.

Rights for the vulnerable

During the late 1990s there was a significant expansion of rights for vulnerable workers. The National Minimum Wage Act 1998 introduced minimum levels of pay across the whole of the United Kingdom economy, and the Working Time Regulations 1998 SI 1998/1833 granted rights to paid holiday, rest breaks, and a maximum duration of the working week. Rather than make these rights solely available to employees, Parliament granted them to the wider category of ‘worker’, which was already defined in S.230(3) of the Employment Rights Act 1996 for the purposes of protection from unlawful deductions from wages.

In essence, this definition attempts to bring within the scope of protection employees and those people in a similar position of dependence vis-à-vis an employer as employees, while excluding those contractors who can look after themselves. The same distinction has been held to apply to the extended definition of ‘employment’ that applies in discrimination law under S.83 of the Equality Act 2010. However, the decision to define these employment statuses by reference to types of contract presents a conundrum: how to prevent those in a position of dependence and vulnerability from indirectly signing away their statutory rights in written terms which misclassify them as independent contractors.

The ordinary principles which apply to commercial contracts provide limited scope to argue that the terms the parties have put in writing and signed are not the true terms of agreement. The seminal decision in Autoclenz Ltd v Belcher and ors (Brief 934) gave tribunals dealing with questions of employee and worker status some licence to look beyond written terms to establish the true terms of the agreement.

A decade later, the decision in the Uber case fully explains the rationale behind Autoclenz and goes further in some important respects. It rejects the notion that the written terms should be the starting point when determining whether an individual falls within the definition of worker.

Contracting out

Equally significant is what the Supreme Court said about the statutory prohibition on contracting out of rights in the NMWA, WTR and the ERA. Just as a worker cannot expressly sign away rights to the national minimum wage or paid holiday, so he or she cannot sign away the status that leads to those rights. As Lord Leggatt put it, ‘any terms which purport to classify the parties’ legal relationship or to exclude or limit statutory protections by preventing the contract from being interpreted as a contract of employment or other worker’s contract are of no effect and must be disregarded’.

The Uber case did not deal with the question of an obligation of personal service, which is a prerequisite of all the types of contract falling within S.230(3) ERA, but the emphasis the Supreme Court placed on how the relationship operates in practice, and its musings on contracting out, could herald a more critical
approach to substitution clauses.

Clearly, the new approach to worker status calls into question business models which depend on exercising a large degree of control over supposedly independent contractors. Since such businesses will not be able to use written terms to draft their way out of the hole the Supreme Court’s decision puts them in, they must decide between relinquishing a significant amount of control or adjusting their prices and practices to ensure they comply with working time and minimum wage legislation. If they fail to do so, more employment tribunal claims are bound to follow, and minimum wage enforcement by HM Revenue and Customs could also be on the cards.

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