UPDATED 12 APRIL 2021 - On 19 February 2021, the Supreme Court ruled in favour of workers in the Uber v Aslam case, marking the end of Uber’s landmark employment battle. The decision means that Uber drivers must now be treated as workers rather than as self-employed, entitling them to the employment rights that come alongside that. Despite Uber’s defiant stance in the immediate aftermath of the judgment, it has since backtracked and agreed to treat its drivers as workers.
As a result, companies using similar flexible employment models are now faced with many questions, including how to adapt to react to the ruling and how to avoid facing employment claims from workers.
What is a ‘worker’?
As a middle ground between employee and self-employed, ‘worker’ status gives individuals some protections that are afforded to employees, such as minimum wage and sick pay, while offering a greater level of flexibility than in a traditional employer-employee relationship. However, it doesn’t give workers all of the same benefits as employees, most notably they don’t have the right to claim unfair dismissal.
The deciding factors
A key point to note is that Uber accepted that drivers were required to perform services personally (i.e. they couldn’t send substitutes in their place). This may well be an argument other gig economy companies are able to run if their operating model allows for substitution.
In reaching its conclusion, the Supreme Court considered several factors, which subsequently placed the result on the side of the worker. These included Uber:
- setting the fare, which means it dictates how much drivers can earn;
- penalising drivers if they reject too many rides;
- setting the contract terms, with drivers having no say in them; and
- monitoring the service of drivers through a star rating system and terminating the relationship if it doesn’t improve
These factors demonstrated that drivers were in a position of subordination to Uber, and that the only way to increase earnings would be to work longer hours.
Can Uber drivers claim compensation?
Yes, and law firms specialising in multi-claimant litigation are actively recruiting Uber drivers with a view to bringing a combined case against Uber. This could result in a considerable compensation bill for Uber, as well as creating a challenging administrative job for both Uber and the courts in order to determine the compensation payable.
In the circumstances, Uber is unsurprisingly trying to settle potential claims by writing to its drivers with tailored financial offers based on their work history.
Have Uber accepted the judgment?
In relation to the drivers who were party to this particular claim, Uber didn’t have a choice. However, there were only around 25 individual claimants. Uber initially disputed that the Supreme Court’s judgment set a precedent for all of its drivers on the basis that it had made changes to its operating model. However, and subject to the significant caveat outlined below, Uber subsequently agreed to treat its drivers as workers. Consequently, and as per the above, it is therefore looking to settle all existing and potential claims with its drivers, although the details of that process are being kept under wraps.
Controversially, Uber is sticking by its stance that drivers are only “working” when they are actually responding to a request for a lift or driving a passenger. This is despite the Supreme Court supporting the finding that drivers are also “working” at any time that they are logged into the app and waiting to be allocated a lift request. Early indications suggest that there could be further protracted litigation on this issue.
What does the decision mean for the gig economy?
With this decision, the courts have arguably set a legal precedent on the topic of ‘worker’ for the wider gig economy, with employers that operate flexible employment models having to reconsider whether they can continue to class their staff as self-employed.
The gig economy is largely defined by the flexibility it offers people. However, and contrary to the suggestions made by certain gig economy companies, it is entirely possible to have the flexibility many individuals want whilst still being a ‘worker’. The reality is that it costs more to treat people as workers and creates an extra administrative burden, and these are the consequences many companies are keen to avoid.
How can employers support a flexible workforce?
Employers looking to adapt their models to this new reality should begin to identify, assess, and avoid risks associated with using gig workers as they currently may do. Companies need to check that they’re maintaining up-to-date records for all staff around work patterns, work expectations, payment terms and substitution.
What about food delivery gig workers?
Uber confirmed that the Supreme Court ruling was specific to the private hire vehicle industry, leaving a question mark hanging over the status of its Uber Eats food delivery drivers.
For now, they will continue to be treated as self-employed. This is primarily because the delivery drivers are not “workers”, because they can send substitutes in their place to carry out deliveries (so goes Uber’s argument). As such, there is no requirement for “personal service” and they therefore cannot be workers. This argument does have merit – Deliveroo has already successfully argued this point in the high court – but it seems likely that more litigation on this issue will also follow in due course.
However, although it may be legally credible to class these individuals as self-employed, businesses should begin reviewing contracts and practices to ensure that they can justify classifying their drivers in this way. In particular, a completely unfettered right of substitution is rare, and where the scope for substitution is limited there are no guarantees that this will be sufficient to prevent the existence of “personal service”.
Future of the gig economy - reconsidering employment models
This decision could have a major impact on the future of the gig economy, offering gig workers some peace of mind and a new sense of security.
Failure to follow Uber’s lead and change may lead to a host of potential employment claims for businesses, which choose to turn a blind eye to this ruling. Most companies using this employment model will either have to fall in line on worker entitlements (including minimum wage, holiday pay and sick pay), or change their operating models significantly.
However, that said, it is far from certain that all other companies operating in the gig economy will follow suit. Those that have built their employment model around flexibility, such as Deliveroo, cannot simply switch overnight, as the rapid implementation of a new work structure could cause significant short-term disruption.
Nevertheless, the gig economy will need to adapt to ensure it works for individuals and businesses alike in future.
We’re here to help
Our employment team is ranked as a Leading Firm in the Legal 500 2021 edition.
Our updated guide to recovery and resilience covers everything you need to navigate your business out of lockdown, unlock your potential and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.
From inspirational SHMA Talks to informative webinars, we also have lots of educational and entertaining content for life and business. Visit SHMA® ON DEMAND.