Valerie Bond
Posted on 4 Aug 2020

Uber Employment Status – Update

The case of Uber BV and others v Aslam and others UKSC 2019/0029 was heard at the Supreme Court on 21 and 22 July. The hearing has reignited many on-going discussions about the large number of grey areas which continue to subsist within the topic of employment status.

Employee, worker, or self-employed?

There are various tests that can help determine whether an individual is an employee, worker, or self-employed.

"Employee" has various definitions within the relevant legislation, but none of these are particularly comprehensive, and have given cause for the courts to develop further ways in which to identify an individual with employee status. Broadly speaking, the legislation itself describes an employee as an individual who works under a contract of employment or contract of service.

"Worker" is a hybrid status midway between an employee and a self-employed person. It is intended to recognise a category of individual who, whilst not an employee, is not fully independent and, therefore, should be afforded some legal protection. The legislation defines a worker as an individual who has entered into:

  1. a contract of employment; or  
  2. any other contract (expressed or implied, oral or in writing), where the individual undertakes to do or perform personally any work or services for another party.

Part b) of the definition of a worker has caused some debate over the years. Employment Tribunals have tried to determine what types of working arrangement fall within its scope, when the definition is remarkably similar to that of an employee.

No definition of self-employment is provided within employment legislation, which does not help to clarify the situation. However, it is generally accepted that someone who is self-employed is an individual who has no contract of employment or contract to undertake work personally.

The now fairly long-standing case of Ready-Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968]  set out the key components for consideration when assessing employment status, as follows:

  1. Personal service – did the individual undertake to provide their own skill and work?
  2. Mutuality of obligation – did the individual agree to provide their own skill and work in return for a wage or other remuneration?
  3. Control - was there a sufficient degree of control to enable the individual to be called a "servant"?

The categorisation of an individual's work with a company is central to their rights and benefits. A worker shares many of the same rights as an employee but does not enjoy the benefit of Statutory Sick Pay, for example. Those who are categorised as self-employed do not attract any such protections – their contractual engagement does not require payment of the National Minimum Wage; neither are they entitled to be paid for any annual leave they may take.

The rules and regulations surrounding employment status are complicated enough, but with the rise of the "gig economy", this new brand of flexible and casual work has meant that the deficiencies and confusions of the law in this area are becoming ever more prevalent. In the case against Uber, the Claimants alleged that Uber had failed to pay them the National Minimum Wage or make any payments during annual leave. The claim was brought by the Claimants on the basis that they were workers, rather than self-employed individuals. Uber argued that there was no contract with the drivers and so they were not workers and, as such, not entitled to paid leave.

Pre-Uber decisions

In recent Employment Tribunal decisions in this area, it has been made clear that the court will always look beyond what is stated in the contract. In determining employment status, it will consider all elements of the relationship, particularly the interaction between the parties "on the ground".

The court will also consider the relative bargaining power of the parties when determining whether the contract is a true representation of the agreement between the parties (as found Autoclenz Ltd v Belcher and others [2011]).

A very recent first instance Employment Tribunal decision dealt with this very point. In the case of Gorman v Terence Paul (Manchester) Limited, a hairdresser worked under an "independent contract for services", which described her role as a "self-employed hairstylist". However, the Tribunal found that the reality of the situation was that the hairdresser was subject to strict control by the salon. As a result, the Tribunal found that she was, in fact, an employee.

Uber BV and others v Aslam and others UKSC 2019/0029 – the latest

This case arrived at the Supreme Court after being heard in both tiers of the Employment Tribunal, as well as the Court of Appeal, all of which found that the Claimants were "workers", and that they were "working" whenever they (a) had the Uber app switched on; (b) were within the territory in which they were authorised to work; and (c) were able and willing to accept assignments.

Whilst the judgment has not yet been issued, there has been a large amount of commentary from those who attended the hearing via the Court's online hearing platform. Such issues raised during the hearing were:

  • The true nature of the contract, i.e. looking beyond what is written, to what is done in practice;
  • The relative bargaining powers of the parties and the impact this has on the true agreement. It was also raised that non-use of power does not mean that it does not exist;
  • The wide definition of “worker” and the impact of this;
  • The control Uber holds in dictating the routes which drivers should take, and preventing drivers from seeing the destination so they do not "screen" the journeys they will accept. This also extends to the action Uber can take for poor conduct of the drivers;
  • Whether there is an agency relationship (where Uber is the agent for the driver) and, if so, the extent of control each party has over this relationship.

Whatever the outcome, many have called for proper and coherent legislation on this very opaque area of law.

Possible Implications

The eventual decision of the Supreme Court will have a significant impact on future cases and the gig economy as a sector. Companies such as Uber have founded their business model on the hiring of "flexible" workers, the engagement of whom has ensured relatively low workforce overheads to date. Should that change, and Uber drivers are found to be workers, businesses like Uber may well be unable to continue in their current mode of operation.

On the other side of the coin, if Uber is successful in its appeal, it may only raise further questions as to the correct interpretation of "worker", and its place within today's employment law. Whatever the decision, it will be one which will have an impact far broader than for the Uber drivers themselves.

This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact Rachael Lloyd or Valerie Bond to discuss any issues you are facing.