Uber's drivers are not self-employed

The Supreme Court has confirmed that Uber's drivers are workers and not self-employed. The taxi-tech business failed to persuade judges that it acted merely as an agent when it supplied enabling technology to the drivers via its App as it exerted such complete control over the way in which the driver worked.

In B.V. Uber London Ltd and Uber Britannia Ltd v Mr Y Aslam and Mr J Farrar v Ober [2021] UKSC 5, private hire App owners 'Uber' appealed against a decision of the Court of Appeal which had confirmed that three of their private hire drivers were workers.

The drivers claimed that they were 'workers' for the purposes of the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998. As such, they were entitled to the National Minimum Wage, paid leave and other legal protections.

Uber argued that it was only acting as their agent in providing the technology for drivers to conduct their trade. 

With no written contract between the drivers and Uber London, the nature of their legal relationship had to be inferred from the parties’ conduct. The Supreme Court noted that there was no factual basis for asserting that Uber London acted as an agent for drivers. Instead, the Court decided that the correct inference was that Uber London contracts with passengers and engages drivers to carry out bookings for it.

As established in its previous decision in Autoclenz Ltd v Belcher [2011] UKSC 41 it is wrong in principle to treat the written agreements as a starting point in deciding whether an individual is a 'worker'. The correct approach is to consider the purpose of the relevant employment legislation. That purpose is to give protection to vulnerable individuals who have little or no say over their pay and working conditions because they are in a subordinate and dependent position in relation to a person or organisation which exercises control over their work. The legislation also precludes employers, frequently in a stronger bargaining position, from contracting out of these protections.

The judgment emphasises five aspects of the findings made by the employment tribunal which justified its conclusion that the claimants were working for and under contracts with Uber.

• First, where 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 that dictates how much drivers are paid for the work they do.
• Second, the contract terms on which drivers perform their services are imposed by Uber and drivers have no say in them.
• Third, 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.
• Fourth, Uber also 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 rating 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.
• A fifth significant factor is 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.

Taking these factors together, 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.

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

When are the drivers 'working' for Uber?

The Supreme Court also holds 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. 

Comment: '...and what about the VAT?'

The Supreme Court decision is an expensive ruling for Uber. It will transform its low-cost business model in the UK. It now faces claims for back-pay and holiday pay from its workers. Uber's VAT position is also clarified. Barrister Jolyon Maugham QC's Good Law Project had challenged the company for a VAT receipt and had subsequently pursued legal action against HMRC, requesting details of any VAT assessments made against Uber. The Project's website now confirms that Uber’s US accounts state that HMRC has assessed Uber to VAT on fares, both prospectively and retrospectively. "That's all we ever wanted", say the triumphant campaigners.

Useful guides on this topic 

Employment status checklist
Employment basics for employers and employees.

Employment status (subscribers)
A review of case law covering employment status, together with a detailed checklist, based on case law. Ideal if you are creating a new business in the 'gig economy'.

Check Employment Status for Tax (CEST)
A review of HMRC's CEST tool.

Personal Service Company (PSC) tax
Running your own business and selling your personal services as a worker? Start here.

Agency Workers: employment intermediaries rules (subscribers)
Working for an agency? Running an agency? Who has to operate PAYE within the labour supply chain?

Got a VAT receipt mate?
Uber's VAT: a barrister takes on Uber. 

External links

B.V. Uber London Ltd and Uber Britannia Ltd v Mr Y Aslam and Mr J Farrar v Ober [2021] UKSC 5