Earlier this year, the Supreme Court issued a historic judgement in the case of Uber BV v Aslam, when it declared that Uber drivers are more appropriately classified as ‘workers’, rather than ‘independent contractors’. The origins of the case can be traced back to 2016, when the Employment Tribunal, in response to claims brought by a small group of Uber drivers, first held that Uber drivers should be characterised as workers. After unsuccessful appeals to both the Employment Appeal Tribunal (EAT) and the Court of Appeal, the case progressed to the Supreme Court, which- to Uber’s disappointment- cemented the employment status of Uber drivers as workers.
In pleading their case, Dinah Rose QC and Fraser Campbell (representatives for Uber) argued that Uber drivers are subject to two separate contracts. They alleged that one contract governs the relationship between the drivers and Uber, a purported 'independent' company that receives a fee to advertise the services of the drivers, while another contract exists between the Uber drivers and the passengers- reinforcing their position as independent contractors.
Interestingly, the Supreme Court rejected this proposition and held that, in reality, Uber contracts with the passengers, while the drivers are responsible for accepting and undertaking the bookings. In doing so, the Supreme Court eschewed the written agreement between the transportation corporation and its drivers, spotlighting the indisputable presence of a power imbalance as a hindrance upon using existing contracts to gauge the realities of the Uber-Uber driver relationship.
Supreme Court Reasoning For The Decision
The Supreme Court’s decision to classify Uber drivers as workers can ultimately be reduced to Uber’s high degree of control over drivers utilising their platform. Nevertheless, five reasons dominate the Supreme Court’s judgement. They are as follows:
1) The service fee deducted by Uber and monetary compensation received by drivers is to the discretion of Uber.
2) The rights and responsibilities of drivers are encapsulated in a fixed, signed written agreement.
3) Uber has undertaken measures to effectively punish drivers that cancel an excessive number of scheduled journeys by issuing warnings. Crucial information, such as the destination of the journey, also remain undisclosed until the driver has accepted the request.
4) Uber retains a high degree of control over drivers. For instance, Uber maps out the route for the drivers. While drivers are entitled to divert from established guidance, doing so may engender customer dissatisfaction, leading to a driver’s access to the platform being restricted.
5) The correspondence between Uber drivers and passengers is also highly regulated.
Distinguishing ‘Workers’, ‘Employees’ and ‘Independent Contractors’
To fully grasp the significance of this rehaul of the employment status of Uber drivers, we ought to examine the differential treatment of workers, employees and independent contractors on a statutory basis. Section 230(1) of the Employment Rights Act 1996 provides that an ‘employee’ is an ‘individual who has entered or works under a contract of employment’. Conversely, section 230(3) defines a ‘worker’ as an individual subject to:
(a) A contract of employment
(b) Any other contract, whether express or implied, and undertakes to do or perform personally any work or services for another party to the contract whose status is not that of a client or customer of any profession or business undertaking carried on by the individual.
While the statutory interpretation of workers and employees appears to be prima facie negligible. Fundamentally, the distinction stems from a worker’s (e.g. an Uber driver’s) ability to decline to undertake a task which they, for instance, deem inconvenient. This explains why the employment status of Uber drivers was not upgraded to full employee status.
On the other end of the spectrum, we have independent contractors. These are individuals who lack established working hours and fail to fulfil the three requirements for a contract of employment to exist. Namely, ‘control’, ‘mutuality of obligation’ and ‘personal service’. As evident from the Supreme Court’s ruling, Uber's high degree of control over its drivers was the principal motivation behind reclassifying Uber drivers as workers rather than independent contractors.
What is the Impact of Being Classified as a ‘Worker’ for Uber Drivers?
The classification of Uber drivers as workers enables drivers to obtain certain benefits and legal protections unavailable to independent contractors. These benefits include: being entitled to the minimum wage for over 25s, receiving annual paid leave and a pension plan.
What Does This Decision Mean for Uber?
It is undeniable that the Supreme Court’s decision in Uber BV v Aslam provides greater protection and job security for Uber drivers, whose work traditionally often involves long hours in return for little financial compensation. However, for Uber- a staple of the new digital age’s demand for efficient, on-demand transportation- this landmark Supreme Court judgement poses questions about the viability of the transport corporation’s business model. Indeed, to offset the impact of Uber drivers being entitled to receive the monetary benefits of workers, it is probable that Uber will be forced to hike the prices for customers. And whilst it is certainly difficult to feel sympathetic for a corporation worth billions, increased prices for customers subverts the very fundamentals of the gig economy.
What are the Implications of the Decision on the Gig Economy?
Firstly, it would be naive to isolate Deliveroo’s dire performance on the London stock exchange from the uncertainty caused by the Supreme Court judgement in Uber BV v Aslam. Unabashedly described as the ‘worst IPO in London’s history’, Deliveroo’s tumbling share prices indicate the growing instability and hesitance among investors to provide capital for businesses operating within the gig economy. And whilst this is not to suggest that Deliveroo’s failed IPO was a direct product of the Supreme Court’s ruling, it is nevertheless likely to have been a contributing factor.
Moreover, the landmark Supreme Court decision may engender a rehaul of the traditional business model of the gig economy. At the crux of the judgement in Uber BV v Aslam is the high degree of control exercised by Uber over their drivers. In an effort to avoid a similar fate to Uber, businesses using the gig economy model may provide greater autonomy to individuals that use their platform to sell their services. More concerning, perhaps, are the safety implications and potential for consumer experience to be undermined due to increased deregulation of gig economy workers.
Ultimately, while established and ever-expanding corporations like Uber will continue thriving, the true repercussions of the Supreme Court decision are likely to manifest in increased consumer dissatisfaction and financial difficulties for smaller businesses operating within the gig economy. In fact, the next few years will be crucial in determining whether the traditional business model of the gig economy survives at all.