Uber Supreme Court ruling: the end of the road for the gig economy?

22 February 2021 | Thoughts and Opinions

Last week the UK Supreme Court dismissed an appeal by Uber who claimed their taxi drivers were self-employed independent contractors. The court upheld earlier decisions which ruled Uber drivers were ‘workers’ in terms of the 1996 Employment Rights Act – with a right to paid holidays, the national minimum wage and other protections.

Uber argued that it was only a booking agent for drivers via the Uber app. The ride share giant maintained that when a ride was booked through the Uber app, a contract was made between the driver and passenger. The Supreme Court judge disagreed and found that the nature of the legal relationship had to be inferred from the parties’ conduct. The court’s decision will benefit some 40,000 Uber drivers across the UK.

Uber Supreme Court ruling: the end of the road for the gig economy?

But the ruling is set to have dramatic consequences for millions employed in the soaring gig economy. Under UK law, a person classed as a worker is entitled to certain employment rights, including the minimum wage, holiday pay and protection from discrimination, which Uber drivers had been denied.

One in ten adults is said to be employed in the gig economy, which refers to jobs conducted on a freelance basis. Many are attracted to it because of the freedom it allows them. But for others, it is categorised by a lack of rights and poor job security.

Here, Ella Bond, an employment law specialist with Harper James Solicitors, gives her view on the landmark ruling and what might come next.

‘The Supreme Court’s decision in the Uber case is the final attempt by Uber to overturn the previous decisions of the Tribunals and Courts, all of which found that Uber’s drivers were workers. This case serves as an important reminder that, even though the contractual documentation between parties may purport to confer a particular employment status, it’s actually how the arrangement and relationship between the parties operates in practice which will be key when determining this.

‘Although the contracts made the drivers out to be self-employed sub-contractors, the reality was that they were in fact ‘workers’ due to the level of control Uber exercised over them. This control included Uber determining the fares, controlling the bookings, vetting the vehicles, and controlling the drivers’ terms and interactions with the passengers.

‘Consequently, as workers, the drivers are entitled to claim holiday pay, SSP and the National Minimum Wage (including the right to claim back pay) and will have certain employment rights such as whistleblowing protection. This decision is likely to be hugely costly for Uber going forward, both in terms of back pay to be claimed and Uber’s future obligations to any of their drivers who continue to operate as workers.

‘As well as having wide ramifications for the gig economy, I would encourage all companies to check their self-employed contractors are operating autonomously and without being unduly managed or controlled. Where there is any doubt, professional advice should be sought. If the arrangement on the ground does not reflect the status assigned to the individual(s), then either changes will need to be made to how the relationship operates in practice or the contract, together with all associated rights and obligations, should be amended to reflect the reality.  This will help businesses to ensure that they do not find themselves on the receiving end of expensive litigation as Uber has been.’

Do you have questions about the status of contractors in your business? Our employment experts can clear up any contractual confusion about who you employ and on what basis, and put your mind at rest.

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