Supreme Court Uber Decision – Employment Status and the Death of the Contract in the Gig Economy?

25 Feb 2021

Last Friday the UK Supreme Court handed down a landmark decision backing Uber drivers’ claims that they were workers and not self-employed, entitling them to worker rights including minimum wage and holiday pay.

Three takeaways from the judgment:

• The court’s starting point was not the contract between Uber and its drivers, but rather whether or not Uber drivers were entitled to the protections of employment laws. The court focussed on the factual relationship between Uber and its drivers in concluding that Uber drivers were “in a position of subordination to Uber”.
• In assessing the relationship between Uber and its drivers the court singled out five different features of the relationship which demonstrated that Uber controlled the drivers’ working conditions and terms, including Uber’s control over pricing, the inability of Uber drivers to form direct relationships with customers and the degree of control in practice over the way in which Uber drivers provided their services.
• The court was dismissive of the contractual terms on which the drivers had contracted and considered any clauses which sought to prevent Uber drivers from having employment rights to be void and indicated that clauses seeking to dictate the legal position would be ineffective.

Does this mean there is no place for written terms in establishing employment status in the gig economy?

• No, there remains a place for written terms which accurately reflect and explain the relationship between the parties. Businesses should fact-check the reality and make sure there is ample evidence to show that the contract is an accurate record of the terms that apply in practice.
• Certain clauses, such as broad indemnities seeking to protect businesses from employment claims, are unlikely to have any effect and should not be relied on.

Are individuals providing services in the gig economy always going to be workers with workers’ rights?

• Not necessarily – the control that the Supreme Court considered Uber to exercise over its drivers may not exist in all business models. Businesses must determine exactly what type of relationship is needed with the individuals supplying its services for their working model to succeed. If the model requires control, then individual service providers will likely be assessed as being workers and entitled to worker rights. Where business-models can make room for individuals to flourish and develop their own working practices and to create goodwill on their own account this would lean towards self-employment.
• For more independent “agent”-type arrangement, aspects to encourage are (i) the directness of the relationship between the individual providing the service and the underlying client; and (ii) a mechanism to enable the individual to develop and direct the business relationship.
• Control was the deciding factor in Uber, but there are other relevant factors that impact an assessment of employment status such as whether or not the individuals providing services may be genuinely substituted for other individuals. The ability to substitute individuals indicates a lack of personal service which is a further key element of worker status.

Article written by: Hadie Cohen and Oliver Harris who form part of the Business Law team at Asserson Law Office.

Hadie and Ollie lead the specialist employment practice at the firm which looks after global companies with UK offices handling all UK legal employment needs [and assist numerous Israeli businesses]. 

 Click here for more information on the Business Law team: asserson.co.uk/p/business-law