Uber drivers: what happened, what's next and what this means for the gig economy

18 March 2021 | Applicable law: England and Wales

The UK Supreme Court has recently confirmed that Uber drivers are workers, and are not self-employed for the purposes of their employment rights. This means that those drivers affected by the judgment will be entitled to paid holiday and to the national minimum wage, and Uber has now agreed to afford certain of its drivers these statutory rights.

Whilst this judgment is specific to the arrangements in place at Uber, if you use a similar business model you should carefully consider the implications. In particular, it is possible that you may see claims from individuals that they are workers and entitled to additional rights, or in the longer term the Government may take steps to address the employment status of individuals working in the gig economy.

What are the risk areas for your business?

The following key findings from the Supreme Court highlight some potential risk areas:

The documentation is not the starting point

Employment legislation is intended to protect vulnerable workers from underpayment, excessive hours, and unfair treatment. You cannot contract out of these protections and contracts that wrongly seek to exclude or limit employment protections will be disregarded by the courts.

Identifying worker status is a matter of applying the statutory provisions to the circumstances of the engagement and taking into account the purpose of the legislation, not starting by looking at the terms of the contract.

Control may be key

Self-employment is often linked with increased flexibility and, in this case, the level of control exerted by Uber was a key factor in determining that the individuals were workers, including that:

  • Remuneration is fixed by Uber, which dictates how much drivers can earn;
  • The terms of service are determined by Uber;
  • Uber controls drivers’ decision to accept rides, including not informing them of the end destination, and imposing penalties for high cancellation rates;
  • Uber controls service delivery by imposing a rating system, and can terminate the relationship if service delivery does not improve after warnings; and
  • Uber restricts the communication between the passenger and driver, limiting the relationship to an individual ride.

Can individuals still be self-employed?

Although grey areas remain, it is possible to structure models in such a way that the individual remains genuinely self-employed. The Court recognised that if the drivers were able to fix their own prices and terms, were not providing a standardised service, and were not penalised for cancellations, this would all point away from a worker relationship and towards self-employment.

Whilst Uber has now taken the step to grant workers rights such as holiday pay and national minimum wage, there are still issues of disagreement over the periods that count as work with Uber not paying for periods of time when drivers are waiting for fares. There is likely to be continuing disputes over technical areas such as this, which are highly fact specific.

What to do next

If you have concerns that your current business model could be challenged as a result of the Uber judgment, alternatives may include restructuring existing working practices, or granting individuals worker status (either across the board or on an opt-in basis) with certain rights such as holiday pay.

Taking, or getting up to date advice now on the employment status of individuals engaged as self-employed is a sensible first step.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.


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