What the Supreme Court ruling on Uber drivers means for UK employers

In 2016 the Employment Tribunal heard a case brought by Uber drivers James Farrar and Yaseen Aslam, who believed that they should be regarded as workers. The tribunal found in favour of Farrer and Aslam. This decision was later upheld by both the Employment Appeal Tribunal (2017) and the Court of Appeal (2018) and now, most significantly, the Supreme Court.

On 19 February 2021, the Supreme Court handed down its decision after hearing the appeal on behalf of Uber back in July 2020. The ruling now means that Uber drivers can access the rights afforded to workers.

This decision is significant for the gig economy, which is forever growing. By recognising the drivers as workers, they can now access statutory rights such as national minimum wage and paid holiday entitlement. This is clearly the more significant element of the decision for those who work within the gig economy. Still, more noteworthy for employers more broadly is the way by which the Supreme Court reached its decision.

The Judges explained the importance of considering the reality of the drivers’ working practices and the relationship with Uber rather than being bound by the written agreements. As employment lawyers, we have flagged this as a key “takeaway” from this decision because it is important for businesses to review the documentation and contracts that they have in place for workers and contractors to ensure that these reflect the true working relationship and to make sure that they are accurately interpreting the classification of those working within and for their business.

The criteria that the court looked at included the level of control that Uber had over the drivers.

For example,

• how work is given to the drivers and the nature of any disciplinary and dismissal procedures,
• restrictions imposed on the drivers by Uber, such as the drivers’ inability to form alternative contracts with passengers outside of Uber,
• the fact that Uber sets the specific terms and conditions of the service, including dictating the fare and therefore ultimately how much the drivers could earn,
• drivers face penalties for cancelling or not accepting rides – sometimes preventing them from working.

This ruling will have future ramifications for businesses that use a similar business model and will open the floodgates to claims from those who will now be able to apply this precedent case to their own employment status. This leaves the gig economy vulnerable to significant obligations to pay back pay and compensation if successfully claimed.

This case highlights the importance of correctly identifying workers and contractors’ employment status by looking at the relationship in practice. Misinterpreting the relationship can be significant for businesses. Should you want assistance with reviewing your workforce’s status, Price Bailey can carry out a workforce audit to ensure that your contractors are truly contractors.