Global Taxes

UK Supreme Court finding against Uber answers questions posed by gig economy

Polly BotsfordMonday 26 April 2021

Tech platform Uber announced in mid-March that it will be treating its UK drivers as ‘workers’ going forward, providing them with holiday pay and paying them at least the National Living Wage. The move follows a UK Supreme Court decision in February, which upheld a 2016 employment tribunal ruling finding Uber drivers to be workers, not self-employed contractors.

Uber’s CEO, Dara Khosrowshahi, said that the company is ‘turning the page on drivers’ rights’.

The decision to categorise its UK drivers as workers – with all that entails under UK employment law – is a significant change in Uber’s stance, one that could have ramifications for the wider gig economy in the UK and beyond.

Kwasi Kwarteng, the UK’s Secretary of State for Business, Energy and Industrial Strategy, said that Uber’s decision was ‘absolutely to be welcomed’.

At the time of February’s Supreme Court judgment – in Uber BV v Aslam & Ors – Uber originally played down the ruling’s applicability, stating publicly that it viewed the judgment as limited by the particular facts and contractual arrangements it had in place back in 2016. It highlighted that since 2016 it had modified these arrangements.

As the number of gig workers has grown, societal concerns about what happens to these people if they do not have rights also grow

Philip Berkowitz
Council Member, IBA Global Employment Institute

There were indications, however, that more claims were going to be brought against Uber following the Supreme Court’s ruling. UK law firm Leigh Day set up a dedicated website, driversclaim.co.uk, for exactly this reason.

Experts widely believed that the Supreme Court case was much broader, partly because it had taken a ‘purposive’ approach to the situation. If the protection of workers is the purpose of the legislation, then the Court can look beyond the terms and conditions of the parties and seek to protect workers if it can.

‘The main thrust of the judgment is that courts should look to the purpose of employment statutes; it is an exercise of statutory interpretation not contractual interpretation,’ says Jason Galbraith-Marten QC, a senior barrister at Cloisters who represented two of the Uber drivers in the case.

Although there’s no hint of legislative change as a result of the Supreme Court case, it’s likely that Uber’s change of gear will have ramifications for the UK’s gig economy and how other companies in this area run their businesses. ‘They will feel that if Uber can’t defend these claims, then they are unlikely to be able to either,’ says Galbraith-Marten.

Gig workers are a global phenomenon and this Uber decision could resonate in other jurisdictions. This is particularly because many countries do not have the classification of ‘worker’ and so in those places, people who work in the gig economy only have two options in law: either to be a fully-fledged employee or a self-employed contractor.

Peter Talibart, Council Member of the IBA Global Employment Institute and a labour and employment partner at international firm Seyfarth Shaw, says ‘Because not all jurisdictions distinguish between “workers” and employees, this type of analysis is even more significant for gig economy businesses in countries where employees are extensively protected by law.’

Indeed, there are – and have been – a number of cases in jurisdictions such as California, Canada, France and Spain.

At a global level, Uber has argued in various white papers that its platform model has social benefits. For example, it suggests there’s a place for flexible roles in any modern economy and that it’s providing first jobs for migrant workers who are not able to find employment in the traditional labour market.

It has positioned itself as a champion in this space, for instance offering drivers in the UK free study tie-ins with The Open University. Its aim, according to its February paper, A Better Deal, is ‘to offer drivers the support and protections they deserve without risking the flexibility they desire’.

In its announcement in March, Uber continued this line, arguing that the worker status that it has now given to UK drivers ‘would seem to fit this framework’ of support and flexibility.

In the immediate term, the Uber BV v Aslam & Ors case has gone back to the employment tribunal to decide on the amount of any awards. These will vary depending on the circumstances of each driver, but Uber could be liable for holiday pay and national minimum wage.

There could also be downsides for consumers as fares may well go up. ‘To the extent that cheap fares were a consequence of cheap labour, [higher fares] seems the right thing to happen,’ says Galbraith-Marten.

In the longer term, greater protection for gig workers is the direction of travel. In the US, the Biden administration is likely to pass a new law which would codify the test for when an independent contractor would be deemed an employee, and thereby make it easier to do so.

Philip Berkowitz, Council Member of the IBA Global Employment Institute and an international employment law expert at Littler Mendelson in New York, explains that ‘as the number of gig workers has grown, societal concerns about what happens to these people if they do not have rights also grows: many will not have health protections, pensions and so on. What happens to them when they fall ill?’

‘These are problems society will have to deal with,’ adds Berkowitz. ‘At a policy level, to find greater protections is the likely trajectory.’

As governments grapple with how to handle these new ways of working, Uber’s decision to reclassify their drivers as workers will give them much food for thought.

Uber did not respond to Global Insight’s requests for comment; Uber’s legal representatives at DLA Piper and Blackstone Chambers declined to comment and did not respond to requests for comment, respectively.

Header pic: Shutterstock.com / Ink Drop