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Uber and the Supreme Court – What Now for the ‘Gig’ Economy?

After what seems to have been years of threats and posturing and well-reported excursions through the lower Courts, Initially, 3 Uber drivers applied to the Employment Tribunal claiming that they were ‘workers’ rather than independent contractors.

Such status would ensure that such classification ensured that they were paid at least National Minimum Wage and receive paid annual holiday, as well as allowing them to enjoy protection under various laws (discrimination, deductions from pay, whistleblowing etc.) whilst stopping short of full employee status. Predictably, the Tribunal agreed with them. Uber appealed to the Employment Tribunal, although cannot, in all honesty, have had high hopes, at least not once in possession of their legal advice.

Uber’s argument (such as it was) depended upon viewing the drivers as contracted with Uber as independent contractors, for which (in return for a fee) they received access to an App which, in turn, put drivers in touch with passengers with whom they contracted. Uber were not employers but were merely the sellers of a technological device which allowed other trade.

Nor could they be regarded as providers of transport services: all they were was a technology company supplying a product with (supposedly) no connection with its use. This reassuringly modern and technological view unfortunately came up against some very traditional and tried aspects of the law of England and Wales.

The Employment Appeal Tribunal agreed with the Tribunal of first instance and additionally, no doubt to the chagrin of Uber, raised the possibility of Working Time: when were drivers actually working? Was it (as Uber said) when they were carrying passengers, or as the Claimants maintained, whenever they were operating the App, irrespective of passengers’ presence? As expected, the Appeal Court followed the lower Tribunals, as did the Supreme Court.

Why did the courts, at all levels, come to this conclusion?

Simply by considering this ‘new’ situation in traditional terms. Firstly, it is more important to consider the objective of Parliament in drafting employee protection legislation, rather than the written contents of the contract with Uber. One of the principal reasons for this is the inequality in bargaining power between the parties in the employment contracting process, probably in no area of English law are the courts more active in this area of levelling the playing field.

More particularly, Uber’s contract and relationship with the drivers specified fares, rates, pay and the service fee deducted from each fare. Similarly, in the face of a complaint Uber alone decides whether or not to refund some or all of the fare. Clearly the drivers do not have much autonomy. This is all contained in a signed written agreement, which drivers are forbidden to amend.

Additionally, Uber absolutely controls the selection of routes, and whether or not to accept passenger requests for transport. Failure to abide by the (Uber defined) rules occasions penalties for drivers. All in all, it would take a massive leap of imagination to describe Uber drivers as ‘independent contractors’ in law. Whatever words the necessary paper held, this did not reflect legal reality.

In retrospect, one wonders why Uber persisted. The answer must be that they felt they had no choice; employment protection law in Europe and, particularly – despite the view of the Guardian – in the UK is a great deal more robust than in Silicon Valley and in reality it was only a matter of time before we arrived where we are today.

This is hardly surprising in an economy which, despite being much more flexible that those of mainland Europe, still allows temporary and Agency workers, as well as those on Zero Hours contracts to enjoy similar protection. The bigger surprise, perhaps, is that the legal challenge took so long in coming. This, perhaps, reflects the decline of Trades Unions in the UK over the last 40 years, and the need for individuals to initiate action.

So what will this mean for other employers going forward? Well, in terms of established law, very little. Whenever companies are seen to exert a high degree of control, then the argument will favour seeing individuals as workers. The impact may well be ‘Gig’ employers re-writing their agreements in the future and make it more likely that they will increase prices to cover the additional costs required in engaging workers, rather than contracting with independents.

An alternative would be to looser control and genuinely promote relations between themselves and true contractors. That, inevitably, means reduced control for the platform providers and possible unintended consequences in terms of uniformity and hence service provision of their offering.

In the particular case of the Uber drivers, however, there will undoubtedly be a surge in claims, initially to Uber or intermediaries, and latterly the Tribunal. Holiday pay will be the first issue, no doubt followed up by discrimination and whistleblowing claims.

The sums involved will be considerable, and employment lawyers will be kept busy with such claims for some time. Other, similarly organised sectors can expect to follow, some no doubt after further legal action.

Whilst the outcome of the legal process in this case was fairly predictable, the response of the new entrepreneurs and their systems is likely to be unpredictable – watch this space

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