(Mar. 17, 2021) The Supreme Court, the United Kingdom’s highest court, upheld on February 19, 2021, a ruling from the Court of Appeal that drivers who brought an employment law claim against Uber in 2016 were not independent contractors and were entitled to the protections afforded workers under U.K. employment law. The high court rejected Uber’s argument that it acts as a booking agent and that its drivers are not workers under employment law. The Supreme Court also found that the Uber drivers were to be considered as working whenever they were logged into the Uber app rather than only when they were driving passengers.
The Supreme Court considered that it was Uber, rather than the drivers, that established the fares and the terms of the contract and which monitored the drivers’ service through Uber’s star rating system, along with being able to terminate the relationship if the star rating did not improve after warnings. In addition, Uber was able to constrain the drivers’ decisions to accept or reject rides by penalizing drivers for rejecting too many rides. The Supreme Court stated that drivers are in a position of subordination to Uber and thus have little means through which to improve their earnings, other than by working more hours. The Supreme Court found them to be workers for the purposes of employment law.
The decision means that a significant number of Uber drivers will be considered to be workers from the time they log into the app to the time they log out and will be entitled to the minimum wage, vacation pay, and other employment benefits and protections. One of the law firms representing Uber drivers was reported as stating that its clients could claim an average of £10,000 (approximately US$14,100) compensation per driver, totaling around £80 million (approximately US$113 million).
The prior judgments of an employment tribunal and the Court of Appeal that the Supreme Court upheld had been hailed by worker advocates as a success, but there were limitations as to their reach, with a government committee stating:
The judgments only apply, however, to the specific workers and organisations under consideration; there are no automatic consequences for other organisations with similar business models. This is a piecemeal approach—and one that places the burden of responsibility for preventing abuse of employment status on workers themselves.
It has been reported that Uber attempted to limit the implications of the Supreme Court’s decision, issuing a statement that it applies to a small number of drivers from 2016, who will be classified as workers. The statement reportedly asserted that Uber does not consider the decision applicable to drivers currently using the app, which has undergone changes in order to provide drivers with more control in addition to providing drivers with free insurance to cover sickness or injury.
A partner from the law firm representing the Uber drivers before the Supreme Court reportedly stated
There is no way [Uber] can say ‘this doesn’t apply’ with confidence. To suggest that the changes they talk about have any impact on the supreme court findings, the effect of that is very misleading. Uber is trying to deter people from the claim with this message.
In addition to the compensation to drivers, the decision may have wider implications for the company. Uber has classified itself as a booking agent rather than a transport provider, which in addition to removing the obligation to provide certain employment benefits and protections has also enabled it to avoid paying a 20% value-added tax (VAT) on fares. The ruling could result in Her Majesty’s Revenue and Customs classifying the company as a transport provider, requiring Uber to pay VAT on fares, with legal professionals accusing Uber of avoiding paying up to £1.5 billion (more than US$2 billion) in VAT payments and interest.