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Uber drivers are workers: Supreme Court decision

Posted on 19 February 2021

Today's unanimous landmark Supreme Court decision confirms that Uber drivers are 'workers' for employment law purposes and so are entitled to rights such as paid holiday and national minimum wage, as well as protection as whistleblowers.

The Supreme Court approved the Court of Appeal's majority decision that Uber's complex contractual arrangements were artificial and did not reflect the true situation. Where this is the case, it is appropriate to look beyond the express contractual terms to identify the reality of the relationship. Given the inequality of bargaining power between Uber and its drivers, the level of control exercised by Uber over the way in which the drivers worked, and the drivers' economic dependence on Uber's platform, it was clear that the drivers worked for Uber. In particular, the Supreme Court found that the drivers' ability to profit from their work was limited by the way in which the relationship with Uber was framed.

Significantly, the Supreme Court has confirmed that the correct starting point when trying to determine whether someone has 'worker' status is not the contract.  Instead, the courts will look at the purpose of the relevant employment legislation, and see if an individual should be protected by that legislation.  The Court noted that workers are often in a weaker bargaining position, and warned against attempts to contract out of the statutory protections that exist to protect vulnerable individuals.  This is a clear signal that workers – particularly in the gig economy – will be protected by the courts, irrespective of the nature of their contractual arrangements.

As a result of today's Supreme Court decision, employers are well advised to consider reviewing their working arrangements with contractors to assess the employment status risks.

Meanwhile, Uber's business model is now in jeopardy.  The Supreme Court held that its drivers start work for the purposes of the law as soon as their app is turned on and they indicate that they are ready to work.  This may mean that customers will be faced with higher fares, in order that the increased costs of running the business will be covered.

The employment status of individuals is very much in the spotlight, not just to determine their employment rights, but also to determine how they should be treated for tax and national insurance purposes. This is reflected in the imminent changes to the Government's private sector off-payroll working regime (IR35) this April. Where a contractor provides services via the contractor's personal service company (PSC) and there is a deemed employment relationship, the revised IR35 regime obliges the fee payer, rather than the PSC, to pay employment tax and national insurance on the consultancy fees.

Please watch this space for more in depth analysis of the implications of the Uber decision and the wider employment status landscape.

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