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Uber Supreme Court Decision: A Shift for the Gig Economy?

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The Supreme Court has now heard the final appeal in the case of Uber v Aslam and handed down its judgment on 19 February 2021 on the question of whether Uber drivers are self-employed or workers. This final decision was keenly awaited due to the effect it will have on businesses and gig economy workers across the UK, and Uber has since announced the details of the new terms which it will be offering to drivers going forward as a result.

What was the decision and its effect on Uber?

The Supreme Court decided that Uber drivers must be treated as workers rather than as self-employed. This means that the 70,000 UK Uber drivers are now entitled to minimum wage, holiday pay and other basic employment rights.

The Court also gave much-needed guidance on the distinctions between workers and self-employed contractors, emphasising that the contractual paperwork put in place should not be the only consideration: the factual reality of how the parties’ relationship works is just as important. Uber had exercised a significant amount of control over its drivers and the relationship was not even-handed. This should not have been the case if the drivers were genuinely self-employed.

Uber fares fell 80% due to the COVID-19 pandemic and many drivers suffered financial hardship as a result. Therefore, the Supreme Court’s additional finding that drivers are classed as working at all times whilst logged in to the app is significant  as it includes the time spent by drivers waiting for passengers to book rides. However, Uber has indicated that it will only treat working time as running from the time a trip is “accepted” by a driver to the time of drop-off of the passenger. This is likely to lead to further disputes in future.

What will this mean for the gig economy?

Uber has insisted that its fares will not rise as a result of this ruling, but has confirmed that its UK drivers will earn at least the National Living Wage, be paid holiday time based on their earnings each fortnight and be automatically enrolled into a pension plan with contributions from the driver and Uber from 17 March 2021. Drivers will continue to retain the freedom to choose if and when they drive.

The ramifications of this judgment extend much further than Uber, however, and will affect all businesses involved in the gig economy.  It will likely lead to significant shifts in the way the gig economy operates in the short term. In the longer term, it may lead to new legislation in this area of employment law, to enshrine more concrete definitions of the legal concepts of “workers” and “employees”.

For the time being, any businesses that contract with freelancers or self-employed contractors should consider reviewing whether this is the correct label to give those individuals, or whether there is any argument based on the reality of the relationship that they should be classified as workers and brought onto payroll.

For employment law or HR queries, get in touch with the team at Darwin Graywww.darwingray.com/employment-hr