UK Supreme Court Decides Uber Drivers Are “Workers” – Is This A Big Deal?

Vinson & Elkins LLP

Vinson & Elkins LLP

With Uber being the poster child of the gig economy, last week’s decision by the UK Supreme Court inevitably made waves when it dismissed the appeal in Uber v. Aslam and upheld an employment tribunal’s decision that Uber drivers are “workers.”  Here’s a quick breakdown of what it all means and how significant it is.

What is a “worker”?  Worker status is an intermediate category between employee and contractor status under UK statutory employment laws. Workers do not have full statutory employment rights (such as the right not to be unfairly dismissed), but they have some rights and protections that independent contractors do not.  For example, workers are entitled to be paid the minimum wage and to paid vacation.

Why did the UK Supreme Court decide that Uber drivers are workers? As is the case in any analysis to decide whether someone is an employee or an independent contractor, a court or tribunal will look at the factual reality of the relationship between the individual and the business to which they are providing services, not simply what label has been used by the parties or the terms of any agreement between them. The Court focused on a variety of facts in reaching its decision, including the degree of control Uber had over contract terms, rates of pay, and the way services are delivered. Whether an individual is an employee, a worker or an independent contractor is a question of law that is applied to specific facts and the Uber decision provides helpful guidance to businesses seeking to apply the appropriate classification.

How significant is the decision? Given Uber’s high profile and the worldwide debate over the treatment of gig economy workers, this was always a high-profile case. But it is important to bear in mind that the drivers were not found to be employees. Worker rights are limited and businesses still have considerable flexibility in the way that they engage workers, but there’s no doubt this decision could have a significant impact on the business model of a company like Uber. The provision of paid holidays, in particular, could have a substantial commercial impact. How significant this decision is will depend greatly on the nature of the business and the way in which it engages with its workforce.

In the context of a post-Brexit reassessment of employment rights by the UK government that will play out over the next few years, it will be interesting to see how the desire for a flexible and competitive business environment will be balanced with the political aim to protect the rights of employees and workers. The Uber decision will not be the final word on this issue.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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