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Supreme Court Finally Rules Uber Drivers as Employees

Uber drivers have recently been ruled as workers, rather than as self-employed, in the highest court in the land of England and Wales – the Supreme Court. This decision could mean the thousands of Uber drivers are entitled to minimum wage and holiday pay.

Former Uber drivers, James Farrar and Yaseen Aslam took Uber to an employment tribunal back in 2016 arguing that the drivers should be entitled to minimum wage. Mr. Farrar said his net earnings in August 2015 were merely £5.03 an hour – under the UK national minimum wage at the time of £6.50 (and now currently at £8.72).

Uber BS & Others v Aslam & Others [2021] UKSC 5

The initial ruling was given at the employment tribunal in 2016 and upheld on appeal. Uber then appealed to the Court of Appeal in 2018 which also upheld the initial ruling by a majority. Finally, on appeal to the Supreme Court, the matter was finally concluded.

Lord Leggatt gave his judgement, dismissing Uber’s appeal that it was merely an intermediary party and the argument that the drivers (whom Uber calls ‘partners‘) can become their own boss by setting their own shifts with no minimum hours. Notably, Lord Leggatt considered a number of elements in giving his judgment:

  • Uber set the fare which meant that they dictated how much drivers could earn.
  • Uber set the contract terms and drivers had no say in them.
  • Request for rides is constrained by Uber who can penalise drivers if they reject too many rides.
  • Uber monitors a driver’s service through the star rating and has the capacity to terminate the relationship if after repeated warnings this does not improve.

Essentially, drivers were subordinate or dependent to Uber and, thus, the ruling was given.

How will this affect the present?

Uber will now have to pay the 20% VAT on fares that it has, up until the ruling, been able to avoid. Jolyon Maugham QC, a barrister specialising in tax and employment law, claims that the Supreme Court ruling has now made it “extremely difficult for Uber to continue to resist paying what I understand to be more than £1 billion in VAT and interest”.

It is likely that we will see costs increase as Uber has to pass on higher labour costs to its customers. Sam Dumitrui, head of projects at the Adam Smith Institute notes that consumers will see prices rise and a less stable, predictable service. Furthermore, when Uber listed its shares in the United States in 2019, the firm included a section in its filing with the US Securities & Exchange Commission (SEC) stating that if its drivers were to be classed as workers, the firm would incur significant additional expenses paying minimum wage to drivers. Such reclassification would consequently have an adverse effect on [their] business and financial condition.

How will this affect the future?

Alex Bearman, a partner at law firm Russell-Cooke, says the outcome is likely to have “significant implications for other operators in the fast growing [industry]”. However on the contrary, Martin Warren, a partner and head of labour relations at Eversheds says the fact that people have won their case against Uber does not necessarily mean similar cases will be brought forward.

With various other claims (see here for more) being brought against other firms such as CitySprint, eCourier, Excel, and Addison Lee, the knock-on effects are yet to be seen.

Conclusion

Uber does, indeed, claim to have made changes to their business in light of the first judgment in 2016, by providing new protections such as free insurance in case of sickness or injury, and giving more control to drivers over how they earn. However, as pointed out by Dr. Alex Wood, an Internet Institute Research Associate on gig-economy at Oxford University, the UK does not have a labour inspectorate. Therefore, “in reality, it’s very easy for Uber to just ignore this until more tribunals come for the remaining… [drivers]”.

Only time will tell whether this ruling has the drastic effects it is capable of. Perhaps drivers for Uber will no longer have to accept net earnings below national minimum wage or, alternatively, perhaps the ruling will swept under the carpet until a subsequent tribunal hearing. Either way, it is in no doubt that the worldwide emphasis on the English courts will be a persuasive authority internationally, and Uber’s reclassification could indeed cause a fundamental change to their business model.

The judgment summary can be viewed here.

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