The Supreme Court has ruled against Uber in a landmark judgment, confirming that Uber drivers are workers and not independent contractors.
What does the judgment mean?
The judgment means that Uber’s drivers are entitled to important workers’ rights not available to self-employed contractors. These include entitlement to the national minimum wage, paid annual leave and protection from detriments under the Equality Act (eg protection from discrimination and whistleblowing). This could see Uber facing extensive claims for backpay from its drivers.
Why is the judgment important?
The judgment has implications for employers hiring casual workers in the gig economy.
It confirms that the way that an employment relationship is characterised in a contract does not necessarily determine an individual’s employment status. Instead, the whole circumstances of the relationship will need to be considered, including the conduct of the parties and the amount of control the ‘employer’ has over the way in which the individual’s services are performed.
In this case, the Court found that whilst the drivers were free to choose when and where they worked, the service they provided was ‘very tightly defined and controlled by Uber’. Uber dictated how much the drivers could earn, set the terms for the service, had significant control over how they performed their services, constrained their choice about whether or not to accept riders’ requests and restricted communications between drivers and riders. The Court also observed that these factors meant that the drivers have ‘little or no ability to improve their economic position through professional or entrepreneurial skill’.
Takeaways for employers
Irrespective of what your contract with them says, independent contractors may claim that they are really a casual worker or even an employee if that is the reality of the employment relationship. This would entitle them to all of the employment rights that worker or employee status brings (eg the right to paid holiday and the national minimum wage). It’s therefore important that you understand how different types of staff are characterised and ensure that the reality of your employment relationships reflect what is written in your contracts.
Importantly, hiring an independent contractor or freelancer will generally only be appropriate if you don’t need full control over how the work is done or who does it, and if you’re happy for the freelancer to work for other businesses.
For detailed guidance about what to consider when you’re deciding on your staffing needs, including an overview of different types of staff and their rights, see our Q&A on Different types of staff.