The Supreme Court has dismissed an appeal by the ride-sharing company Uber over an employment court's decision that Uber drivers were working under worker's contracts for the company.
The unanimous decision in Uber BV & Ors v Aslam & Ors  UKSC 6 confirms that drivers working using the app are employed by Uber instead of being independent contractors and should benefit from worker rights, including the right to earn the minimum wage and holiday pay.
The Employment Tribunal claimants, Mr Aslam and Mr Farrar, were licensed to drive private hire vehicles in London and did so using the Uber app. Their claim was brought in the employment tribunal in 2016 as a test case to establish their employment status.
The employment tribunal found that Mr Aslam and Mr Farrar satisfied this test and worked under worker's contracts for Uber London. Following this, the Employment Appeal Tribunal and the Court of Appeal (by a majority) dismissed Uber's appeals.
Uber argued that Uber BV, the Dutch based company that owns the technology behind the Uber app, acted solely as a technology provider with its subsidiary (Uber London in this case) acting as a booking agent for drivers who are approved by Uber London to use the Uber app. Uber argued that drivers are independent contractors because they can work when they want and as much or as little as they want.
Uber also claimed that when a ride is booked through the app, a contract is thereby made directly between the driver and the passenger. The fare is calculated by the Uber app and paid by the passenger to Uber BV, which deducts part and pays the balance to the driver. The process was characterised by Uber as charging a 'service fee' to the driver for the use of its technology.
To support its case, Uber relied on wording of its standard written contracts between Uber BV and drivers and between the Uber companies and passengers. Uber also emphasised that drivers are free to work when they want and as much or as little as they want. In summary, Uber argued that drivers are independent contractors who work under contracts made with customers and do not work for Uber.
The Supreme Court disagreed. On the facts, there was no written contract between the drivers and Uber London, the court said and as such "the nature of their legal relationship had to be inferred from the parties' conduct and there was no factual basis for asserting that Uber London acted as an agent for drivers".
"The correct inference was that Uber London contracts with passengers and engages drivers to carry out bookings for it."
On top of this, the court said that it was wrong in principle to treat the written agreements as a starting point in deciding whether an individual is a 'worker'.
"The correct approach is to consider the purpose of the relevant employment legislation. That purpose is to give protection to vulnerable individuals who have little or no say over their pay and working conditions because they are in a subordinate and dependent position in relation to a person or organisation which exercises control over their work."
Five aspects of the findings made by the employment tribunal were highlighted by the Supreme Court as justifying its conclusion that claimants were working for and under contracts with Uber.
First the court affirmed that, where a ride is booked through the Uber app, it is Uber that sets the fare and drivers are not permitted to charge more than the fare calculated by the Uber app. "It is therefore Uber which dictates how much drivers are paid for the work they do."
Second, the contract terms on which drivers perform their services are imposed by Uber and drivers have no say in them.
Third, once a driver has logged onto the Uber app, the driver's choice about whether to accept requests for rides is constrained by Uber. Specifically, the court mentioned how Uber would automatically log drivers of the app for ten minutes if it logged too many cancellations of trip requests from the driver.
Fourth, Uber also exercises significant control over the way in which drivers deliver their services. "One of several methods mentioned in the judgment is the use of a ratings system whereby passengers are asked to rate the driver on a scale of 1 to 5 after each trip. Any driver who fails to maintain a required average rating will receive a series of warnings and, if their average rating does not improve, eventually have their relationship with Uber terminated."
The fifth and final factor the court emphasised was Uber's restriction of communications between passenger and driver. According to the court, the apps configuration limits communication to the minimum amount necessary to perform a trip and takes active steps to prevent drivers from establishing any relationship with a passenger capable of extending beyond an individual ride.
"Taking these factors together, the transportation service performed by drivers and offered to passengers through the Uber app is very tightly defined and controlled by Uber," the court said.
"Drivers are in a position of subordination and dependency in relation to Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill.
"In practice the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber's measures of performance. The Supreme Court considers that comparisons made by Uber with digital platforms which act as booking agents for hotels and other accommodation and with minicab drivers do not advance its case. The drivers were rightly found to be 'workers'."
The Supreme Court also outlined when drivers are 'working' for Uber. The court held that the employment tribunal was entitled to find that time spent by the claimants working for Uber was not limited (as Uber argued) to periods when they were actually driving passengers to their destinations, but included any period when the driver was logged into the Uber app within the territory in which the driver was licensed to operate and was ready and willing to accept trips.
Yaseen Aslam, co-lead claimant in the case and App Drivers & Couriers Union President said: "I am overjoyed and greatly relieved by this decision which will bring relief to so many workers in the gig economy who so desperately need it. During the six years of these proceedings, we have watched the government commission and then shelve a review of the gig economy yet do nothing to help us. I hope in future the government will choose to carry out its duty to enforce the law and protect the most vulnerable from exploitation."