A special article by Darren Newman, Employment law trainer, writer and consultant.
One of the things I like about the Supreme Court is its lack of grandeur. People often associate the English legal system with all manner of flummery – wigs, gowns, archaic language, soaring rhetoric and elaborate ceremony. You get none of that in the Supreme Court. Even when it is sitting in its building on Parliament Square it takes a refreshingly down-to-earth approach. In lockdown, with arguments being conducted from the various homes and offices of the participants, it is even more low key. You get clever people debating the law in a respectful and civilised manner – followed by a carefully reasoned decision. It’s lovely.
Take the announcement of the Uber decision on Friday. No fanfare, just Lord Leggatt sitting in front of what appear to be his dining room curtains saying ‘welcome to the Supreme Court’ – it makes you proud.
Despite the low production values, Friday’s decision in the Uber case was a real blockbuster. There is often a risk with much anticipated Supreme Court decisions that they will shy away from the big questions we are all interested in and focus on something that is specific to the case in front of them. My worry in this case was that it would end up turning on some aspect of agency law. But no. this is the new leading case on how you determine worker status. It gives the new starting point for that assessment and will now be quoted every time a Tribunal has to look at the issue.
The headline point is that when you are deciding whether a particular individual is a worker or not, you do not start with the contract and see whether that is the sort of contract a worker would have. Instead you start with the statutory provision – for example the right to the minimum wage – and see whether they fall into the statutory definition of a worker ‘irrespective of what had been contractually agreed’. Whether or not an individual is a worker is primarily a question of statutory interpretation not contractual interpretation.
Lord Leggatt points out that the modern approach to statutory interpretation is to look at the purpose of a particular provision and to interpret it, so far as possible, in the way which best gives effect to that purpose. In this case the purpose of the legislation being considered was to
‘protect vulnerable workers from being paid too little for the work they do, required to work excessive hours or subjected to other forms of unfair treatment (such as being victimised for whistleblowing).’
It is the vulnerability that is key. Some contractors are in a position to negotiate their own terms with their clients. Others are in a more subordinate position – dependent on the client for whatever work is offered to them. Given the statutory need to protect these individuals, it is clear that you cannot take the written contract as the starting point in determining whether they fall within the definition of “worker”. It is the very fact that the employer is in a position to dictate the terms of the contract that means that a statutory right to a minimum wage, a limit on working time or a right to paid annual leave is needed. Here’s a good bit from Lord Leggatt’s decision:
‘The efficacy of such protection would be seriously undermined if the putative employer could by the way in which the relationship is characterised in the written contract determine, even prima facie, whether or not the other party is to be classified as a worker. Laws such as the National Minimum Wage Act were manifestly enacted to protect those whom Parliament considers to be in need of protection and not just those who are designated by their employer as qualifying for it.’
I don’t know how you work, but If I’d written that paragraph I’d have taken a break and had a biscuit afterwards to reward myself.
The key overarching issue in determining whether or not the drivers were workers was whether they were in a position of subordination and dependence in relation to Uber. Lord Leggatt emphasised that the ‘touchstone’ of that subordination and dependence was the degree of control exercised by Uber over the work and service of the drivers – the greater the control, the stronger the case for classifying the drivers as workers.
Lord Leggatt then set out the factors that indicated that the extent of the control exercised by Uber did indeed create the subordination and dependence that justified that the Tribunal’s conclusion that the drivers were workers. I won’t go through them. But it strikes me that what was going on here was that Uber was trying to have its cake and eat it too. On the one hand it needed to ensure that those who took a ride with them enjoyed a good experience, that the price was appropriate, the driver behaved well, the car was of a certain standard and the route taken was efficient. On the other hand it wanted to pretend that it wasn’t providing this service at all – it was just acting as an intermediary giving individuals running a driving business the opportunity to find customers. Trying to hold these two contradictory approaches together led to some extraordinary contortions in the documentation it produced. And of course occasionally – particularly when it wanted to boast to regulators about how many ‘jobs’ it was creating – the mask slipped and the true nature of the relationship between Uber and its drivers became clear.
Throughout this case we have seen that the various contractual documents drafted by Uber have done them no favours at all. They were just too clever by half. Intricate and impenetrable, they set out a relationship between the parties that bore no relationship to reality. Asking the Supreme Court to give primacy to such documents was always a losing strategy (easy to say that now of course, but still, it’s true).
The result was that Uber drivers were workers. They were entitled to paid annual leave and – most importantly – to be paid the national minimum wage. Lord Leggatt’s judgment is now the first place to go when considering worker status. Could the same approach also apply when considering whether someone is an employee rather than just a worker? Maybe – though a contract of employment was a recognised ‘thing’ before statutory employment rights were created. Rights given to employees might still need to start with an analysis of whether the individuals relying on them were employed under that sort of contract – but that is an issue for a future case.
Working Time and the sheer scale of Uber’s arrears
Back to Uber. Crucially the Supreme Court, as well as finding that the drivers were workers, also upheld the Tribunal’s finding that a driver who logged on to the app was working even before a job was allocated. Uber had claimed that having the app switched on implied absolutely no obligation on the driver’s part to accept work – but were not helped by the fact that their Welcome Pack for drivers referred to logging on as ‘going on duty’. It was clear that Uber regarded drivers who had the app switched on as under some sort of obligation to accept trips – even if they could decline individual requests.
The finding on working time is, surely a killer blow. It means that every time one of Uber’s 40,000 or so drivers has had the app switched on, they have been entitled to be paid the minimum wage for however long they remained logged on. The potential for back-pay claims must be enormous.
Uber’s reaction so far has been almost nonchalant. The Guardian quotes Janie Heywood of Uber as saying:
“We respect the court’s decision which focused on a small number of drivers who used the Uber app in 2016. Since then we have made some significant changes to our business, guided by drivers every step of the way. These include giving even more control over how they earn and providing new protections like free insurance in case of sickness or injury.”
The idea that this case was all about a small number of drivers on an old set of terms and conditions just won’t wash. Uber did not lose this case on some technicality about their 2016 documentation. The Courts have found that Uber’s business model means that its drivers are workers. That position isn’t going to change by tweaking the wording of their policies. And quite what difference a free insurance policy is supposed to make is beyond me. Are they really going to brazen this out? Pretend that they can carry on as normal and see how many drivers actually have the nerve – and the resources – to take them on?
Surely HMRC must step in. Now that we know for sure that Uber drivers are workers, compliance officers can set about the task of assessing whether or not Uber has complied with their obligations (shouldn’t be tricky – they clearly haven’t) in respect of the minimum wage and set about calculating the amount of arrears that are due. They should then issue what might be their biggest ever Notice of Underpayment – plus a penalty of up to £20,000 per worker. There should be no excuses. This is a massive breach of the minimum wage law. If HMRC doesn’t act, then how will it explain its decision to pursue smaller employers making genuine mistakes about how the minimum wage is calculated?
One argument that must not be allowed to gain traction is that Uber’s liability has arisen as a result of some unexpected legal quirk – that they are victims of a complex or unclear law. Uber lost this case in 2016 and it is only their repeated appeals that have kept the process going this long. The complexity of the case arises from their own practice of shrouding a straightforward worker relationship in a mesh of overcomplicated legal verbiage bearing no relation to the facts on the ground – and clearly intended to dodge the obligations that other employers have to bear. Their legal arguments have reached the end of the road.
Time to pay up.