Uber and beyond: what next for platforms?
Main image
Uber iStock
John van der Luit-Drummond is editor-in-chief of International Employment Lawyer

“It’s been a long time coming but I’m delighted that we’ve finally got the victory we deserve,” said Uber driver Mark Cairns following last Friday’s Supreme Court judgment. “Being an Uber driver can be stressful. They can ban you from driving for them at the drop of a hat and there’s no appeal process. At the very least, we should have the same rights as any other workers.”

Cairns was one of 25 Uber drivers who successfully fought their case for employment status up to the UK’s highest court where, on 19 February 2021, judges unanimously held the drivers were not self-employed contractors, but workers entitled to holiday pay and the minimum wage.

Yaseen Aslam, one of the lead test claimants in the case, said the decision would bring “relief to so many workers in the gig economy who so desperately need it”. Fellow lead claimant James Farrar predicted the ruling would “fundamentally re-order the gig economy and bring an end to rife exploitation of workers by means of algorithmic and contract trickery”.

By contrast, Uber suggested the judgment was of marginal significance, applying to only a handful of drivers who used its app in 2016 and “significant changes” have since been made to driver contracts. As employment lawyers continue to pore over the detail of the Supreme Court’s judgment, IEL spoke to leading labour law academics to uncover the implications of the Uber decision and consider the challenges ahead for platform companies and their workforces.

The journey so far

UK law contains three categories for employment: employees guaranteed employment rights and benefits; workers entitled to some rights; and the self-employed and contractors. In 2016, former Uber drivers Aslam and Farrar brought an action under section 230(3) of the Employment Rights Act 1996, claiming the ride-sharing app had failed to pay them the minimum wage or provided paid leave. Uber defended the claim, arguing that the drivers were self-employed contractors and not entitled to such rights.

The tech company lost its argument before the Central London Employment Tribunal, the Employment Appeal Tribunal, and the Court of Appeal before the UK’s highest court heard the case and put the issue beyond doubt. Nevertheless, many legal observers expect more protracted legal battles to come, even though the prospects of Uber escaping the effects of this latest judgment are limited.

The real focus is on how the parties conduct themselves factually

“I don’t think it is going to go the way Uber would like it to,” says Professor Alan Bogg at University of Bristol Law School. “It may be the case workers under new contracts will have to bring fresh tribunal claims, and there will then be arguments about whether they are workers under these new contracts, but the approach adopted by the Supreme Court makes it very unlikely these contractual changes will make a difference.”

“There has always been a debate to what extent the court can ignore the written terms setting out what the relationship is,” adds Professor Michael Ford QC of Old Square Chambers and the University of Bristol Law School. “This case is almost saying, well the written terms are really just an element in the overall picture but the real focus is on how the parties conduct themselves factually to decide whether or not someone is a worker.”

Driving change

Following its loss before the UK courts, it seems likely Uber will pivot to an arena where it has achieved more success – political lobbying. The fruits of Uber’s labours can already be seen with the passage of the controversial Proposition 22 in its home state of California, and it is also lobbying the European Commission ahead of the EU executive’s consultation on gig economy regulation. However, Uber and other platforms cannot avail themselves of a Prop 22-style referendum in Europe, which is traditionally more protective of workers’ rights. Post-Brexit and with a business-friendly government in power, is the political landscape more favourable to change on this side of the channel? Perhaps, but experts say Uber’s prospects of securing legislative change would be slim.

“Given the current chaos I’d be very surprised if anything happened because, after all, we are still waiting on an employment bill to come forward, we are still trying to sort out Brexit, and we are in the middle of a pandemic,” explains Ford. “And equally, if they did propose changes in the law to protect their model you’d see very intense lobbying on the other side.”

“Conservative governments are usually much more open to deregulatory changes but this is a situation where you have a government supported by a significant shift in the working-class vote in the north coupled with a widely recognised crisis of enforcement in the labour market,” says Bogg. “It would be very difficult for this government, with the political pressures it is under, to introduce deregulatory changes in response to the judgment.”

Indeed, as Bogg explains, political pressure is being driven in the opposite direction: “The pressure will be on making sure the judgment is enforceable in practice. It will look very bad for the government if, after this victory, you then have tens of thousands of drivers who still can’t get the minimum wage because of inadequate enforcement mechanisms.”

Platforms can’t have their cake and eat it too

In agreement, Professor Valerio De Stefano of the Institute for Labour Law at the University of Leuven says: “For workers a judgment is good news but they are not magic wands. Employment status needs to be upheld and enforced by policymakers on a better and broader scale.”

As De Stefano explains, the findings of British judges are not idiosyncratic to the UK, with courts in Belgium, France, Italy, the Netherlands, and Spain already ruling in favour of reclassifying gig workers’ employment rights. “It is a common trend across Europe that courts find platform workers fall within the existing definition of employees. Platforms need to come to terms with the fact that their business model is not compatible with a self-employed status.”

Any changes to the way Uber and its peer platforms operate to circumvent employee rights would need to go beyond fringe tweaks to algorithms, argues De Stefano. Instead, for workers to be truly self-employed, platforms must radically transform the way they operate. “They need to give up a consequential part of managerial control of workers or acknowledge they don’t engage self-employed people; they don’t just match customers with independent contractors but actively intervene in the service and have to take a degree of responsibility for the platform. Platforms can’t have their cake and eat it too.”

Bogg doesn’t expect Uber’s business model to change dramatically, but posits that if the ride-sharing service is to survive in the marketplace it will need to observe basic labour protections. “If a business model is such that it can’t function without paying its workers beneath the minimum wage then it probably isn’t a business model that should be tolerated in a social market economy. The question is whether Uber can find ways to be profitable that are consistent with observing very basic labour standards.”

Demystifying flexibility

A desire for flexibility is the argument most often raised by Uber when discussing the employment status of its drivers. Launching the company’s recent white paper, “A Better Deal”, Uber CEO Dara Khosrowshahi said any EU regulation on platform work needed to be “grounded in the principles drivers and couriers say are most important to them: flexibility and control over when and where they want to work”. To some, however, it is just fog on the road sent to obscure the truth.

“It is a great myth being peddled: if you want flexibility then you can’t be an employee. It is simply not true,” says Ford. “You can work flexibly and be an employee. There is nothing requiring an employer to offer any fixed number of days or fixed salary yet it is a persistent myth that reaches the media. ‘Drivers want flexibility, they don’t want to be an employee.’ Well, you can be both.”

“The Supreme Court has been extremely clear that flexibility of logging on and off the platform is not the only element that counts when considering if someone is a worker,” adds De Stefano. “Once drivers log on they are subject to a series of control and managerial prerogatives from the platform. The way rides are allocated is always up to the platform’s algorithm. So this ‘flexibility’ is called into question. The courts around Europe say flexibility is important and must be considered as part of the story, but it is not the whole story.”

With the flexibility argument debunked by the courts, all platforms should be wary of exerting strong controls over their users, says De Stefano. “There are platforms that don’t exert control or monitoring of workers and there are those that do. In those latter cases, the Supreme Court judgment maintains there is no actual independence for workers. Algorithmic management goes beyond what would be ordinarily identifiable to the platform economy. The Supreme Court is clear that even if you have the possibility of rejecting jobs, of deciding if and when to work, if you are subject to control and managerial powers then you can be considered a worker.”

This case is not about the gig economy at all. It is about anyone in a position of subordination

Non-platform businesses may be forgiven for thinking the Uber decision would be limited to similar ride-sharing taxi services, but that would be a mistake, according to Bogg. “It’s a common misconception that this is a ‘gig worker’ case, but it’s not, it’s about statutory interpretation on the provision of worker status. It, therefore, has significance for any kind of work arrangement whether or not it is operated through a platform, so the consequences are certainly not restricted to gig work because gig work just isn’t a legal thing anyway.”

“This case is not really about the gig economy at all,” agrees Ford. “It is about anyone who is in a position of subordination where the employer has written terms which purport to classify the worker one way or another, and the extent to which you look not at those written terms but at what is happening. People working in those sorts of conditions aren’t restricted to the gig economy. Nearly all the decided cases aren’t about gig workers, they are about people across the labour market who have been labelled self-employed regardless of whether they worked for an app or not.”

Bumps in the road?

Certainly, more litigation is predicted, both against Uber and other platform giants with workers looking set to come out on top. “After this, I think tribunals will be looking at the economic substance of the business model rather than getting hung up on the contractual details,” says Bogg, who adds that his advice to drivers would now be to bring claims for full employee status.

“Given what is known about Uber’s business model, there seems no reason why drivers wouldn’t also count as employees working under a contract of employment,” he says. “That wasn’t the issue before the Supreme Court and fresh claims under the unfair dismissal legislation would need to be brought, but given how important control and subordination are to the employee test, I think that might be the next step in litigation.”

If Bogg’s prediction holds up then, with around 45,000 drivers in the UK alone, the situation could become much more precarious for Uber. “The Supreme Court judgment kind of suggests the drivers are employees – at least when they are working – which suggests not only do they get employment rights but that they’ve been misclassified for tax purposes,” adds Ford. “If that is the case then Uber should be paying employer’s national insurance contributions and taxed employees at source under PAYE. Maybe HMRC would get involved.”

Whether the platforms’ algorithmic decision-making process could give rise to a breach of Equality Act provisions is another area ripe for legal challenge, suggests Ford. “As I understand it, some of these customer rating systems tend to reinforce existing stereotypes and prejudices. People in protected classes could end up doing worse on the ratings just because how people rate drivers is a reflection of their own prejudices.”

Also in need of clarification is the measurement of working time for minimum wage calculations, specifically with those individuals working across multiple platforms at the same time, says Bogg. “The Supreme Court upheld a broad view of what counted as working: when the app is on, you’re willing to undertake work, that counts as working time and needs to be remunerated in accordance with the minimum wage. But that could be difficult with multi-apping. Those in the gig economy have multiple employers on multiple platforms so it becomes challenging to work out what your minimum wage entitlement will be. It’s an interesting question and one that needs to be addressed at the European level when the working time directive is revised.”

The courts won’t be interested in clever labyrinthine contractual arrangements

Within the coming weeks, the Court of Appeal is expected to hand down its ruling in a dispute between delivery riders and takeaway-app company Deliveroo. The appeal relates to a decision by the Central Arbitration Committee (CAC), which held riders could not form a collective bargaining unit because their contracts with the food delivery business contained a substitution clause allowing individuals to assign jobs allocated through the platform to other riders. This, CAC found, meant the riders were self-employed, not workers.

The Court of Appeal’s decision is as eagerly anticipated as the recent Uber judgment, which some believe will have a huge bearing on the decision in Deliveroo. “Once the full effects of the Uber judgment are felt I think it more likely the riders will be treated as workers because of the purposive approach advocated by the Supreme Court radiating across all these different claims, says Bogg. “Deliveroo is a different statutory claim but it will be subject to the same general thrust as Uber.”

“Uber opens up the issue about substitution clauses,” agrees Ford. “The courts won’t be interested in clever labyrinthine contractual arrangements. We’re going to look at the factual relationship, not how it is defined by the contract.”

Whether it be through the courts or via primary legislation, the direction of travel for platform worker status appears set even if there may still be a few twists in the road ahead. “It is still complex and the Supreme Court decision is not the end of the story,” says De Stefano. “But we clearly see a trend towards an unequivocal acknowledgement of individuals not being classified as self-employed. That is undeniable for both platforms and workers.”