The unanimous decision followed a two-day hearing before the Supreme Court and concludes a five-year legal battle over whether Uber drivers were contractors or workers.
In 2016, the Central London Employment Tribunal found drivers to be workers under section 230(3) of the Employment Rights Act 1996, a decision that was upheld by the Employment Appeal Tribunal and the Court of Appeal.
Before the Supreme Court, Uber argued that its only role was to provide technology services and act as an agent for the drivers who they classified as “partners”. However, the UK highest court found there was “no factual basis” for the argument that Uber acts as an agent when accepting private hire bookings.
In his judgment dismissing Uber’s appeal, Lord Leggatt wrote: “The employment tribunal was, in my view, entitled to conclude that, by logging onto the Uber app in London, a claimant driver came within the definition of a ‘worker’ by entering into a contract with Uber London whereby he undertook to perform driving services for Uber London.”
Lord Leggatt also said courts should carefully scrutinise companies’ working arrangements to ensure individuals are not denied rights just because they are called “partners” or “contractors”.
He added that the purpose of employment legislation is to protect “workers from being paid too little for the work they do, required to work excessive hours or subjected to other forms of unfair treatment”.
The judgment also held that drivers’ classification as “workers” was not limited 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.
The ruling strikes at the heart of Uber’s business model. We anticipate there will be a significant class action against Uber
Jamie Heywood, Uber’s regional general manager for northern and eastern Europe, said: “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.
“We are committed to doing more and will now consult with every active driver across the UK to understand the changes they want to see.”
However, lawyers for the respondents said the ruling would have wide-reaching implications for Uber as well as platform workers and the gig economy.
Paul Jennings, a partner at Bates Wells & Braithwaite, said: “The Supreme Court’s judgment is a clear and powerful restatement of the importance of basic employment protections. It will shape all future cases concerning the gig economy.”
“The ruling strikes at the heart of Uber’s business model. We anticipate there will be a significant class action against Uber. As a business, it will need to reflect very carefully on the implications of the judgment.”
Bates Wells senior associate Rachel Mathieson added: “The judgment has made it clear that it is not open to gig employers to pick and choose its rules – if the law mandates that these individuals should be paid national minimum wage then there is no contract that can escape that.”
“[This] judgment is a crucial milestone in the protection of individuals in our modern economy. The Supreme Court has confirmed that laws including the National Minimum Wage Act are there to protect vulnerable workers from being paid too little for the work they do, being required to work excessive hours or being subjected to other forms of unfair treatment.”
The case will now return to the employment tribunal, which will decide how much compensation drivers are entitled to. Leigh Day, which represents more than 2,000 drivers, believes claimants could be entitled to an average of £12,000 each in compensation. Uber has approximately 45,000 drivers in the UK.
“Uber has consistently suggested that the rulings only affect two drivers, but Leigh Day will be claiming compensation on behalf of the thousands of drivers who have joined its claim,” said Leigh Day partner Nigel Mackay. “For many of the drivers that it represents, the claims could be worth thousands of pounds in compensation.”
James Farrar, co-lead claimant and App Drivers & Couriers Union general secretary said: “This ruling will fundamentally re-order the gig economy and bring an end to rife exploitation of workers by means of algorithmic and contract trickery.
“Uber drivers are cruelly sold a false dream of endless flexibility and entrepreneurial freedom. The reality has been illegally low pay, dangerously long hours and intense digital surveillance.”
While “delighted” with the ruling, Farrar called on the government to “urgently strengthen the law so that gig workers may also have access to sick pay and protection from unfair dismissal”.