Why did the Supreme Court find that gig economy drivers were workers?

The Supreme Court's (SC's) ruling that Uber drivers were workers raises a number of immediate practical considerations (which we outline here) and wider ramifications (as we discuss here). In this Insight, we explain why the SC reached its decision.

Agency model rejected

The SC rejected the argument that the platform here merely acted as a booking agent contracting with individual drivers. Without the drivers, there was no means of fulfilling the operation's contractual obligations to passengers and, in this case, its regulatory obligations as a licensed private hire vehicle operator.

The court also threw a spotlight on the need, if the agency model were to be valid, for the drivers really to understand that they were appointing the platform to find work for them as agent (rather than just thinking they were working for the platform).

Identifying the purpose of the statutory protection sought

While many organisations will turn to the written terms agreed between them and an individual as setting out the relationship between the parties, the SC was clear that employment tribunals should consider first whether individuals are workers within the meaning of the applicable legislation "irrespective of what has been contractually agreed", rather than determining employment status by applying ordinary principles of contract law. This requires examining "the purpose of a particular provision and to interpret its language so far as possible in a way that best gives effect to that purpose".

Here, the general purpose of the employment legislation in question was found to be "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)".

In other words, businesses involved in the use or supply of gig workers cannot rely just on contract terms to establish that gig workers are not workers or employees.

Protecting those in a "subordinate and dependent" position

Pointing out that these aspects of work relations were ones that had been considered could not be left to contractual regulation, the SC considered it was clear that the legislation was in place to protect those who were in a "subordinate and dependent position vis a vis their employers". A further category of individuals "substantively and economically" dependent were also felt to be in the same position.

The essence of the intended distinction must therefore be between, on the one hand, workers whose degree of dependence is essentially the same as that of employees and, on the other hand, contractors "who have a sufficiently arms' length and independent position to be treated as being able to look after themselves in the relevant respects".

Referring to previous authorities, the SC noted that factors indicating a dependent relationship included "control exercised by an employer over working conditions and remuneration… the more the work life of individuals is controlled the greater their dependency and consequently their economic, social and psychological vulnerability in the workplace" and that while "subordination may sometimes be an aid to distinguishing workers from other self-employed people, it is not a freestanding and universal characteristic of being a worker… integration into the business of the person to whom personal services are provided and the inability to market those services to anyone else give rise to dependency on a particular relationship which may also render an individual vulnerable to exploitation".

Attempts to contract out void

The court acknowledged that the conduct of the parties and other evidence may show that any written terms were in fact understood and agreed to be a record, possibly an exclusive record, of the parties' rights and obligations towards each other. Nevertheless, the SC confirmed that "there is no legal presumption that a contractual document contains the whole of the parties agreement and no absolute rule that terms set out in a contractual document represent the parties true agreement just because an individual has signed it". An employer is often in a position to dictate the contract terms and that the "individual performing the work has little or no ability to influence those terms". Hence the need for statutory protection.

The SC also noted that it is not possible for parties to contract out of statutory rights (save in accordance with specific statutory obligations). Any terms in a written agreement which purport to classify the parties legal relationship or to exclude or limit statutory protections by preventing the contract from being interpreted as a contract of employment or other worker's contract are of no effect and must be disregarded.