Supreme Court rules that Uber drivers are classed as ‘workers’ not self-employed and therefore entitled to employment rights such as the minimum wage and a workplace pension.
Uber has lost a landmark battle as the Supreme Court ruled that its drivers must be classed as workers and not independent third-party contractors.
The drivers perform driving services booked through the Uber app. The court said it was Uber, not the drivers, who set the fares, which could not be exceeded. The contract terms were also set by Uber and the drivers had no input. Once the drivers logged on to the app, it was Uber that set the rules about accepting requests for rides and monitoring customer satisfaction.
The court concluded that the drivers “are in a position of subordination and dependency in relation to Uber”.
The court emphasised that it must look at the reality of the relationship rather than focus on the contractual document. Uber had significant control over the way that drivers worked and therefore the court concluded that they should be considered the company’s workers rather than self-employed.
Knock-on effect
There is likely to be a knock-on effect for other companies within the third-party contractor’s field. While the ruling does not automatically mean that everyone in the gig economy will now be classed as a ‘worker’, it certainly sets a precedent for further claims to come forward. However, each case will have to be reviewed on the facts of the relationship between the individual and the company.
Automatic enrolment implications As Uber drivers are now classed as workers, by law they will be entitled to be automatically enrolled into a workplace pension scheme by Uber if the qualifying criteria is met. This late adoption will also require Uber to make the highest level of contributions of 5% of banded earnings.
This is great news for contractors in similar circumstances as those with Uber, if claims are successful, as it paves the way for automatic enrolment to give them an opportunity to save for retirement.
On the flip-side there are significant cost implications for employers, as they must ensure that all of their workers who fall within the definition of an ‘eligible jobholder’ are enrolled into a qualifying pension arrangement with the opportunity to opt out.
More significantly, they may be required to plug the gap left by missed employer and employee contributions (including interest) backdated to when the workers should have been enrolled.