The Uber Supremacy (not)

The UK Supreme Court has now delivered its final verdict on the question of whether Uber Drivers are workers for the purpose of various bits of UK employment law. The full and admirably clear judgement handed down on 19 February 2021 can be found here. The conclusion, contrary to Uber’s arguments, is that in reality and despite what the contracts might say, Riders get Uber to provide them with a ride and Uber engages Drivers in order that Uber may provide the ride. Uber is not a middleman offering Drivers to Riders, in contrast to platforms like Air B’n’B who present potential customers with a range of different offers of accommodation from different individuals from which the customer can choose depending on how well they meet her particular needs.

Unsurprisingly Uber doesn’t like the decision but it’s final as far as UK law is concerned. However, Uber have put out a statement in response in which they highlight changes they have made to their arrangements with drivers since the original legal challenge and I guess they might try to claim that these ‘new’ arrangements are so different that the judgement doesn’t apply to them. In this blog I’ll outline the grounds of the court’s decision and then consider whether the changes Uber has made are likely to make any difference.

Firstly, as background, in London, where most Drivers are, you need a Private Vehicle Hire Licence as an individual to be able to work as a taxi driver of any sort. This will typically cost around £370 plus the cost of a medical, with maybe a further £200 on top if you have to have a language assessment.

But this doesn’t itself enable you to get fares for yourself. Instead it allows you to work for a licensed hire operator. If you want to drive for yourself as a ‘one-man band’ you have to acquire a Private Hire Operator’s Licence which will cost £2,000 for your one vehicle. Similar provisions are in place outside London.

This matters because a fundamental finding of the Supreme Court is that the only person who held a Private Hire Operators Licence in the web of agreements between various Uber companies, Drivers and Riders is Uber London. So although Uber London as a Private Hire Vehicle Operator can offer to provide taxi services to members of the public, the Drivers cannot. The court also found that there is no contractual agreement between Uber London and the Drivers. The Drivers are in a contract only with Dutch company Uber BV and only the Riders are in a contract with Uber London. So the claim by Uber that it was not actually offering taxi services itself but instead acting as an intermediary or agent for the Drivers was rejected because the only person legally able (as having to be a licensed Private Hire Operator) to provide taxi services was Uber London. As the Drivers aren’t licensed as Private Hire Operators, they cannot themselves provide taxi services but only drive for a Private Hire Operator.

As the judgement says

This suggests that the only contractual arrangement compatible with the licensing regime is one whereby Uber London as the licensed operator accepts private hire bookings as a principal (only) and, to fulfil its obligation to the passenger, enters into a contract with a transportation provider (be that an individual driver or a firm which in turn provides a driver) who agrees to carry out the booking for Uber London

Of course, there’s nothing stopping Drivers applying for Private Hire Operator licences themselves except the need to find the necessary £2,000 fee up front, but this might be rather a barrier to entry for many Drivers, and mean far fewer for whom Uber driving were possible, let alone desirable. This is quite important because it doesn’t seem to be an issue that Uber could get around simply by changing its arrangements so that Drivers were in a contract with Uber London who would act as a booking agent for them as they could only do so for Drivers who were able to splash out on acquiring an Operator licence. Of course Uber could pay for the licences but as its business model involves investing as little money as possible (e.g. the vehicles are provided and insured by the Drivers) and paying as little as possible whether to Drivers in the present case by not wishing to incur any of the costs of them being workers or to HMRC by claiming they are not liable for any VAT on Rides.

So, Uber London having been found to provide taxi services as principal to a Rider, and using a Driver to deliver the Ride, what then is the nature of the contract Uber London has with Drivers to carry out the booking for Uber London. Obviously, as there isn’t actually any written contract between Uber London and any Driver, the nature of it has to be inferred from what actually happens in practice. The court then ran through all the well-known conditions and constraints placed on Drivers, focussing on five in particular :

• the fares are set by Uber
• the terms on which Riders are carried are set by Uber
• the Driver’ ability to choose is constrained, in particular by Uber not telling the Driver the destination when offering the opportunity to deliver the Ride, and Uber penalising Drivers who do not accept enough Rides or cancel Rides
• Uber requires a particular kind of vehicle to be used, sets an exact route that a Driver can be penalised for not following, and uses customer ratings as an internal performance management tool, terminating Drivers if they’re not up to scratch.
• Riders aren’t offered a choice between different Drivers and Uber ensures that contact details are not shared

Taking these all together the court found that things were

designed and organised in such a way as to provide a standardised service to passengers in which drivers are perceived as substantially interchangeable and from which Uber, rather than individual drivers, obtains the benefit of customer loyalty and goodwill. From the drivers’ point of view, the same factors — in particular, the inability to offer a distinctive service or to set their own prices and Uber’s control over all aspects of their interaction with passengers — mean that they have little or no ability to improve their economic position through professional or entrepreneurial skill. In practice the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance

And that this meant that the Employment Tribunal was entitled to rule that as a matter of fact the Drivers were ‘workers’ for Uber rather than being self-employed people offering to supply taxi services on their own account with Uber simply providing a platform to link them up with potential customers. The court notably distinguished Uber from platforms that do simply provide a shop window for competing suppliers, like Airbnb, saying

…such platforms differ from Uber in how they operate in several fundamental ways. Notably, the accommodation offered is not a standardised product defined by the platform. Customers are offered a choice among a variety of different hotels or other types of accommodation (as the case may be), each with its own distinctive characteristics and location. Suppliers are also responsible for defining and delivering whatever level of service in terms of comfort and facilities etc they choose to offer. Apart from the service fee, it is, crucially, the supplier and not the platform which sets the price.

…Nor does the platform restrict communication between the supplier and the customer or seek to prevent them from dealing directly with each other on a future occasion. The result of these features is that suppliers of accommodation available for booking through the platform are in competition with each other to attract business through the price and quality of the service they supply. They are properly regarded as carrying on businesses which are independent of the platform and as performing their services for the customers who purchase those services and not for the platform.

This is more or less exactly what I wrote after the original Employment Tribunal decision back in 2016 in response to other commentators claiming that Uber was no different from Airbnb or even from eBay.

Obviously this is a bad result for Uber as if the Drivers are working for Uber then they have entitlements to things like holiday pay, are subject to Minimum Pay requirements etc etc all of which would fall as costs on Uber. It’s also terribly unhelpful to Uber’s argument with HMRC that it needn’t account for VAT on fares because the taxi services are provided by individual Drivers and not by Uber.

So what was Uber’s response? Well obviously they have had plenty of time since the Employment Tribunal decision to prepare for the risk of ultimately losing this lengthy litigation. Following the Supreme Court judgment they immediately put out this ‘blog’. It’s the most weaselly-worded thing I’ve seen in some time, starting out…

Earlier today the UK Supreme Court ruled that a small group of drivers using the Uber app in 2016 should be classified as workers. After this small group of drivers went to an employment tribunal, the case wound its way through the courts over the last few years, ultimately ending up before the UK Supreme Court. Today we learned that our case was not successful and this group of drivers from 2016 should have been classified as workers. The verdict does not focus on the other drivers on the app, nor does it relate to couriers who earn on Uber Eats.

One has to wonder what Uber mean when they talk of ‘ a small group of drivers’ twice and ‘this group of drivers from 2016’. At the time of the Employment Tribunal, Uber had about 30,000 Drivers in London, and as the Supreme Court notes (with my emphasis)

For the purpose of the decision which has given rise to this appeal, the employment tribunal limited its consideration to two test claimants

As far as I know, all the individual Drivers used by Uber in 2016 were subject to the same agreements and contracts. Indeed it has been a fundamental and unchallenged finding over the stages of litigation that all individual Drivers have to sign up to exactly the same terms and conditions. And the Supreme Court judgment about how the law applies in the factual circumstances of the test claimants will apply equally to everyone in the same factual circumstances. So when Uber say

The verdict does not focus on the other drivers on the app

what can they possibly mean?

The blog then goes on say

Over the last few years we have made significant changes to our business … Many of the examples called out in the judgement are no longer relevant. For example, drivers now have full transparency over the price and destination of their trip, and since 2017 there has been no repercussion for rejecting multiple consecutive trips.

The implication here seems to be that Uber hope that the changes they have made mean they can argue that while the judgment is that Drivers were ‘workers’ in 2016, factual differences between then and now means that they aren’t anymore. The second video in the blog outlines these changes for Drivers, parading them in the words of the enthuastic voiceover as to

help them manage their business when they choose flexible work on the Uber platform.

The specific changes mentioned are

• Drivers are now told the destination of the trip being offered
• Drivers aren’t now logged-off if they refuse consecutive trips
• Riders can save ‘Favourite Drivers’
• The terms and conditions for Drivers are now ‘Clearer and Simpler’

Are they likely to have made a sufficient difference to change Drivers’ status from that of worker to someone working on their own account? I don’t think so. If individual drivers still don’t have a Public Hire Operator licence then they still can’t be providing services on their own account to Riders. Thus Drivers are still providing their services to Uber who are paying them to fulfil the bookings Uber have taken to provide taxi services to Riders.

Telling Drivers the desired destination before they accept the job and not logging them off if they decline jobs does remove two of the more ‘controlling’ elements from the relationship between Uber and Drivers and on top of that I guess the argument would be that telling Drivers the destination while not penalising them for declining trips does introduce some sort of competition among Drivers because some will accept the Ride and others not. But it seems to me that it doesn’t materially do so because Uber continues to set the fees and vehicle standards so as to and such as to provide a standardised service to Riders, it doesn’t present Riders with a choice of Drivers and, together with continuing prohibition on exchanging contact details, make it impossible for individual Drivers to (in the words of the judgment) ‘attract business for themselves through the price and quality of the service they supply’.

The ‘Favourite Driver’ thing is a bit of a red herring. This allows a Rider to save a Driver and then only for Pre-Scheduled trips indicate that they would like this Driver again. But even for this limited category of Rides, Uber still don’t allow any direct contact or negotiation and Uber set the price themselves as usual, so in principle this seems little different from asking a restaurant to ensure you are served by a particular favourite waiter, or asking for a favourite mechanic at a garage. But even if in these circumstances the Driver could be seen as in a direct relationship with the Rider and not be working for Uber, they could only undertake the trip if they had a Private Hire Operator licence. So this can’t possibly make any differece to the vast majority of Rides or Drivers.

All in all then, a bad result for Uber. Despite the attempts in their response to toss the judgment off as limited in its application to only a few Drivers, it isn’t. And despite the attempt to imply that the judgment might not apply to their changed arrangements, it seems clear that it does. But Uber being a leopard for whom a very particular set of spots is necessary, I doubt we’ve seen the last of litigation on this.