UK Supreme Court rules in latest UBER case

19 March 2021

Employment protection legislation seeks to distinguish between dependent and independent labour. The intention is to exclude from protection self-employed entrepreneurs and professionals whose relationship with the 'employer' is in reality a commercial relationship between two businesses.

In the UK legislation there are three main categories of employment status: employees, workers, and the self-employed (by contrast NZ has only two broad categories, being employee and self employed contractor).

The rights and obligations in relation to each category of individual flow from their employment status.

At one end of the employment status spectrum are 'employees' who are afforded the greatest level of protection. Rights that apply only to 'employees', include the right to claim unfair dismissal; statutory notice periods; redundancy pay; the rights to maternity/paternity/parental leave; and the right to request flexible working.

At the other end of the spectrum are the self-employed, who are not entitled to any employment protection rights.

Somewhere in the middle are 'workers', who are entitled to some valuable employment rights including National Minimum Wage; holiday pay; discrimination and whistleblowing protection and pension auto-enrolment.

Under s230(3) of the Employment Rights Act 1996 (ERA), a 'worker' is defined as:

"an individual who has entered into or works under:

  • a contract of employment [limb a], or
  • any other contract... whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual [limb b]".

So, while the definition of a worker includes an 'employee' (limb a), it is wider under limb b, which consists of two elements: the individual must be obliged to do the work personally (i.e. do it himself or herself); and the person for whom the work is done must not be a client or customer of a business being run by the individual (not in business on their own account, i.e. independent contractor).

This definition of 'worker' can be found in similar forms in the Working Time Regulations 1998, the National Minimum Wage Act 1998, the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 and the National Minimum Wage Act 2015.

Uber says it will comply with the judgment but says the drivers will only be entitled to the minimum wage for the time they are actually working (ie driving a client) and not for waiting time.  No doubt that will start another legal challenge.

It’s worth noting that the UK minimum wage is only equivalent to NZD$16.83 (compared with our current $20.00 per hour) so it’s likely that being categorised as workers, the drivers may earn less than they do now.

Of relevance to the NZ situation is the policy of the Government on Fair Pay Agreements and Dependent Contractors.

The Fair Pay Agreements Working Group recommended that FPAs should apply to both employees and workers (being people currently regarded as being in a dependent contractor relationship).

The Government is also committed to a policy of protecting vulnerable workers by legislating protections for dependent contractors.

In short it looks like we are heading down the UK track of establishing a third category of employment status for “workers”.

You can read the full Supreme Court judgment here.