In its recent landmark decision, the UK Supreme Court held that, in essence, drivers working via a ride-sharing platform were not independent contractors but, instead, were workers and therefore entitled to certain employment rights, such as the minimum wage and sick pay.
In a decision that is unlikely to surprise anyone who has been following the UK cases about worker status in the gig economy, the Supreme Court rejected the appeal and upheld the previous decisions that the claimants were “workers” under the legislation. It also agreed that the claimants were working for the ride-sharing platform during any period when they (a) had the ride-sharing platform app switched on, (b) were within the territory in which they were authorised to work, and (c) were able and willing to accept assignments.
The significance of the decision lies in the different levels of protection provided by UK legislation for contractors, workers and employees. Employees have the most extensive statutory rights, only some of which extend to workers, such as holiday pay, the National Minimum Wage and auto-enrolment for pension. Independent contractors have no real statutory protection. The drivers argued that they were “workers” and so entitled to rights, such as the minimum wage.
It has long been accepted that, in order to determine whether an individual is an employee, a worker or a contractor, tribunals must look beyond the terms of that individual’s contract. They also have to consider how the relationship actually works and not just what the parties (or perhaps one of them) wanted to say about how it might work. This approach was clearly set out in the Autoclenz decision and is often referred to by that name.
In its new decision, the Supreme Court takes this approach a stage further. It highlights that the rights at the heart of the dispute are statutory rights, so the starting point must be the statute, not the contract between the parties. This is all the more important as attempts to contract out of these statutory rights are generally void. Therefore, relying on words in the contract that try to create a situation in which the rights do not apply would be “inconsistent with the purpose of the legislation“. That purpose is the protection of individuals, so the courts must apply the legislation in a way that recognises that purpose.
The contract remains relevant, but is very much secondary to the words of the relevant statute. Where the contractual terms are effectively dictated by one party, a tribunal has to treat those terms with particular caution.
Having accepted that the tribunal was entitled to find that the claimants were workers, the Supreme Court went on to agree that, in this case, the claimants were working whenever they had the ride-sharing platform app switched on and were in the area covered by their licence. Consequently, the drivers were entitled to the National Minimum Wage while waiting for business with the app on, not just when they had a passenger in the car.
The trend of recognising many of those engaged in the gig economy as “workers” also has important consequences for pension rights. As workers, they are entitled to be automatically enrolled in a pension scheme and to have pension contributions paid by the company for which they work as long as (a) their earnings are above the threshold (currently £10,000/year) and (b) they are aged between 22 and their state pension age.
The effect of decisions of this sort is that the individuals concerned are recognised as having been workers since they started under their current arrangements. That means there can be significant sums due in backdated pension contributions, as well as accrued holiday pay and National Minimum Wage.
The true status of a gig-economy worker is not determined by complex written agreements but rather by what the gig-economy worker does, how they carry out their work and the reality of who controls the work in question. That assessment will always turn on the specific facts involved, but complicated contractual terms seeking to exclude the statutory protections are likely to be even less significant to the final decision.
