For ingenious contract attorneys adept at dreaming up artistic new clauses to make sure that their gig economic system purchasers don’t confer ‘employee’ standing on those that present providers for them, Friday 19 February was a nasty day. The Supreme Courtroom threw a spanner within the works.
The court docket was ruling in a long-running authorized battle between cab-hailing app Uber and two check claimants, with extra claims ready within the wings. Uber had asserted that its drivers, who may go surfing to the app as a lot or as little as they appreciated, had been unbiased contractors working for themselves. The contracts fastidiously drawn up by Uber had been between the drivers and the passengers, with Uber appearing as reserving agent.
However the Supreme Courtroom was not having it. In a unanimous resolution, it concluded that in actual phrases, components such because the diploma of management that Uber exercised over drivers, price-setting by Uber, and the way in which the agency used buyer scores to handle drivers’ efficiency, amounted to the drivers being afforded employee standing. That meant they had been entitled to rights such because the minimal wage and vacation pay.
For some time now, the courts have been edging in the direction of an method that pays extra consideration to what’s taking place on the bottom than what the contract says, most notably within the 2011 resolution in Autoclenz Ltd v Belcher  UKSC 41. However now the Supreme Courtroom has gone a lot additional.
Giving the only real judgment on this unanimous resolution of seven justices, Lord Leggatt spelt out a place that can have made employment contract attorneys’ eyes pop. In circumstances equivalent to this, involving employment laws designed to guard weak employees, the ‘start line’ is just not the contract itself. As a substitute, the courts will start by trying on the function of the related employment legislation, and see if the truth of their scenario signifies that they need to be protected by that laws. The painstakingly crafted contract will now not be centre stage. As Leggatt stated: ‘It’s the actual fact that an employer is commonly able to dictate such contract phrases and that the person performing the work has little or no potential to affect these phrases that offers rise to the necessity for statutory safety within the first place.’
Leigh Day’s Nigel Mackay, who acted for the claimants in Uber, describes the ruling as ‘massively vital’. He explains: ‘Uber actually developed that a part of its argument because the case went on, that you simply begin from the written contract; and if there’s nothing inconsistent [with the legislation] in that, then the contract is king… The true significance is that the Supreme Courtroom has now confirmed that this black letter legislation method doesn’t apply once you’re speaking about statutory rights.’
Mishcon de Reya companion Will Winch says: ‘It is a large change, and it’s opened the door to getting by way of an issue that individuals having been attempting to unravel for years. There have been all kinds of discussions on whether or not there must be a brand new statutory definition of employee, and whether or not that might work; and whether or not the legislation was ample to guard folks within the gig economic system. Now this has taken a wall off the way in which that individuals will take a look at the issue, and we are able to see it from a complete special approach. It has opened issues up enormously.’
At current, gig economic system contracts will usually embody synthetic provisions particularly inserted to defeat any potential declare to employee standing. A basic instance is a ‘substitution clause’ to counsel that the individual named within the contract is free to ship another person to do the work as a substitute, despite the fact that in follow this is able to by no means occur. Different extra imaginative choices embody clauses for the rent of instruments from the corporate, to suggest non-worker standing. However what’s going to the Uber ruling imply for these contracts in future?
‘There’s no level now drafting contracts that you already know could have little relation to the truth of the connection. Why hassle?’ says Sean Jones QC, employment barrister at 11KBW. ‘If somebody involves you and says, please tinker with this contract to verify there isn’t any employee standing; as a lawyer, you’d now should ask, is it value it?’ He provides: ‘Tribunals will doubtless discover it liberating… Uber doesn’t give a vivid line rule, but it surely tells you the tone and the method that you must take, beginning with “actuality first”.’
The ruling may have a sweeping impact throughout the broader gig economic system, significantly for companies utilizing the more and more fashionable ‘platform’ mannequin. Mackay says: ‘Any sort of enterprise that’s offering a platform that individuals are working by way of will likely be taking a look at this to see if they’re an employer. You see this mannequin in all types of sectors now – handymen, childcare, garbage assortment, cleansing.’
What components will level in the direction of employee standing? ‘It’s about whether or not every part is carefully managed by the platform; if it controls the way you contact the shoppers and the way you do the work, and units the value,’ explains Mackay. ‘Subordination is one other huge difficulty. In case you’re successfully being managed in the way you do the work, for instance in Uber’s case by way of a scores system, that’s one of many key issues in a subordinate relationship.’
These components are a part of a fiendishly tough balancing act that lies on the very coronary heart of the gig economic system. As Jones places it: ‘The model is every part. To protect it, you want management. The extra management you will have, the extra doubtless it’s that individuals will likely be discovered to be employees. That’s the central drawback for the gig economic system.
‘Corporations have by no means been capable of finding that candy spot with sufficient management, however with out conferring employee standing. It might simply be that there isn’t a candy spot; you’ll be able to’t run a enterprise like that with out participating employees. That is perhaps a conclusion that many such firms might now be dealing with.’
As for Uber, it insists that the ruling will have an effect on solely a ‘small’ variety of drivers and says it has made ‘vital’ adjustments to its enterprise, which means that ‘most of the examples referred to as out within the judgment are now not related’.
Rachel Rothwell is editor of Gazette sister journal Litigation Funding journal, offering in-depth protection on prices and the financing of litigation