Uber: Supreme Court Ruling

Monday 1st March 2021 Lords Chamber

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Wednesday 24 February.

“I want to begin by making it absolutely clear that everyone deserves to be treated fairly at work and rewarded for their contribution to the economy with both fair pay and fair working conditions. This means that employers must take their responsibilities seriously, not simply opt out of them. If there is a dispute between the individual and an employer, as seen in the recent case involving Uber, the courts consider each case on an individual basis. The courts are independent and the Government do not intervene. As such, with the Supreme Court being the final stage of the appeal, its judgment is final and Uber will need to take action to align with the judgment.

The Government recognise concerns about employment status being unclear in some cases, and we are committed to making it easier for individuals and businesses to understand which rights and tax obligations apply to them. We have made good progress in bringing forward measures that add flexibility for workers while ensuring the protection of employment rights. For example, we have legislated to extend the right to a written statement of core terms of employment to all workers, making access to a written statement a day one right and extending the contents of a written statement. We have also banned the use of exclusivity contracts and zero-hours contracts to give workers more flexibility. This means an employer cannot stop an individual on a zero-hours contract from looking for, or accepting work from, another employer. We will continue to explore options for employment status that protect rights while also maintaining flexibility in the labour market. This Government have a proud history of protecting and enhancing workers’ rights, and we are committed to making the UK the best place in the world to work.”

14:16

[Lord Lennie (Lab) [V]]

The Supreme Court ruling of 19 February was a good day for workers in the gig economy and an embarrassing one for the Government. It has taken four years to get this ruling, with Uber kicking and screaming all the way. During that time, the Government commissioned and received, but then ultimately ignored, a report from Matthew Taylor about workers’ rights in the gig economy.

Either the Government accept that workers must have decent, understandable and contractual rights at work—including receiving at least the national minimum wage—or they do not, in which case workers will continue to be exploited by these huge multinational organisations. Do the Government accept that this ruling must apply to all Uber drivers and those other comparable gig-economy workers, such as those who work for Deliveroo? If not immediately, when precisely will the Government bring forward an employment rights Bill based upon the Taylor report and, by doing so, prevent businesses having to interpret this ruling for themselves?

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

The Government are committed to improving the clarity around employment status and to bringing forward an employment Bill, which we will do as soon as possible. The Bill will protect and enhance workers’ rights, promote fairness in the workplace and strengthen workers’ ability to get redress for poor treatment.

[Lord Taylor of Goss Moor (LD) [V]]

My Lords, the Minister will be aware that Uber has made statements suggesting that it believes that the ruling is limited only to a handful of individuals and that subsequent changes mean that it will not apply to current staff—but that is not the advice that others are giving. HMRC has statutory responsibility for enforcement of the minimum wage, and it can take action either on its own initiative or in response to complaints made online. If enforcement action is taken by HMRC, then it will be for Uber to prove that it has complied with its obligations, and the two-year limit on claims will not apply. Is HMRC expected to take that action, and is government encouraging it to do so?

[Lord Callanan (Con)]

The noble Lord will be aware that I cannot comment on individual cases, but, of course, HMRC is fully empowered and able to take all the action that it requires in order to get people to comply with the law.

[Lord Blencathra (Con)]

My Lords, everyone knows that Uber is a thoroughly disreputable and exploitative company, and I warmly welcome the Supreme Court’s decision. Will the Minister now ensure that Uber does not weasel out of its obligation to all drivers, past and present? Will he also encourage HMRC to go after it for its billions in back taxes, and will he bring forward urgent legislation to make sure that all companies in the so-called gig economy are no longer able to exploit the lowest-paid workers in this country? That is a thoroughly Conservative view of these things.

[Lord Callanan (Con)]

The noble Lord knows the tremendous admiration that I have for him, but I have to disagree with him on this. The thoroughly Conservative thing is that there is choice and competition in the market, and Uber has provided tremendous choice and competition, particularly in London. It is not just Uber—there are other apps as well. The monopoly previously enjoyed by black cabs was bad for the consumer. They were overpriced and Uber has been a thoroughly good thing for the market in London—so I disagree with the noble Lord on that one.

[Lord Berkeley of Knighton (CB) [V]]

My Lords, I am delighted to agree with the Minister’s remarks. As has already been mentioned, the Supreme Court ruling probably applies to many other areas. I am thinking, for example, of freelance broadcasters in local radio. The Minister has already partially answered my question. It is always better to avoid court if we can, so we do need to simplify the legislation surrounding workers and workers’ rights. Does the Minister agree that that would help to avoid court cases in future?

[Lord Callanan (Con)]

Of course, it is always better if these matters are settled without court action. As I said in a previous answer, we are committed to bringing forward an employment Bill. I thank the noble Lord for his support.

[Lord Monks (Lab) [V]]

My Lords, I agree with the noble Lord, Lord Blencathra. Will the Government now enshrine the very welcome Supreme Court judgment in statute by including its principles, plus the availability of workplace pensions, in the long-promised but long-delayed new Bill on employment rights and the gig economy? Will they also reject the expected campaign by Uber and other global tech companies to reverse or limit the judgment and so strike a blow against bogus self-employment, with all the risks to the tax base and other problems that it incurs, and eliminate abuses in the gig economy?

[Lord Callanan (Con)]

I never thought I would hear the noble Lord say that he agreed with my noble friend Lord Blencathra, but there we are. I make absolutely clear that the Supreme Court judgment is final, and Uber will of course need to align its business model to comply with it. Employers have a duty to automatically enrol qualifying workers into workplace pension schemes. This already extends to engagers of agency workers and those on temporary, fixed-term and zero-hours contracts.

[Lord Vaizey of Didcot (Con)]

I refer to my entries in the register of Members’ interests. I proudly declare myself a user of Uber’s services, as well as those of home-grown, UK global companies such as Deliveroo. I congratulate the Minister on his thoroughly Conservative—indeed, three-Shredded-Wheat—response to the noble Lord, Lord Blencathra. But why has the position of the Director of Labour Market Enforcement, previously occupied by the distinguished Matthew Taylor, been left vacant, despite his offer to carry on until a replacement is found? It is an important role, given where we are.

[Lord Callanan (Con)]

I thank the noble Lord for his support. In my view, it is all about choice in the market. Those who wish to use services such as black cabs are free to do so, as are those who wish to use Uber or other home-grown services. That to me is the essentially Conservative thing; it is about choice and competition, which produce better standards for all. In answer to the noble Lord’s question, we will be making an announcement shortly.

[Lord Hendy (Lab) [V]]

My Lords, it is good to hear that the Government will introduce legislation to simplify this complex area of the law and end repeated litigation over workers’ status. Does the Minister agree that simplicity requires that worker status be limited to a simple binary choice between employees on the one hand and, on the other, those who are genuinely in business on their own account, with their own clients and customers?

[Lord Callanan (Con)]

As I said, we are committed to considering options to improve clarity on employment status and how best to address that in a post-Covid scenario. However, it is important that we retain the flexible labour market that has served this country so well and has resulted in our unemployment rate being significantly better than that of the rest of Europe.

[Lord Faulks (Non-Afl) [V]]

My Lords, I too welcome the decision of the Supreme Court. Those who have read the judgment of Lord Justice Leggatt will realise the detail which the court went into in deciding that, whatever the lawyers had devised, the reality of the relationship meant that the Uber drivers were in fact workers. I welcome the news that there is to be legislation, but I suggest that there are some occasions where the courts will have to deal with the reality. Even the best-drafted legislation will have to set out the principles. The courts here were doing precisely what they should do—applying the principles of the Act to the reality on the ground.

[Lord Callanan (Con)]

The noble Lord has put the case very well. The Supreme Court’s decision is, of course, final. Uber will have to comply with that judgment, as everybody else has to comply with court rulings.

[Lord Davies of Brixton (Lab) [V]]

My Lords, I want to follow up the issue raised by my noble friend Lord Monks of the implications of this judgment for pension provision. Including these people within the aegis of automatic enrolment throws up a series of practical problems. There is the question of whether back pay will be pensionable. These workers tend, by their very nature, to have widely fluctuating emoluments, which again creates problems. Will the Government be undertaking a study of the implications of this judgment for pension provision, particularly under automatic enrolment?

[Lord Callanan (Con)]

The noble Lord makes a good point. Of course, pension entitlement is based on employment status, age and income. It is a complex area of law and we will, of course, look very closely at the judgment.

[Baroness Goudie (Lab) [V]]

My Lords, the Uber case was directly concerned with the national minimum wage, the working time regulations and whistleblowing under the Employment Rights Act, but it applies to all rights enjoyed by workers that are subject to statutory regulation. Pension is deferred pay. Does the Minister accept that workplace pensions and, as my noble friend mentioned, auto-enrolment under the Pensions Act 2008 for eligible job holders, are aspects of what is secured as a consequence of the Supreme Court judgment?

[Lord Callanan (Con)]

Well, many individuals working in the gig economy will already be eligible for automatic enrolment and all employers have a duty to automatically enrol qualifying workers into the appropriate workplace pension scheme. All workers aged between 22 and the state pension age who earn more than £10,000 a year and are working, or ordinarily working, in the UK will be entitled to be automatically enrolled into a workplace pension.