The UK Supreme Courts Decision in Uber v Aslam on ‘workers’ and whether they enjoy employee type rights – does this have consequence for ownership of patents?
In the unanimous and landmark judgment in Uber v Aslam [2021] UKSC 5, the UK Supreme Court (‘UKSC’) has held that under the Employment Rights Act 1996 (‘ERA 1996’), Uber drivers are ‘workers’, and not independent contractors. The judgment has wide-reaching implications not only in terms of the protection and benefits to be afforded to such individuals, but also in relation to issues like the ownership of intellectual property.
The rapid growth of the gig economy suggests that this flexible model may be the future of the labour market. However, the UKSC has confirmed that Uber drivers are ‘workers’ for the purposes of UK employment law. Whilst the UKSC’s decision has profound implications for the gig economy in terms of workers’ rights and protections, it also has important implications for the understanding of how being a ‘worker’ may impact ownership of any intellectual property created during such engagements.
Background
In the UK, three categories of employment status, with varying levels of protection, are recognised under employment law. These are: (i) employees, (ii) workers, and (iii) self-employed independent contractors. This appeal concerned the employment status of Uber drivers, and in particular whether the drivers are ‘workers’ for the purposes of employment legislation.
Section 230(1) of ERA 1996 defines an employee as an individual who has entered into, or works under, a contract of employment. However, ERA 1996 also created the concept of a ‘worker,’ as Section 230(3) states that a worker includes an individual employed under a contract of employment. The definition extends to individuals who work under any other contract, (whether express or implied), whereby the individual undertakes to work or provide services for the other contracting party ‘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.’ Therefore, employees are considered as a sub-group of ‘workers’ for the purposes of employment law.
The drivers’ case was heard in the Employment Tribunal in 2016. The drivers argued that there was not a contract between them and their customers and that the conduct of Uber mirrored an employee-employer relationship. The Employment Tribunal held that the drivers were in fact workers, and not self-employed. The Employment Appeal Tribunal and the Court of Appeal dismissed Uber’s appeals.
The UKSC unanimously dismissed Uber’s final appeal and upheld the original decision of the Employment Tribunal. In the leading (and sole) judgment, Lord Leggatt noted that as there was no written contract between the drivers and Uber, the nature of their legal relationship had to be inferred from the parties’ conduct and there was no factual basis for considering that Uber acted as an agent for its drivers (i.e. by acting as a booking agency and collecting fares).
The UKSC found that Uber contracts with passengers and engages drivers to carry out bookings on its behalf. The Court also considered the purpose of the underlying employment legislation is to give protection to individuals who have little or no say over their pay and working conditions because they are in a subordinate and dependant position in relation to the organisation which exercises control over them. Therefore the UKSC did not take the approach in a key case on the question of employment where Bristow J. in Withers v. Flackwell Heath Football Supporters’ Club [1981] 1 I.R.L.R. 307, EAT, said it depends upon the proper answer to the question “are you your own boss?” If the question is answered in the affirmative then the person is not an employee, otherwise an employment relationship exists. Indeed that case does not appear to have been cited in the Court of appeal or UKSC.
The remainder of this article will consider what implications the UKSC’s decision may have on the ownership of patent rights.
Intellectual Property Ownership
Section 39 of the Patents Act 1977 provides that an invention made by an employee belongs to the employer if they are made ‘in the course of the normal duties of the employee or in the course of duties falling outside his normal duties, but specifically assigned to him, and the circumstances in either case were such that an invention might reasonably be expected to result from the carrying out of his duties.’ Therefore, if the invention or work is created by an employee during the course of employment, the rights will be owned by the employer, subject to any contractual provisions to the contrary. However, where a consultant (rather than employee) creates work, they normally own the intellectual property rights in that work unless there is an agreement to the contrary.
Section 130(1) of The Patents Act 1977 defines an employee as ‘a person who works or (where the employment has ceased) worked under a contract of employment,’ which is similar to the employee definition in Section 230(1) of the ERA 1996. Consequently, employment law has had to grapple with evolving terminology such as the notion of a worker being distinct to that of an employee. Yet as the case law develops there is perhaps an issue arising as to what difference if any is there between an employee and worker, and does that matter in other areas like patent law? In deciding if an individual is an employee for the purposes of the Patent Act 1977, the common law has focused on considering the control exerted over the activities of the individual and has asked whether the individual is, in effect, their own boss. To put it simply, if the answer is yes, then the individual is unlikely to be an employee, otherwise an employment relationship exists.
The common law relied on in patent matters has taken a simple approach therefore: In any specific employment context, in Withers v. Flackwell Heath Football Supporters’ Club teaches us the key question was “are you your own boss?” In some cases there will be evidence which is consistent with employment, such as contracts, PAYE slips and so on, but these are never conclusive in favour of a relationship of employment. The essence is one of control. On that point the UKSC in the Uber case is aligned.
Yet if the ‘worker’ is a contractor for service then can they still be an employee for the purposes of the Patent Act? As Lord Denning in Stevenson Jordan & Harrison Ltd v. Macdonald & Evans [1952] 1 T.L.R. 101 at 111 said; distinguishing between a contract of service (i.e. employment) and a contract for service (i.e. not):-
“It is almost impossible to give a precise definition of the distinction. It is often easy to recognise the contract of service when you see it but difficult to say where in the difference lies. A ship’s master, a chauffeur, and a reporter on the staff of a newspaper are all employed under a contract of service; but a ships pilot, a taxi man, and a newspaper contributor are employed under contract for service.”
In Hall (Inspector of Taxes) v. Lorimer [1992] 1 W.L.R. 939, Mummery J, stated ([1992] 1 W.L.R. 944) that the test was a matter of impression and could not be the subject of checklists:-
“In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person’s work activity. This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.”
It can be seen from Hall v. Lorimer, that what the court was concerned with was; whether a person was self-employed (in which case one tax treatment applied), or to use the language of Mummery J., that person was “[A] person [who] carried on business on his own account” or whether a person was an employee (in which case a different tax treatment applied). It appears that being one rules out the other, but that Mummery J. suggests that each case is very much dependent upon its own facts.
Now let us apply this to the notion of a worker, which is inherited or transposed as a notion of EU law into our domestic law. Recent cases involving the gig economy have explored this question, as to whether, if a person is a worker then rights set out in the Employment Rights Act 1996, the Working Time Regulations 1998 and the National Minimum Wage Act 1998 apply. Workers are a creation to ensure people enjoy some rights typical of employees, where they are not declared to be employees. So a ‘worker’ is possibly a sub-species of employee who has a contract for or of services. What has not be answered is whether the meaning of employee in the patent act embraces those declared to be workers, thereby permitting the invention that might become a patent to be owned by their ‘employer.’ It remains unanswered so far whether a person can be defined as a worker but not be an employee. However, given Mummery J.’s test this must necessarily be an open question.
To all intents and purposes, in applying the ‘employee’ test, the Courts have not been required to consider if there is any distinction to be drawn between the definition of a worker and that of an employee in considering the ownership of intellectual property rights. In light of the UKSC’s judgment, it would appear that a ‘worker’ would satisfy the ‘test’ and approach taken to date by patent judges in the Courts. It is interesting to note that in reaching its decision, the UKSC also considered the question of ‘control’ organisations have over an individual’s work. However, although it appears unlikely to be the case, it must remain an open question as to whether there is a distinction to be made between worker and employee in relation to patent ownership, as the position of a worker has not been the subject of consideration in a patent entitlement context.
Comment
The high-tech industry is particularly well suited to the gig economy; for example software development and R&D operations, which typically utilise a large number of consultants and contractors. Although the UKSC’s decision does not materially change existing law, the implications of this decision are far reaching for many businesses in the gig economy, including in relation to the ownership of intellectual property. Organisations should carefully consider the arrangements in place, particularly if an individual is likely to be engaged in an inventive capacity. A clear take away message from the UKSC’s decision is that organisations should be careful not to assume that all ‘workers’ are alike.
Following the decision of the UKSC, many contractors working in the gig economy may now be considered workers for employment law purposes. It is therefore worth those engaging such persons to ask themselves if their services arrangements are capable of transferring rights to intellectual property generated during their engagement. To avoid potential problems, where it is anticipated that intellectual property will be created, it is always advisable to enter into clear contractual terms in relation to intellectual property rights and confidential information. Although the specific terms will depend upon the form of intellectual property involved, organisations must ensure that written agreements:
- Make it clear that the organisation owns the rights in any intellectual property created during the engagement;
- Set limits (or prohibitions) on the use of any intellectual property in any future engagements; and
- Address limits on the contractor’s rights to access confidential information or commercially sensitive information.
We will continue to monitor and provide updates in this important and evolving area in due course.
A copy of the Supreme Court’s decision can be found here.
