Across the world, Gig employers are now facing a legal reckoning in the highest courts.
On 21st July, the issue of whether Uber drivers are ‘workers’ will be considered by a seven-member panel of the UK Supreme Court. This follows on from Mr Heller’s momentous victory in a recent decision of the Supreme Court of Canada (SCC) in Uber Technologies Inc. v. Heller which involved a legal challenge to a mandatory arbitration clause in a contract between Uber and an UberEATS driver. The arbitration clause required disputes to be referred to arbitration in Amsterdam, which would be subject to the law of the Netherlands. The clause also required the payment of US $14,500 as an upfront administrative cost. The appellant earned $20,800–$31,200 per year before taxes and expenses were deducted. Nor did the fee include other costs likely to be incurred in an arbitration, such as travel to Amsterdam, accommodation, and legal representation. Students of transnational labour law of a certain generation cut their teeth on great debates about ‘offshoring’ and the disintegrative risks to labour standards posed by capital mobility. The Heller case is an important reminder that we are now in an era of juridical mobility: employing entities seek to escape national labour law systems without the cost and inconvenience of spatial mobility.
The Ontario Court of Appeal determined that the arbitration clause was invalid for two reasons. First, it constituted an unlawful “contracting out” of the protective provisions of the Employment Standards Act 2000 (ESA). Second, the arbitration clause was invalid because it was ‘unconscionable’. On appeal, the decision of the SCC did not consider the ‘contracting out’ provisions of the ESA. That is a pity because a statutory provision of this kind arguably provides a simple, reliable and more effective constraint on attempts to evade the enforcement of statutory labour standards. As we shall see, the existence of such a provision in the UK would prevent Heller-type clauses from being part of the UK gig landscape.
Much of the discussion in the SCC focused instead on the doctrine of unconscionability. A majority of the SCC upheld the decision of the Ontario Court of Appeal but the justices did so for different reasons. It is possible to identify two broad approaches in the majority, what could be described as a ‘contractual’ approach and a ‘constitutional’ approach. Abella and Rowe JJ. (Wagner C.J. and Moldaver, Karakatsanis, Martin and Kasirer JJ. concurring) exemplified the contractual approach. They did so on the basis that the arbitration clause was unconscionable and hence invalid. Brown J favoured a ‘constitutional’ approach. He rejected the unconscionability analysis of Abella and Rowe JJ on the basis that it expanded the doctrine beyond its proper limits, leading to an unacceptable degree of uncertainty for contracting parties. Brown J instead decided the case on the narrower ground of public policy. The effect of this arbitration clause was to exclude Mr Heller’s access to an appropriate forum for a just determination of his legal rights. In impeding access to justice, this undermined the rule of law. This invoked an established head of public policy, preventing ouster of the courts in the determination of legal rights, and this was sufficient to impugn the disputed clause in Heller. It did so without any wider disruptive effects on the negotiation of contracts, which depend upon a stable and predictable framework of legal rules.
Heller represents a powerful countermovement against the use of arbitration clauses in employment contracts. The unconscionability argument in Heller may be understood as a private law response to the problem of arbitration clauses, focusing on the inequality of bargaining power when individuals enter into standard form contracts drafted by powerful corporate actors such as Uber. The majority favoured a widened doctrine of unconscionability targeted specifically at standard form ‘contracts of adhesion’. This was based upon two elements: an (i) inequality of bargaining power resulting in (ii) an improvident transaction. It should be noted that this represents a much wider approach to unconscionability than we would expect to see from an English court, for example in dispensing with a requirement of morally culpable exploitation of the claimant or by isolating a single term rather than assessing the whole transaction. It is also concerned with standard form contracts as such, a problem that extends beyond employment law into consumer law. While unconscionability is apt to lead many lawyers into fits of romantic giddiness, its stability as a doctrine in labour law is questionable. The negotiation of most employment contracts could be described as involving an ‘inequality of bargaining power’. A roving doctrine of unconscionability, in the expansive form set out in Heller, might be (in the words of Captain Willard from Apocalypse Now) like handing out speeding tickets at the Indy 500. This is a particular difficulty when contracting practices in labour markets are increasingly channeled through comprehensive written standard form contracts. The legal analysis would then shift to the parameters of ‘improvidence’. While this could generate a veritable cottage industry of law review articles, we may wonder how useful it will be to gig workers paid a pittance in circumstances of social and economic precarity. Workers would be likely to benefit more from a bright-line statutory prohibition of arbitration clauses, rather than appealing to the conscience of the court on a case-by-case basis.
By contrast, Brown J’s constitutional argument was based on the rule of law, and it connected with public good arguments against a system of private arbitration. The rule of law argument is wider than concerns about the specific bargain itself. For example, Professor Finkin has argued that there are strong policy arguments in favour of an exclusive jurisdiction for public courts in the employment field: “the vindication of legal rights is best reposed in a public body: one whose competence in the law is assured, whose impartiality is above question, whose process is transparent, whose decisions are accessible and have broader legal and communal impact and which is subject to comprehensive public accountability.” Where private arbitration clauses are utilized so extensively that litigation in public courts disappears, the overall system of public justice and the rule of law is undermined. In this situation, the public good might justify a curtailment of private arbitration clauses even where there is no bargaining unfairness in the individual employment contract.
In focusing on the specific public policy issue at stake in the Heller dispute – the rule of law and effective access to a forum that can adjudicate disputes about legal rights justly and fairly– Brown J’s judgment provides a more tailored method for scrutinsing the proportionality of such clauses. Private arbitration would be permissible where it did not preclude access to justice. The mischief of the specific clause in Heller was that it was designed to make arbitration inaccessible to the weaker party – the antithesis of access to justice. Brown J.’s approach also avoids difficulties with the unconscionability approach where, for example, the relevant clause was accompanied by a transparent explanation available to the party before entering the contract. Here, the deficiencies in the contracting process may be resolved sufficiently to avoid unconscionability. The rule of law objection would still stand. Contractual approaches to the Heller mischief are always vulnerable to circumvention because strong, well-advised parties can configure the negotiation process to mitigate the procedural deficiencies just enough to evade the doctrine. The value of the ‘constitutional’ perspective is that it is better able to vindicate important aspects of the common good, such as the rule of law, that would be missed by a focus on procedural fairness in the individual bargaining process.