In a case which is sure to have major ramifications for the so called “gig” economy an Employment Tribunal has ruled that two cab drivers providing services to Uber are ‘workers’ (and therefore entitled to certain employment rights) and are not the self-employed contractors that Uber would much rather they be. So what does this decision mean for employers of other types of staff?
In a case which is sure to have major ramifications for the so called “gig” economy an Employment Tribunal has ruled that two cab drivers providing services to Uber are ‘workers’ (and therefore entitled to certain employment rights) and are not the self-employed contractors that Uber would much rather they be.
For those not familiar with how Uber works – Uber provides a smartphone app which allows smartphone owners to log in and remotely hail a driver using location software in the passenger and the driver’s phones. A driver in the vicinity is summoned, often making it quicker and easier than booking a minicab or hailing a taxi.
The app is connected to the passenger’s credit card, with journeys being charged for on a per-mile and minute basis. Uber essentially takes a referral fee, with the majority of the fee going to the driver. Uber drivers use their own vehicles and pay for their own fuel.
This was a case which re-visited the matters to be considered in deciding upon employment status. In making its decision the Tribunal considered issues such as the level of control applied by Uber and noted that Uber applied a significant degree of control, firstly by interviewing and recruiting drivers then once recruited over issues such as the drivers ability to accept trips/cancel trips, also setting routes, limiting drivers’ choice of vehicles etc. The Tribunal also noted that Uber applied a rating system, for drivers which the Tribunal found amounted to performance management/a disciplinary procedure. The Tribunal also took account of the fact that Uber handles customer complaints and accepts the risk of loss. Had the drivers truly been working on their own account then the Tribunal found that they would have borne the risk of loss themselves.
The Tribunal was not impressed by Uber’s attempts to deny an employment relationship in contractual documentation with the drivers and suggested that Uber had resorted in its documentation to “fictions” and “twisted language” – a warning to all employers that simply stating in a contract that someone is self-employed will not preclude a Tribunal from finding that the reality of the situation is rather different!
Employment status is of course relevant because workers have more rights under employment legislation than self-employed contractors (although not the full employment rights enjoyed by employees).
Workers’ rights include an entitlement to:
- 5.6 weeks’ paid annual leave each year
- a maximum 48 hour average working week, and rest breaks
- the national minimum wage (and the national living wage)
- protection under the whistleblowing legislation.
As they are not employees, workers are not entitled to:
- the ability to claim unfair dismissal
- the right to a statutory redundancy payment
- the benefit of the implied term of trust and confidence
- the protection of TUPE, if Uber sells its business
The other significant relevance of employment status is that if, as in this case, a ‘self-employed’ person has been responsible for paying their own tax and NI there may well be a shortfall if the person is then classed as a ‘worker’ – and HMRC will look to the employer in the initial instance to make good the contributions which should, in its opinion, be due. As in some cases this could stretch back years this could amount to a significant financial risk.
If you employ self-employed contractors you should periodically risk assess that status – if any of the following ring true, there could well be a problem which should be resolved before HMRC force it to be:
Do your contractors only or mainly work for you and one or two other employers?
Do you supervise their work?
Do you provide their work equipment?
Do you manage their performance?
Would you apply your own disciplinary or performance management procedure to them?
These simple tests can by no means be regarded as a full assessment of risk, but they will give you a pretty good idea.
At the moment the Uber decision is only an Employment Tribunal decision (and as such does not have to be followed by other Employment Tribunals) and Uber will almost certainly appeal the case – it could take years to reach the final stage at the Supreme Court, assuming of course that Brexit means referrals to European Courts won’t be necessary.
In the meantime however it must be considered likely that other similar cases would be decided in the same way, therefore the implications for other similar business models must be of a significant risk of supposedly self-employed contractors being classed as workers by the Employment Tribunals, therefore enabling staff to claim workers rights under employment legislation.