Uber drivers win right to be classed as workers
This afternoon, Uber drivers won the right to be classed as workers rather than self-employed.
The ruling by a London employment tribunal means drivers for the ride-hailing app will be entitled to holiday pay, paid rest breaks and the National Minimum Wage.
The ruling is a disaster for UK plc according to Dave Chaplin, CEO and founder of Contractor Calculator, the online portal that provides free information and advice to some thousands of self employed workers every month.
Commenting on the outcome of today’s, Chaplin said, “This is the most high-profile court case concerning employment in recent years and today’s ruling is a disaster for Uber who will now be faced with compensating its drivers retrospectively. What’s more, it is a disaster for UK plc as it is certain to open the floodgates for more workers to challenge their employers in pursuit of their rights from companies which operate a similar business model to Uber. It will also arm HMRC with the ammunition to attack genuine freelancers under the rules of IR35 and I would urge all self employed contractors to seriously consider their IR35 position.”
In a recent survey conducted by Contractor Calculator’s 80% of self-employed freelancers categorically said that they do not want any rights at all, 88% do not want maternity/paternity rights, 82% do not want sickness pay, 85% shun holiday rights and pay, 75% do not want to be forced into auto-enrolment of a pension, 80% do not want extra rights to help with grievances or disciplinary matters and 94% do not want any restrictions on hours worked and are happy to manage their own affairs.
Chaplin added, “The Uber case does not paint the full picture of self-employment and there are thousands of self-employed freelancers who are very happy with the way they work, they do not want rights and do not see themselves as vulnerable workers.”
What do the lawyers think?
Kathryn Dooks, employment partner at Kemp Little LLP, said, “Two Uber drivers today won their employment tribunal claim against the “gig economy” app. The decision means they are classified as “workers”, entitling them to the National Living Wage (£7.20 / hour for drivers over the age of 21), paid holiday, sick pay and rest breaks, amongst other rights.
“The claim revolved around the level of control exerted over the drivers by Uber. Uber claimed that the drivers were self-employed, choosing when and where they worked. It argued that many of the drivers wanted to be self-employed, so they could be their own boss and work completely flexibly. However, drivers can be suspended for not accepting enough rides or for low passenger ratings following a drive, leading to arguments about the nature of the relationship.
“Uber faced similar claims across the USA and lost a case in California in 2015, leading the company to try to settle numerous other claims across the US earlier in the year. By contrast, the Florida Department of Economic opportunity previously ruled US Uber drivers were independent contractors, meaning the drivers were not eligible for unemployment insurance.
“The outcome of the English employment tribunal case could have a significant impact on the business models of companies like Uber, Deliveroo and other apps which match service providers to customers. For this reason, the decision is certain to be appealed by Uber. In the meantime, Uber can expect a large number of claims from its drivers following this test case and other apps can expect similar claims. The courier firm City Sprint is already facing a hearing on the same point in November. No doubt many such businesses will be reviewing their working practices to see whether they can avoid the implications of the decision. But these attempts may be futile in the longer term as the government has announced an independent review of the law in this area, to be conducted by Tony Blair’s former policy chief, Matthew Taylor, which seems to signal a more interventionist approach.”
Tim Goodwin, associate solicitor at Winckworth Sherwood, said, “It’s a long-established principle that the courts consider employment status to be a question of ‘substance over form’ – meaning that it’s the reality of the arrangement between the company and the individual that counts, not what you put on the contract. It doesn’t really matter whether your boss has called you an employee or a contractor, if the reality is that you are in an employment relationship, which broadly means that your employer has control over your day-to-day activities at work then the reality is that you will be an employee, and entitled to all of the employment rights that go with that status. What the Tribunal has been asked to do is answer just that – does Uber have a sufficient level of control over its drivers to render them employees or workers?
“This judgment is likely to have massive implications across the ‘gig economy’, as we see an increasing number of start-up businesses effectively adopting Uber’s model. The effect of this judgment is that those kinds of business may owe a lot more to their workers, such as paid holiday and minimum wage, than they had bargained for. This outcome should be taken as a salutary lesson by businesses who try to arbitrarily ‘classify’ workers as contractors to avoid affording them their full rights as workers.
“Nevertheless, it would be foolhardy to rely on this outcome too heavily. This is a first instance decision, and one of immense importance, so we should expect to see it fought out again in the Employment Appeal Tribunal, or even the higher appeal courts. Employment status has also become the focus of a Parliamentary Inquiry, launched earlier this week, so we should expect to hear a lot more about this going forward, and potentially some legislative changes."