How Will The Uber Ruling Affect Gig Economy Employers And Workers?5th Mar 2021
Life After The Uber Judgment – What Next?
When is a self-employed contractor really a worker or an employee? When do they accrue more rights under employment law? And what risks does this create for you as an employer?
Employers hoped the Supreme Court’s ruling on the employment status of ride-hailing app Uber’s drivers would create an easy-to-apply litmus test.
And yes, this important judgment has provided further clarity on the status of those in the gig economy…but not the instant and easy ‘yes/no’ test that employers craved. Complying with employment legislation is seldom that easy.
Employers who use self-employed contractors will still need to tread carefully: this remains a complex area of the law.
Uber BV and Others v Aslam and Others: The Facts
Uber appealed to the Supreme Court after losing its legal battle at every stage: employment tribunal (2016), Employment Appeal Tribunal (2017) and Court of Appeal (2018). And now judges sitting at the nation’s highest court have unanimously dismiss Uber’s latest appeal.
Seven senior judges – six lords and a lady – upheld the employment tribunal’s decision that Uber drivers are ‘workers’ for the purpose of rights under the Employment Rights Act 1996, the Working Time Regulations 1998 and the National Minimum Wage Act 1998.
It was a stark reminder that innovative companies seeking to disrupt the entrenched practices of traditional markets don’t always get their own way. Disrupting markets for the benefit of consumers does not give you a licence to sidestep workers’ rights.
Why Uber Lost – And Why That Matters To You
Uber lost because it exercised so much control over its supposedly ‘self-employed’ drivers: they were effectively workers.
Drivers complained that they were not paid the minimum wage, not given paid annual leave and lacked whistleblowing protection.
The Supreme Court ruled that worker status is a question of interpretating the statutes (the law) – rather than the employment contracts. So it was wrong to treat written agreements as the starting point.
Judges focused on five factors:
- Uber dictates the rate of pay
- Uber dictates the contract terms
- Uber constrains drivers’ freedom to choose when to work (once logged into the app)
- Uber controls the way the service is delivered
- Uber restricts drivers’ ability to communicate with passengers.
Is it any wonder that Uber lost at every stage? Such conditions don’t sound much like the utopian ideal of self-employed drivers working when and how they like in a technology-driven new paradigm.
It all comes down to how much control you decide to exercise over your people. If you deny your contractors the freedoms that make them self-employed then the law will decide that they’re really workers instead – with legal rights.
Here’s the reality: your people are either workers (with rights), employees (with even more rights) or they are self-employed (in which case, your control over them can be only very limited).
Could The Law View My Self-Employed Contractors As Workers?
To be classified as self-employed, a contractor must fulfil certain criteria:
- they must invoice for the work they do – and must assume the risk of getting paid late (or not at all)
- they will be responsible for rectifying any defects in their work
- the person engaging them does not have the right to control what they do
- the engager does not have to use their services – they could hire someone else to do the work.
Your people are likely to be classified as workers if:
- they have a contract
- they are paid money (or a benefit in kind) in return for their work
- they must do the work themselves – they have only limited rights to delegate the work to others
- they are obliged to turn up for work (even when they don’t feel like it)
- they are not doing the work as part of their own limited company (treating the ‘employer’ as a client)
- the employer should provide work for them for the duration of the contract.
But beware! There is much more to this than a simple box-ticking exercise. An employment tribunal will take a holistic view of your working practices. They will look at the big picture – not just whether or not you meet a few key criteria.
What Can Go Wrong For Employers
You’re a sensible, principled employer. You’re not trying to have your cake and eat it in the ‘control vs rights’ stakes. You’re just trying to provide a good service to your customers – because it’s the right thing to do (especially in challenging times like these).
And to ensure that your customers receive excellent service, you need to exercise the appropriate degree of control over how the work is done by your outside contractors. They must adhere to your high standards.
They must observe certain protocols and practices to ensure everything runs smoothly and that you continue to comply with all the relevant commercial, employment and health and safety legislation.
You’re just trying to do the right thing. But at what point do your checks and balances affect the employment status of those self-employed contractors?
Sadly, there’s no instant answer to that. At least, not the kind that employers hoped the Supreme Court’s ruling on Uber would provide. It depends on the individual circumstances of those concerned (including you).
So you need to get expert legal advice based on your specific situation.
Find Out More About Employment Status And Your Workers’ Rights
Worried that the law may view your self-employed contractors as workers? Concerned that you might inadvertently be breaching their rights?
It pays to be safe. Get expert legal advice from Coles Miller employment law solicitor Hugh Reid.