Uber – Flexible Workers
Gig platform workers
The gig economy has grown rapidly over recent years with demand soaring during the pandemic. The ability to use flexible working models to deal with short-term lockdowns and fluctuating demand has been a lifeline for many businesses. Individuals working via a gig platform are generally considered self-employed and often paid for each ‘gig’ they do. However, the landmark decision of the Supreme Court that Uber drivers are not self-employed but are classed as workers for UK employment rights purposes leaves businesses that operate a gig economy model vulnerable to significant challenges.
The Uber decision
The Supreme Court agreed with the decision reached by the lower courts that Uber drivers were ‘workers’. This means that drivers should be paid the National Minimum Wage (NWM) and accrue holiday entitlement for any period they are working. In the Uber case this was found to be for the entire period they are logged on to the app and willing and able to accept passenger journeys. As well as the apparent monopoly Uber had in the market at the time, the Court was persuaded by the level of control exercised by Uber over each of its drivers. In particular:
The journey fare, driver’s pay and service fee for use of the app were set by Uber.
Contract terms were drawn up by Uber and were non-negotiable.
Once drivers were logged into the app activity levels were monitored. If too many trip requests were declined drivers were subject to a penalty.
Passenger ratings of the drivers were used by Uber to manage driver performance. Failure to maintain an average rating could lead to termination of the relationship.
Uber controlled communication between drivers and passengers. Drivers were not free to develop individual relationships with passengers.
Protection for vulnerable workers
At the very heart of this decision is a recognition of the purpose of the employment legislation. It is intended to protect vulnerable individuals who have little or no say over their pay or other terms of work. Such individuals are in a subordinate and dependent position and so should be afforded protection of the law.
Look beyond the contract
The Court made it clear that written agreements between the parties cannot be used to, directly or indirectly, contract out of the statutory definition of a ‘worker‘ or the ensuing rights/ protections afforded by the law. The written agreement is therefore not the correct starting point in deciding whether an individual is a worker. The reality of the working relationship must always be considered. Here, the drivers were found to be controlled by Uber and could not improve their position unless they worked longer hours to earn more money. The drivers were therefore not genuinely self-employed.
Address the imbalance
Although employment status cases are highly fact sensitive, analogies can be drawn with the elements of control identified here by the Court. Businesses should review their engagements with contractors and identify whether any adjustments need to be made to the working relationship, to redress any imbalances in control. A contingency fund may need to be set aside to provide for any potential liabilities and / or the employment protections afforded to workers.
- National Minimum Wage – Workers are entitled to NMW and can bring claims in the employment tribunal or in the county court for unpaid wages
- Annual leave – Workers are entitled to paid annual leave and can bring claims for unpaid holiday going back two years.
- Whistleblowing – Protection from suffering a detriment or being dismissed if they have made a protected disclosure ‘whistleblowing’.
- Discrimination – Protection from discrimination, harassment and victimisation in the workplace.
- Contracts – Workers are entitled to a written statement setting out particulars of employment.
- Pensions – May be classed as ‘eligible job holders’ and entitled to a 3% pension contribution from employers under the auto-enrolment scheme.
How to manage your risk?
Audit the workforce
Identify current engagements with self-employed contractors, sub-contractors or consultants including via personal service companies. Audits supported by a legal team are protected by legal privilege.
Consider the level of control exercised
Consider who determines the level of pay and other working conditions.
Review your contracts
Clauses in your contracts (e.g. employment status indemnities) that, directly or indirectly, contract out of worker status or workers’ rights are likely to be void.
Regular review of engagements
Over time the relationship between your business and a contractor may change; contractors often start out providing ad hoc services but over time the reliance increases and they start working more under the direction and control of your business.
“The impact of the Uber decision on businesses will vary based on the particular facts, operating model and sector in which a business operates. It is important to take advice on the potential risks, liabilities and opportunities that this decision presents.” Kevin Poulter, Partner.
To discuss the impact of this case on your business please contact us.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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