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Uber drivers are entitled to NMW and other worker rights

Uber drivers are workers and not self-employed, the Supreme Court has ruled. Toni Trevett, director of CompleteHR Ltd, examines the significant employment law consequences resulting from this landmark gig economy case.

19th Feb 2021
Director CompleteHR Ltd
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An image of Uber's headquarters
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This case started in 2016 with two drivers, James Farrar and Yaseen Aslam, when a London Employment Tribunal ruled that drivers for taxi app Uber were considered workers and would be entitled to holiday pay, paid rest breaks and the national minimum wage.  

The tribunal also found that drivers were covered by the Working Time Regulations. This meant that they would be entitled to rest breaks, have protection from discrimination and cannot be dismissed for whistleblowing.

Landmark case

The ruling was a landmark case as it was the first to examine whether gig workers are independent and not employed by any company. Then the appeal process commenced and Uber sought to fight this decision.  

Uber argued that its only role, and that of its subsidiary Uber London, is to provide technology services and to act as a payment collection agent for the driver. It contends that the drivers are performing services, as independent contractors, solely for and under contract with the passengers, with Uber London acting as their booking agent. 

Uber maintained that the employment tribunals ruling was wrong because it disregarded "the clear and unambiguous terms of the written agreements".

Which brings us to the present day as the Supreme Court unanimously ruled today that Uber drivers are workers in a judgment that has fundamental implications for the gig-economy as a whole.

The implications of the result

This means Uber drivers are considered “workers” during the time they spend logged in to the Uber app and not self-employed as Uber had argued. 

It was found that the relationship between Uber and drivers is one of “subordination and dependency” and that the drivers have little ability to increase their professional skills and can only boost their earnings by carrying out more work for Uber.

The drivers are therefore entitled to basic rights including paid holiday, rest breaks, the national minimum wage and will also be entitled to auto enrolment into a pension scheme depending on their earnings - among other worker rights.

So businesses who generate and provide work to individuals who they treat as self-employed should consider whether those individuals may be 'workers' under UK law, and entitled to basic employment law rights. 

Five reasons behind the decision

As detailed in the judgement, there were five aspects of the tribunal that were key in how the court came to its decision: 

  1. The remuneration paid to drivers for the work they do is fixed by Uber and the drivers have no say in it (other than by choosing when and how much to work).
  2. The contractual terms on which drivers perform their services are dictated by Uber. Not only are drivers required to accept Uber’s standard form of written agreement but the terms on which they transport passengers are also imposed by Uber and drivers have no say in them.
  3. Although drivers have the freedom to choose when and where (within the area covered by their PHV licence) to work, once a driver has logged onto the Uber app, a driver’s choice about whether to accept requests for rides is constrained by Uber.
  4. Uber exercises a significant degree of control over the way in which drivers deliver their services." Examples include: Uber vets the cars used; the technology is owned by Uber; if a driver deviates from the route indicated by the Uber app, the customer may complain. 
    1. A further method of control is the ratings system whereby passengers are asked to rate a driver after each trip. If a driver fails to maintain a certain level it will result in warnings and termination of their relationship with Uber.  
  5. Uber restricts communication between passenger and driver to the minimum necessary to perform the particular trip and takes active steps to prevent drivers from establishing any relationship with a passenger capable of extending beyond an individual ride.

“Taking these factors together, it can be seen that the transportation service performed by drivers and offered to passengers through the Uber app is very tightly defined and controlled by Uber,” said the judgement. 

“Furthermore, it is designed and organised in such a way as to provide a standardised service to passengers in which drivers are perceived as substantially interchangeable and from which Uber, rather than individual drivers, obtains the benefit of customer loyalty and goodwill.”

However, drivers are unable to offer a distinctive service or to set their own prices, explained the judgement. 

"Uber’s control over all aspects of their interaction with passengers mean that they have little or no ability to improve their economic position through professional or entrepreneurial skill. In practice the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance.”

Next steps

If you have any doubts about the status of individuals working in your organisation, your first port of call is the government’s employment status overview page.  

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Richard Hattersley
By Richard Hattersley
19th Feb 2021 21:38

Understandably, employment status experts have kept a close eye on today's Supreme Court ruling and are now unpicking the implications for gig workers and the contractors.

Seb Maley, CEO of Qdos, said “The ruling should serve as a stark reminder to businesses that employment status isn’t always clear cut, and that decisions must be made carefully. If a firm engages an individual under the wrong status, the cost - both financially and reputationally - can be massive."

“But while many gig economy workers want greater protection and employment benefits, we shouldn’t assume that all self-employed people need them. There are hundreds of thousands, if not millions of people working for themselves who want to remain entirely independent.”

“But while many gig economy workers want greater protection and employment benefits, we shouldn’t assume that all self-employed people need them. There are hundreds of thousands, if not millions of people working for themselves who want to remain entirely independent.”

Meanwhile, Dave Chaplin, the CEO of ContractorCalculator, said: "Firms should not be misclassifying workers in contrived ways to avoid their duties as employers and give workers their due rights. The drivers were not carrying on their own business undertaking, were providing personal service, and were heavily controlled by the Uber app.

The ruling also serves as a reminder for organisations unprepared for the looming off-payroll rules. “The take away for the contracting community and IR35/Off-payroll matters is the reinforcement of what we know already – make sure the contractual paperwork is correct and a true reflection of the engagement. Then there should be no issues," added Chaplin.

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By tonyaustin
25th Feb 2021 11:57

No mention has been made of whether the Uber drivers' pay is income from employment under ITEPA 2003 and so subject to tax deductions under PAYE and Class 1 National Insurance contributions. If it is, will HMRC be pursuing Uber for failing to deduct tax and NIC under PAYE and seeking secondary NIC contributions?

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