Toni Trevett, director of CompleteHR, examines the significant employment law consequences resulting from the Uber employment tribunal verdict.
On Friday a London employment tribunal ruled that drivers for taxi app Uber are considered workers and will be entitled to holiday pay, paid rest breaks and the national minimum wage - among other rights.
The ruling means drivers are also covered by the Working Time Regulations, so will be entitled to rest breaks, have protection from discrimination and cannot be dismissed for whistleblowing.
The case is the first to examine the key premise underpinning the ‘gig economy’: that people who work via apps are independent and not employed by any company. The verdict casts significant doubt on the business model behind gig economy tech platforms like Uber, which connects workers with customers without employing the staff themselves.
The decision will affect some 30,000 drivers in England and Wales, and has far-reaching consequences for Uber and the ‘gig economy’ as a whole. On hearing the judgement Uber said immediately that it would appeal against it.
‘Substance over form’
A long-established principle in such cases is that the courts consider employment status to be a question of ‘substance over form’. It’s the reality of the arrangement between the company and the individual that counts, not what is drafted into a contract or agreement.
Two drivers, James Farrar and Yaseen Aslam, raised the case on behalf of a group of 19 Uber workers – a key term here as the group did not argue they were employees, choosing the term workers instead.
Farrar told the court he was under tremendous pressure to work long hours and accept jobs. He also outlined the repercussions from Uber if he cancelled a pickup. Some months he earned as little as £5 an hour – below the £7.20 minimum employers are now obliged to pay workers aged over 25.
Uber argued that its drivers were not workers but self-employed contractors. The San Francisco-based company also stated that it was a technology firm not a transport business, and that its drivers were independent, self-employed contractors who could choose where and when they worked.
This landmark ruling of course leads other firms with large self-employed workforces to consider the reality of their position too.
According to the Guardian’s report on this decision, research by Citizens Advice suggests that as many as 460,000 people could be falsely classified as self-employed, costing up to £314m a year in lost tax and employer national insurance contributions.
Four courier firms already face legal action from delivery drivers or cyclists who want similar recognition as staff employees, and the rights that go with that status, while delivery firm Hermes is under investigation by HMRC.
Similarly, takeaway firm Deliveroo made the news in July after reports of a clause in its agreements with couriers that they will not bring a legal claim challenging their employment status. However, employment law experts have suggested that the clause is unenforceable.
The Uber verdict comes amid rising interest from government about the recent trend towards self-employed working. The government is about to commence a six-month review of modern working practices, and HMRC has recently announced a new compliance team focused on 'gig economy' workers
What happens now?
The ruling is not the end of the process for Uber. The firm will take the case to the employment appeal tribunal, and following its decision there could be further hearings in the court of appeal and then the Supreme Court. Any payments due to drivers will not be calculated until that process is over.
Uber drivers who wish to make a similar complaint should contact the GMB union or their local tribunal about their claim as soon as possible.
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.
Discussion of the ruling has already started on Any Answers. Have you fielded any questions from confused clients or employees?
About Toni Trevett
Toni is the founder of CompleteHR Ltd, and is the company's lead consultant and trainer. She specialises in the broad area of management development training including the skills of people management and HR .