Uber: Analysis of the ‘employment status’ of those who participate in the gig economy
What is the gig economy?
The phrase ‘gig economy’ is used to describe individuals who earn their income per task, or ‘gig’, that they complete. Examples include a car journey (like Uber drivers) or a food delivery (like Deliveroo drivers).
It has been estimated that around 5 million people in the UK work this way. The attraction for individuals is said to be the flexibility of being able to work whenever they like. Similarly, the gig economy is attractive to businesses because they only pay staff when work is available, thus avoiding staff costs when there is no work. Therefore it is no surprise that the gig economy has gained particular traction within the hospitality and transport industries, as these industries are known for their regular fluctuations in supply and demand.
Timeline of the Uber case and the central issue that it raises
In 2016, a number of Uber drivers brought claims against Uber. The central issue was that of the status of Uber drivers, namely whether they had self-employed employment status (as Uber argued) or whether they were workers. On 28 October 2016, the Employment Tribunal (ET) held that the Uber drivers are workers. Uber appealed against this decision. On 10 November 2017, Uber lost their appeal, with the Employment Appeal Tribunal (EAT) ruling that the Uber drivers are workers.
Uber recently attempted to leapfrog the Court of Appeal and go straight to the Supreme Court. However, this application was rejected and the Court of Appeal will hold Uber’s appeal sometime in 2018.
The issue of ‘status’ that the Uber case raises
Why are Uber so resistant to their drivers having worker status? The likely reason is because workers are entitled to employment rights that self-employed individuals are not entitled to, which include:
- The National Minimum Wage;
- Protection against unlawful deductions from wages;
- The statutory minimum level of paid holiday;
- The statutory minimum length of rest breaks; and
- To not work more than 48 hours on average per week or to opt out of this right if they choose.
Therefore if Uber drivers are recognised as workers, Uber will be forced to accommodate these rights (which is something that is not in their business interests).
Implications of Uber on the gig economy
The implications could be huge on the ‘gig economy’, because if their drivers are ultimately recognised as workers:
- It would force all other businesses operating within the gig economy to re-evaluate the status of the individuals working for them; and
- It could open the floodgates to individuals working within the gig economy (who previously thought they were self-employed) to bring claims against their employers alleging breaches of workers rights. The recent Supreme Court decision eradicating tribunal fees only increases the chances of this happening.
The Uber ‘warning’ on employers
This case highlights the importance of employers carrying out their due diligence before treating any staff member as self-employed, because the law does not look at the label, but what the relationship is in practice. It appears Uber made the mistake of treating their staff as self-employed when the ET and EAT after looking at the relationship in practice, concluded that their staff were workers.
When Judges are assessing whether or not an individual is a worker, there are many factors that can be considered, some of which include:
- The existence of a contract – (whether written, verbal or implied);
- Whether or not the individual is contractually obliged to perform work or services;
- The degree of control the individual is subjected to;
- Whether or not the other party is a ‘customer’ or ‘client’ of the individual; and
- Who pays the tax of the individual.
Watch this space, it will be interesting to see the outcome of Uber’s appeal, and whether this decision brings to an end the Uber saga. One would think that if the Court of Appeal rule against Uber (like the ET and the EAT), Uber will attempt to get the decision overturned by the Supreme Court. One thing is for certain, this case has brought to the fore the issue of ‘status’ and the importance of all employers to carry out their due diligence in this regard.
By Zahid Reza
Image used under CC courtesy of Alper Çuğun