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Uber and the "gig" economy

BY Donald MacKinnon
Employment Law & HR
BG Purple

Most readers will have seen the recent press coverage of the decision of a London employment tribunal finding that Uber cab drivers are “workers” within the meaning of the Employment Rights Act 1996.  As “workers”, the Uber drivers are entitled to the protections under the Working Time Regulations, including the right to paid annual leave, the right to the National Minimum Wage and protection against discrimination.

On one level, the decision is just one more decision in a list of recent claims where individuals have sought to establish employment protection.  Recent examples have included doctors in training and ‘dancers’ at Stringfellows’ nightclub.  In each case, the courts have looked in detail at how the working relationship operates in practice and whether the individuals in question can be genuinely seen as self-employed. The legal definition of “worker” involves an obligation on an individual to personally perform work for another party to a contract whose status is not that of a customer of a business carried on by the individual.

In the Uber case, having examined the working conditions in some detail, the tribunal came to the conclusion that the level of control exercised by Uber was such that it was unrealistic to view the drivers as genuinely self-employed.  The tribunal took into account the fact that Uber interviews and recruits its drivers, requires drivers to accept and not to cancel trips, fixes the fare, handles passenger complaints and subjects drivers to performance reviews via a customer rating system.  The tribunal was particularly scathing about the lengths that Uber had gone to, in its written documentation, to disguise the true nature of the relationship with the drivers.

On another level, however, this case can be viewed as a significant step by the UK courts to get to grips with the issues being thrown up by the expansion of the ‘gig’ economy.  The gig economy is a term used to cover a variety of new working relationships where individuals, under the guise of self-employment, compete with one another to carry out short term engagements.  While Uber and Deliveroo are the best known examples, there are countless other organisations, ranging from web developers to jewellery makers, who use a similar model; most, if not all of whom, will treat the individuals carrying out the work as self employed and thus not entitled to the protections currently afforded to ‘employees’ or ‘workers’.  Such relationships are becoming more prevalent – one study predicted that by 2020, 40% of workers in the US would be independent contractors.  Where the US leads, it can safely be predicted the UK will follow.

One of the main issues is that the definitions of ‘employees’ and ‘workers’ in UK legislation were drafted some time ago, and envisage most individuals in a traditional working environment; hence the confusion over who qualifies for which rights. As the law struggles to catch up with the realities of the gig economy, legislators at last have caught on to the implications for employers and employees.  The UK Government has recently launched an inquiry into the future of work, focussing on the status and rights of agency workers, the self-employed, and those in the gig economy.

One word of caution.  The Uber case is only a tribunal decision, and Uber have already made it clear that they will be appealing the judgement.  This is one that could go all the way to the Supreme Court before we get a final decision.

The case is a timely reminder though for all employers to look at their current working arrangements. The fact that an individual is designated as self-employed, and indeed is taxed as self-employed, does not necessarily determine the issue.  Particularly in light of the Uber judgement, courts and tribunals will examine closely the exact nature of the working relationship between the parties.  Getting the status wrong, as Uber have found, can be expensive and time consuming to put right.

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