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It is ironic that, following a year where the only talk of gigs has related to the gig economy and not those large gatherings we remember so fondly, the Supreme Court hand down their long-awaited judgement on the status of Uber drivers.
The decision confirming worker status and thus workers’ rights on these drivers firmly establishes the direction of travel for the courts in these matters. The courts are increasingly being asked to look at whether someone who has been engaged on a purportedly self-employed basis is in fact a worker, and this judgment is a recognition that the courts are concluding more often than not that individuals who have been engaged as self-employed contractors are in fact workers and deserve status and protection.
The key issue at the heart of this case was whether Uber drivers were workers or self-employed. As the former, they are entitled to paid holiday and the National Minimum Wage (NMW) but not as the latter. Uber argued that it is merely a technology platform that drivers use to sell their driving services. It is not providing a taxi service per se. As such, drivers sign onto the platform, they are not required to commit to work and can accept or decline appointments. Uber’s argument contended that such a relationship lacked the necessary control or mutuality that any employment relationship requires.
Back in 2017, the Employment Appeal Tribunal (EAT) disagreed with Uber’s argument and concluded that the drivers were workers (see ebriefing here). This was later upheld in 2018 by the Court of Appeal. However, given the consequences of such a decision on Uber’s business model and profits, it appealed the decision to the Supreme Court. The case was heard last July, and the ruling published last week.
The Supreme Court looked at two issues: were the drivers 'workers' and providing personal services to Uber? If so, what periods constituted their 'working time'?
On the first and principal point, the court concluded that the degree of control exercised by Uber confirmed workers status. Uber dictated the rate of pay, the contracts terms and the way services were delivered. In addition, it restricted the drivers’ freedom to choose when to work once logged in and its ability to communicate with passengers. On the second point, the court agreed with the tribunal that the drivers were 'working' whenever they were logged in to the app, in the territory they were authorised to operate in and were ready and willing to accept fares.
The court made an interesting point in the judgment which gives an indication of future judgments on this issue – the interpretation of the legislation should give effect to the purpose of the legislation, which is to give protection to vulnerable individuals who have little or no say over their pay and working conditions because they are in a subordinate and dependent position in relation to a person or organisation who exercises control over their work.
Whilst the case itself may be fact-specific, considering only the Uber business model and its workings, this does not mean the case lacks significance for other sectors and organisations. The issue of employment status has long kept employment lawyers occupied and the new models of working that IT and the ever-broadening gig economy are introducing are only complicating the issue and blurring the definitions further.
Key practical points to take from this case whatever your business model is:
- The reality of working practices remains more important than documentation; an agreement can state that there is no employment status but if the level of control over the individual is evident, it is likely the individual may be a worker or there may even be an employment relationship.
- When determining employment status, one needs to look at what happens in reality and consider questions such as: Who controls what the individuals do? Is there an unfettered right for the individual to appoint a substitute? Is the organisation obliged to provide work and the individual required to carry it out? Who dictates the terms and conditions? Who takes the financial risk? Who supplies the equipment required to perform the tasks?
- The cost of assuming self-employed status over worker status can be high and so organisations should check working practices and arrangements – this is, in particular, the case as the new IR35 rules come into force on 6 April 2021 (see ebriefing here and newly recorded webinar here. Workers and employees are also entitled to holiday pay and backdated holiday pay, provided the claim is bought within three months of the last failed payment and can be claimed for up to the previous two years.
- Workers and employees are also entitled to the NMW and failure to pay it is even more serious; HMRC are renewing their efforts to name and shame employers who are failing to pay NMW (see my blog post here).
We have experience in helping organisations across different sectors including social care, housing and charity, establish correct working practices and determine the employment status of their contractors.
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