Uber's tribunal defeat could have big implications for the 'gig economy'

A UK court has ruled the taxi app's drivers are entitled to the minimum wage and other benefits.

by Jack Torrance
Last Updated: 28 Oct 2016

MT didn’t see that coming. Drivers that use the ride-hailing app Uber have won a landmark ruling that could have massive implications for the so-called ‘gig economy’ in the UK. While the fast-growing Silicon Valley company had argued its drivers were independent self-employed ‘partners’, today’s court case determined they are in fact workers.

That could mean that Uber will be forced to pay them the national living wage, holiday and sick pay and even pension contributions – something it is by no means inclined to do. The company’s entire business model is about being as low-cost and flexible as possible.

This could turn out to be a big moment for employment rights in the UK. The number of self-employed workers has skyrocketed in recent years and trade unions are determined to ensure Uber is the first of many companies that face similar rulings.

But as MT understands it, this doesn’t set a new legal precedent, per se. All such cases are judged on their own merits (see below). The tribunal found against Uber for myriad reasons, including the way it limits driver contact with customers, the language it uses when recruiting drivers and the way it treats those drivers who refuse a fare (you can read the 40 page ruling here). Chances are that if Uber doesn’t win an appeal it will simply change its Ts and Cs to ensure it can continue to treat its drivers as contractors.

Nonetheless the ruling should make it clear to those companies that do use the label of ‘self-employment’ to get around the rules that it doesn’t give them carte blanche to do what they like. This afternoon MT's inbox is full of comments from law firms saying this ruling could 'open the floodgates' for similar claims. Expect more tribunals on the horizon soon.


When is self-employment not actually self-employment? 

There are actually three main types of employment status: proper ‘employees’, who enjoy the widest range of protections, ‘workers’, who may be on flexible or temporary contracts and have fewer rights, and the self-employed. It’s the line between the last two that has been blurred in recent years as companies have been keen to keep costs low and be as flexible as possible.

There is no definitive way to telling them apart, says Tom Stenner-Evans, senior associate in the Employment team at Michelmores. But it’s certainly true that just getting a worker to agree they are happy to be hired on a self-employed basis isn’t good enough.

‘There are certain requirements for [it to be considered] employment and if all of those boxes are ticked, it’s much more likely it’s an employment relationship, even if the parties have agreed it’s self-employment,’ he says. There are three key factors that determine whether somebody is actually self-employed or not.

  • Personal service. ‘In an employment relationship there’s an expectation on the individual providing the service themself,’ says Stenner-Evans. If workers have to show up themselves to do a job then they could be employed.
  • Mutuality of obligation. ‘There’s an expectation on the part of the organisation to provide work and an expectation on the part of the individual that if work is provided they will do it,’ he says. Genuine self-employed people have every right to turn down work they don’t want.
  • An element of control. ‘Someone in a supervisory role to whom you report.’ The self-employed should be their own boss.

Of course all of these things are pretty vague and it will ultimately up to a court to decide what does and doesn’t constitute control or mutuality of obligation. The government has commissioned Matthew Taylor, the head of the Royal Society of Arts to review whether employment practices are keeping up with changes in the way companies do business. It would be beneficial for everyone if that led to some more clarity over where employers stand on self-employment. 

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