Uber Loses Appeal to Classify Drivers as Self-Employed

On 19^th February 2021, the Supreme Court ruled that Uber’s drivers are workers, not self-employed. The ruling finally gives a definitive answer to the question:

“Are uber drivers self-employed?”

This is a massive development in a legal battle that has been fought over several years. The decision has wide ranging implications, both for Uber, and for the Gig Economy at large…

The latest (and final) ruling

Firstly, what does this mean for Uber?

First, it means their workers are entitled to receive minimum wage and holiday pay as standard, something they didn’t have before. This means Uber will have to provide this or change the way it operates. Uber could also face a significant compensation bill.

Uber is not alone in facing legal challenges from its staff. There are ongoing cases regarding the self-employed status of gig-economy workers. This ruling will likely impact the outcome of all of these cases, plus any others that occur as a result.

So what does this mean for you?

If you work outside of the gig-economy, there may be no short-term impact on your business. If you engage self-employed individuals in your organisation however, you may need to review your contracts. If your staff were to be considered “workers” this would mean they’re entitled to:

• the national minimum/living wage
• paid minimum annual leave entitlement of 5.6 weeks per year
• protection against unlawful deductions from wages
• protection against detriment for whistleblowing
• the right to be accompanied at a disciplinary/grievance hearing (though it is not appropriate to apply a disciplinary or grievance procedure to them)
• protection against less favourable treatment in relation to part-time working
• certain rights relating to trade union membership
• pension auto-enrolment

With this in mind, consider whether the individual’s contract reflects the reality of their role.

It is yet to be seen whether this ruling will lead to a full disassembly of the gig-economy. In the meantime, err on the side of caution and address staff concerns with care.

History of the Uber case

Previously, the Court of Appeal refused to overturn previous judgements that Uber drivers are entitled to employment rights.

This result confirmed that Uber drivers were classed as workers and not self-employed. It meant that they were on the verge of being forced to give its uber drivers holiday pay, minimum rest periods, and pay them at least national minimum wage.

By the time the case had reached the Court of Appeal, Uber had already suffered two losses since two of its drivers first took the company to an employment tribunal in 2016. The Supreme Court judgement was the final chance for uber to keep self-employed status for drivers. Now, we know that definitively that Uber’s drivers are workers.

It’s not only gig economy businesses that will be watching the verdict closely. The ruling on employment status could have a big impact on your business…

Why are Ubers different from taxis?

Most UK taxi drivers work in a similar way to Uber. This means many are labelled as self-employed. They will mostly receive work through central booking agents too. So why is this any different for Uber?

Drivers working for Uber weren’t on zero hour contracts. It comes down to an issue of control. The court found that Uber’s working conditions mean that drivers are not self-employed.

For instance, all Uber drivers receive performance reviews and ratings. These scores come from passengers and are used by Uber to give warnings if too low. Uber can suspend drivers for turning down work when on shift (i.e. when logged into the Uber app). And Uber sets all fare prices, so drivers have no power over what they charge.

Also, unlike other taxi companies, Uber is worth $120bn on the stock market. That shouldn’t influence a judge, but probably has an effect on public opinion…

Worker, employee, self-employed: what’s the difference?

Many UK businesses have a mixed workforce of employees, workers and self-employed. And there’s a grey area between. 

An employee is someone that works for you under a contract of employment. Workers are people that may occasionally do work for your business. Prior to April 2020, workers weren’t required to have a written contract. Now, they must have one or you will be in breach of employment law. The contract might include terms likes ‘casual’, ‘zero hours’ or ‘as required’.

So it’s a little confusing. But what’s important is that both workers and employees have more rights than the self-employed. They also have more duties to their employers. For example, workers and employees must turn up to work on time and can’t send someone else in their place.

Many gig economy businesses rely on not giving basic employee rights to their workforce. And Uber says that most of its drivers value the flexibility of being self-employed.

What does this mean for me?

You might agree with the ruling, even if you are a gig economy employer. But it still presents a big challenge for businesses.

You may need to start giving holiday and sick pay to staff previously classed as self-employed. And all your workers will need to get at least national minimum wage. Your workers will have the right to take you to an employment tribunal if you break these rules.

The judgment also shows that if your day-to-day working relationship with staff is different to their contracts, then your contracts hold no weight. This was the case with the uber employment contracts.

This gives self-employed people more power to claim at an employment tribunal that they are under the control of your business.

What do I do next?

First, make sure that the employment status label you give to your workforce is the correct one. As mentioned above, that’s easier said than done.

If you struggle with the worker/employee/self-employed distinction, call Croner. We give expert advice on how to label your staff correctly.

Make sure your staff contracts reflect reality. If your contract says a person is “self-employed” but they can’t turn down work, then it’s likely that contract won’t stand up in an employment tribunal.

We help you write contracts that truly represent the working relationship, and still give you the flexibility you need from staff. Without falling foul of the law. 

Expert support

Be prepared for the implications of this ruling. Contact Croner today. We help you make sense of the rules affecting your business and help you stay on the right side of the law.

Speak to a Croner employment law expert. Call 01455 858 132.