As you may have seen in the news, on 19 February 2021, the Supreme Court announced its judgment in the case of Uber BV and others v Aslam and others. The judgment confirmed that Uber drivers are workers for the purposes of employment legislation and are therefore entitled to receive the national minimum wage, annual paid leave and all other benefits which worker status assigns.
Uber sought to show they were acting simply as an agent or an intermediary between the driver and the passenger, much as a travel agent does between airline and passenger. They claimed that the drivers were self-employed, self-directed, and therefore there was no “employment” relationship of any kind with the drivers. They pointed at their contractual provisions, which made the self-employed status clear, but also at the fact that the drivers could work for more than one App at the same time.
This was not upheld.
The Supreme Court found that Tribunals should not rely on the contract in place, but instead in the reality of the relationship between the companies and individuals. The Court considered that the purpose of the minimum wage and working time regulations was to protect vulnerable persons in their working relationships. If workers are subordinate enough that they cannot negotiate their terms and conditions, this can be a pointer towards them needing the protection provided by these laws. It is clear that here, with hundreds of thousands of drivers around the country, they were unable to negotiate with a multi-national entity like Uber.
The Court found that once the Uber app was switched on and the drivers were ready to accept passengers, the drivers were workers and their minimum wage claims (for up to two years’ back pay and annual leave) could therefore be reverted back to the Tribunal.
The case is significant; it’s a really important precedent on employment status. Is also demonstrates how difficult it is to determine the difference between a worker and the genuinely self-employed, but how important it is that the employer or company gets it right.
What is a worker?
Briefly, the law recognises 3 main types of employment status. We have a full page on employment status here.
- A worker is an individual who works under a contract where they agree “to do or perform personally any work or services for another party to the contract whose status is not … that of a client or customer”.
- An employee is an individual employed under a contract of employment.
- A self-employed person, when genuinely self-employed, has no employment relationship, effectively instructs themselves, and pay income tax (as opposed to PAYE).
This matters because it affects what rights each individual has. For example, self-employed individuals cannot bring matters before the Employment Tribunal.
The difference between a worker and an employee is a blurred line but, generally, it is accepted that workers are not an employee if they are free, without penalty, to accept or reject any offer of work made to them.
Workers are entitled to national minimum wage and holiday, and statutory payment such as SSP where applicable. They are also protected for detriments arising from whistleblowing. Unlike employees though, they cannot claim unfair dismissal and are not entitled to notice of termination.
What about Deliveroo?
You may remember that a judgment last year confirmed that Deliveroo drivers were in fact self-employed. So how does this judgement fit in here? Well, the Court was clear that there is an important distinction between drivers and delivery service.
For drivers, personal service is expected; a passenger expects that particular driver, their car, their licence. Under Deliveroo, effectively anyone could drop off your food, and the delivery people themselves do therefore have a genuine right to substitute, therefore they cannot be workers. So Uber does not necessarily clash with Deliveroo at all here; both are good law and provide helpful guidance on the distinction between different persons.
What does this mean for the gig economy?
This case was always going to be disruptive. The gig economy has become more common in the last few years and the judgement could be seen as a win for the protection of the low-paid vulnerable worker. But it may also be seen as a defeat for entrepreneurialism.
Why does this matter?
If you are self-employed or have individuals on self-employed contracts, such as consultants or freelancers, this case is critical. It could change the status of certain self-employed people. So, for contractors, hairdressers, drivers, cleaners, etc… It could change the responsibilities of the company to the individual. A contract is not definitive, it’s all about evaluating the actual relationship.
The Uber judgement is expected to affect the gig economy rather than professionals. This is because professional consultants are less likely to be in a dependent or subordinate relationship. However, this will be a matter of fact for the Tribunal to evaluate on a case by case basis.
Having said that, the previously delayed IR35 changes also come into effect in April 2021, so you will need to ensure that your contractor relationships are correct in advance of this date. Those changes will particularly affect those who work under personal service companies. Our full blog on the IR35 changes is here.
What should employers now do to establish someone as an independent contractor? It is not about tinkering with the contract; it is about the day-to-day relationship. If you have supposedly self-employed individuals, you need to evaluate what the genuine relationship is, and rectify your mistakes if you may have got it wrong. Those persons may now be owed statements of terms and conditions, minimum wage, and holiday pay.
You could also consider changing how you conduct your business to lessen the risks of individuals being workers or employees.
You should also bear in mind that, even in a contractor relationship (so wider than just a gig economy scenario), this case also makes it clear that an indemnity clause in a self-employed contract (eg. where consultants agree to indemnify for raising claims re. status) is likely now to be unenforceable as anything that directly or indirectly prevents Tribunal claims is void and unenforceable. So it is worth reviewing your contracts and your relationships, as you can no longer rely on clause such as this in respect of the costs of a status claim.
What is the future of Uber?
There was wild speculation last week that, perhaps, the back pay owed might effectively mark the end of Uber in the UK. That seems unlikely, given that Uber has lost similar claims in both Spain and France, but haven’t stopped trading there.
However, Uber is going to be faced with substantial liabilities, and so the costs for consumers may go up, especially in the light of the fact that HMRC may be taking actions against Uber concerning VAT, income tax, NI, and national minimum wage.
Another issue Uber is going to have to figure out is exactly what’s owed. The Court found that when a driver logs into the app, they are working, but what about where they “multi-app” at the same time (eg. drive for Uber, and Addison Lee etc). This is something that Uber is going to have to evaluate and it may involve updating their driver app. Nevertheless, the CJEU is clear that it’s not the problem of a worker to solve issues such as these calculative and administrative issues, it’s the role of the employer, so this seems to be Uber’s burden to bear.
Uber may also consider changing its structure. It is thought that they could make the drivers more clearly self-employed, but that may impact customer safety. They may also go the other way, and seek to ensure that in fact, the drivers are employees, rather than workers. This would mean that Uber could exert more control over those drivers, and limit their ability to multi-app.
I work or worked for Uber, what do I need to know?
In short, you may be entitled to backpay to account for national minimum wage and annual leave. To pursue these claims, the biggest thing to consider is time limits.
If you’re still working for Uber, you can make a claim at any time in respect of your current employment in relation to holiday pay or minimum wage.
However, if you’re no longer working for Uber, you would only be able to escalate claims if your last day was in the last three months. However, it may also be possible for you to do a day’s work again on the app to restart those time limits, although this option has not yet been tested in the Tribunal.
If you believe you have a claim for backpay from Uber, please do not hesitate to get in touch.
How can Thrive help?
If you have anyone on a self-employed contract, we suggest that you re-evaluate the status of those persons. GET IN TOUCH and we can do an audit for your relationships and evaluate your risk for you before the IR35 changes are effective in April.
By Deborah Norbury and Alicia Collinson
Disclaimer…Please note this blog is for reference purposes only and is only accurate at the date it was published. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action. Please contact us if you have any questions on email@example.com