Back in October it was announced that the Employment Tribunal had upheld claims for entitlement to the national living wage and holiday pay from a group of Uber drivers. They found in the drivers’ favour and established that they are not self-employed but are workers. Since then, other cases have been decided against companies like City Sprint and Pimlico Plumbers where judges have grappled with the concept of worker status and blurred the lines of the so-called “gig” economy further.
Taking the Uber case as a starting point, what did it actually all mean? Well, as self-employed individuals the drivers did not have workers rights and were not paid a fixed income. In the gig economy, instead of a regular wage, these drivers got paid for the "gigs" they do, such as a food delivery or a car journey.
Uber tried to argue that they had nothing to do with transport and were, in fact, a technology company providing the link between user (passenger) and driver. They said that the pool of independent self-employed contractors who downloaded their app could choose where and when they worked. This did not go down well with the tribunal. The judges were scathing about Uber’s elaborate arguments and complicated documentation, accusing the firm of “resorting in its documentation to fictions, twisted language and even brand new terminology.”
It was simply ridiculous to consider each of the Uber drivers (30,000 in London alone) as independent small businesses, the tribunal said. The drivers are not able to negotiate with passengers or determine prices as self-employed service providers could. They are offered and accept trips strictly on Uber’s terms.
Now that Uber drivers are considered workers, they will benefit from a number of employment rights including:
- 5.6 weeks of paid annual leave each year
- 48 hour maximum working week
- protection from unlawful deduction from wages
- national minimum/living wage.
The repercussions of this are huge, for any business seeking to avoid these rights be engaging service providers through arrangements that purport to classify them as self- employed contractors, using documentation that bears no relation to the reality of the relationship, where these workers are obliged to provide their own services and cannot send along a substitute at their own cost to provide their labour. Uber will have to give drivers back pay for unpaid benefits, including holiday pay and cover those costs going forward. With an estimated 46,000 Uber drivers working in London by the end of 2017, that is going to be quite some cost, and that is before we even start to think about the tax implications.
Although Uber are appealing the decision, it is unlikely that the next judgment will appear in this landmark case any time soon, but that has not stopped other gig workers or those operating under similar arrangements pursuing actions against their employers.
In January, the Tribunal found that a City Sprint bike courier should be classed as a worker rather than self-employed and should be entitled to basic rights including holiday, sick pay and the national living wage. In February the Court of Appeal upheld the EAT’s decision that plumbers employed by Pimlico Plumbers are also workers, not self-employed contractors. The Judges said that plumber Garry Smith was entitled to basic workers' rights, following a heart attack and dismissal, even though he had been regarded as self-employed by Pimlico Plumbers and even by himself when he started working for them.
At the time of going to press, similar cases are currently being brought against the courier firms eCourier and Excel as well as taxi firm Addison Lee. Deliveroo’s drivers are said to be trying to create a union and claim that they are workers.
There is certainly a place for flexible working arrangements and there is value in a gig economy (indeed the gig economy has apparently grown by 72% in the transport and storage sector since 2010). However, companies who need casual labour need to be clear about the factual, contractual and legal basis of their arrangements, in the light of these cases and what the implications are for getting it wrong.
If you would like to discuss any of the information included above, please contact partner, Nick Hobden on 01322 422550 or by emailing email@example.com