The Supreme Court handed down a unanimous judgment in February confirming that Uber drivers are “workers” and not self-employed.
The implications for Uber drivers of this decision are that they will be entitled to claim back pay for holiday pay and national minimum wage spanning back at least 2 years. Claims for statutory payments such as statutory maternity pay or statutory sick pay can span more than 2 years. As such, this was a costly decision for Uber.
What is a “worker”?
Workers are a hybrid of an employee and someone who is self-employed.
The Employment Status test (as it is currently) requires a tribunal to look at the following key elements:
- Control – Does the organisation control what the individual does, the hours they work and how they undertake the work;
- Mutuality of Obligation – Is there an obligation for the organisation to provide work and for the individual to accept work;
- Personal Service – Is the individual required to undertake the work personally; and
- Integration within the organisation – How is the individual integrated within the organisation.
For a genuine self-employed relationship, none of the above should apply to the circumstances.
A worker does not have unfair dismissal rights after 2 years of service or the right to a statutory redundancy payment, like an employee. However, they have rights such as an entitlement to:
- 28 days’ paid holiday (inclusive of bank holidays) each year;
- Rest breaks and a 48-hour average working week under the Working Time Regulations;
- Statutory sick pay;
- Earn the National Minimum Wage;
- Protection for whistleblowing; and
- Not be discriminated against.
Depending on the amount they earn and the time the worked has been engaged with the organisation, they may also be entitled to Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay and Shared Parental Pay.
What did the Supreme Court consider in the Uber case?
Uber said that their holding company based in the Netherlands was a technology provider who provided an app for the driver to use. They claimed that their subsidiary, Uber London, was merely a booking agent, via whom a customer booked a ride. As such, Uber alleged the actual contract was between the customer and the Uber driver directly.
Unfortunately, the Court did not agree. The Court decided that the customer booked the trip with Uber, through the app, Uber then gave the work to the driver, to provide the service to the customer.
In addition, the Court considered the following factors:
- Uber decides what the fare will be;
- Uber decides the contractual terms of the relationship and the driver has no say in this;
- Uber has significant control in the way the driver delivers their services;
- Uber monitors their performance through a rating system and can penalise drivers, resulting in their termination if their ratings do not improve;
- If the driver is logged onto the app, their choice of whether to accept or reject rides is constrained; and
- Uber has implemented measures to prevent the driver and customer from establishing any relationship extending beyond that single trip.
It was therefore decided that Uber has significant control over the how the drivers engage with their work. The drivers were not equal to Uber, they were subordinates.
The Court also confirmed that the drivers were not only working when driving passengers to their destination, but also when they have the app switched on and are waiting to accept passenger journey requests. As such, their working time is longer.
Further, any agreements in place between the parties are only relevant if they reflect the reality of the situation. If they do not reflect the reality, courts and tribunals will look at all of the circumstances.
Since the judgment, Uber have confirmed that its drivers will be treated as workers and be paid accordingly.
Practical Tips – What does this mean for employers?
Employment status is frequently raised as part of tribunal proceedings. We have seen cases where individuals have worked for businesses for a number of years and only when the relationship sours or the arrangement is terminated, do they raise that they believe they are an employee or worker in a bid to maximise the claims they can bring.
The Uber case sets a precedent for how these cases will be decided moving forward.
Whilst the test of “worker” status depends on weighing up a number of different factors, it is clear that a high degree of control exercised by the organisation that engages individuals will favour an argument that those individuals may be regarded as workers.
It is therefore advisable for all employers (whether operating in the gig economy or more generally) to review any self-employed arrangements in place, to check (by way of example):
- If there is an agreement in place with them;
- If the agreement reflects the reality of the situation;
- How long the individual has worked for the organisation;
- If the individual is working on a specific project or for a specific period of time;
- Whether the individual is under the control of the business, for example, with regards to their working hours, who decides how they undertake tasks and when they do so;
- Whether the individual has become integrated into the business, for example, how much does the individual rely on the business, does the business treat them as all other staff, including employees etc;
- How the individual is paid;
- Whether there are any fluctuations in hours and pay;
- Whether the individual is paid for holidays or sickness absences;
- Whether the individual uses their own equipment and vehicle;
- Whether there is a requirement for the individual to accept work offered;
- Whether there is a requirement for the organisation to offer the individual work;
- Whether the individual is on an equal footing to the business or a subordinate; and
- Whether the individual can provide a suitably qualified substitute, if they are unable to work, and whether this has ever occurred.
This is not an exhaustive list.
Where you are unsure of an individual’s status, you should take advice. Indeed, it can be costly (in terms of back pay for holiday pay and National Minimum Wage for example), if you get it wrong, particularly where you have a number of individuals in the same situation.
If you do have self-employed individuals working with you and this arrangement will continue, you should ensure that you comply with the new IR35 rules for off-payroll working which is due to come into effect from 6 April this year.
If you require any further information or advice about the case or to assist you with a review of your staff, please contact Rachel Stephens at firstname.lastname@example.org or Andréa Hopson at email@example.com.