The Uberization Effect

Many of you reading this article will no doubt have used Uber taxis over the past few years with little thought for what the employment status of the driver is; unless you are an employment lawyer of course!

What a surprise it must have been to many to hear the decision of the Employment Tribunal in the case of Aslam, Farrar and others v Uber where it was held that drivers were in fact ‘workers’ and not self employed as commonly perceived.

The Uber decision could have a monumental impact on nearly 5 million UK individuals who work in the ‘gig’ economy; which refers to those people engaged to take up casual work on a piecemeal basis. We’ve seen a huge rise in Uber drivers working under the umbrella of this organisation who are now in line for compensation because their self employed contracts do not reflect the true nature of their engagement. Although the Uber case is a first instance decision and not binding on other cases looking at the gig economy, Deliveroo bikers and other casual workers could well bring claims on the back of the Uber judgment if they pursue claims for workers rights from the company that engages them to provide their services.

Uber unsuccessfully argued that they were merely providing the technology to facilitate taxi rides between drivers and customers. They purported (as set out in their contracts) to have limited degrees of control which were not indicative of an employment relationship between Uber and their drivers. If these drivers were truly self employed, they would have not been found to be entitled to basic rights afforded to ‘workers’ for the purposes of the Employment Rights Act 1996, National Minimum Wage Act 1998 and the Working Time Regulations 1998.

The Tribunal held that Uber drivers were not quite ’employees’ but were ‘workers’ and therefore legally entitled to be paid for 5.6 weeks annual leave, rest breaks, national minimum wage (which should be paid during waiting times), a maximum 48 hour average working week and whistleblowing protection. The Tribunal held that the supposed driver/passenger contract was pure fiction and “faintly ridiculous” which bore no resemblance to the real dealings and relationships between the parties. The lengths that Uber’s lawyers went to in drafting the contracts to indicate a self employed status was not enough to alleviate the retrospective burden now placed on Uber to provide basic workers rights and potentially huge amounts of back pay to their 40,000 drivers for claims of failure to pay the minimum wage and holiday pay. Uber drivers were held to be economically dependent on Uber because they could not negotiate with passengers and were completely reliant on Uber to supply work. If Uber had followed a different business model and exerted a lesser degree of control over their drivers then the decision may well have been different.

Growth in the gig economy has led to the Commons Select Committee on Business, Energy and Industrial Strategy investigating the nature of casual working relationships and focusing on the status of workers and rights of these individuals. It is estimated that 460,000 people are falsely classed as self employed in the UK which leads to approximately £314 million a year in lost tax and national insurance contributions.

Collingwood Legal recommend that employers review their employment relationships so that contracts are truly reflective of the degree of control they have over individuals they engage for work.

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