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Markel Insurances

22 Feb 2021

Uber and employment status: Who’s really in the driving seat?

The range of statutory employment rights that a person enjoys depends on their employment status. There are currently three types recognised in employment law in the UK:

  • employee (with full employment rights)

  • worker (with some employment rights, such as the right to paid statutory holiday and to receive the National Minimum Wage)

  • self-employed (who are largely outside the scope of employment law and do not have these statutory rights)

While basic definitions of ‘employee’ and ‘worker’ are contained in legislation, detailed tests of an individual’s employment status are set out in case law.

In contrast, tax law only distinguishes between employees and the self-employed - someone working for their own business as a self-employed sole trader or a partnership and does not use the intermediary ‘worker’ status to determine tax liabilities. 

Many recent court and tribunal cases have been concerned with whether people working in the ‘gig economy’ are workers or self-employed for employment law purposes.

As widely reported in the media, in the culmination of  a five-year legal dispute, the Supreme Court (which is the highest and final appeal court in the UK) has ruled unanimously that the original employment tribunal was correct in finding that the Uber drivers at the centre of the dispute were workers, with worker rights, rather than self-employed contractors, due to the relationship of subordination between Uber and its drivers. 

Uber, whose services include taxi services and food delivery, has sought to categorise their drivers as being self-employed, arguing that they serve their own clients. However, the Supreme Court has unanimously ruled that the employment tribunal was correct to find that the drivers were in fact workers, with a right to receive the National Minimum Wage and paid statutory holidays.

In handing down the judgment, Lord Leggatt focused on five key reasons for finding that the drivers were workers for the duration of time they were logged onto the app and available to accept work:

1. The drivers had no say over their fares which were set by Uber

2. A standardised written agreement (described as a ‘service agreement’), which they are not able to renegotiate, is essentially imposed on drivers

3. Uber exercises a significant amount of control over drivers, including penalising those who decline or fail to accept a certain number of trip requests

4. Uber dictates the way in which drivers should deliver their service and uses a rating system which if the driver falls below leads to a series of warnings which may ultimately result in termination of the contract.

Complaints from passengers aren't handled by the driver, but by Uber, who will often decide them without even referring to the driver. This sometimes leads to a reduction in a driver's pay

 5. Communication between passengers and drivers is restricted by Uber (preventing the formation of any future relationship between the driver and the passenger outside their journey)

Whilst this case is primarily of significance to employers using technology platforms, such as apps, in the ‘gig economy’, it is a reminder that the tribunals in the UK will apply the relevant statutory tests of employment status, as further developed in caselaw to the detailed facts of the cases that come before them, and attempt to identify the true reality of the relationship, irrespective of how carefully drafted contractual documents seek to represent that relationship.  Where the individual meets the statutory ‘worker’ definition, the protective statutory provisions relating to workers all prohibit the parties contracting out of its provisions in order to disapply them. 

In other words, the wider significance of this case for employers and businesses is to highlight that redrafting contracts in an attempt to ensure that individuals are self-employed for employment purposes, rather than workers or employees, will not wash with the courts or tribunals.

In order for the business to prove on the balance of probabilities before a court or tribunal that the individuals they engage are truly self-employed, this must be judged on the true nature of the working relationship between the parties based on the facts.

For more information on what’s been discussed in this article or for general employment law advice, please contact Hannah Thomas or call us on 0371 705 4006.

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