After criticism of the working practices at Sports Direct and an
HMRC investigation into low pay courier firm, Hermes, the latest
blow to the gig-economy comes from the Employment Tribunal decision
this afternoon that Uber taxi drivers are actually
"workers", with rights, rather than being unprotected
The Uber drivers argued in particular that, as workers, they are
entitled to the National Minimum Wage and to paid holiday.
Uber had argued that it was purely a technology company and not a
transport business and that rather than contracting with the
drivers, the contractual relationship was actually between the
passenger and the driver.
The Employment Tribunal rejected
this completely. It found that Uber's written terms did
'not correspond with practical reality'; highlighting that
courts will always assess a working relationship based on what
happens on the ground, rather than what is recorded in
Some of the factors that the
Employment Tribunal took into account when finding that the
practical reality was that the drivers were workers included the
fact that they found that Uber:
interviews and recruits
controls key passenger information and does not share this with
requires drivers to accept trips
sets the default route to be taken
sets the fare and the driver can only decrease it; the driver
is not free to increase it
imposes conditions on drivers regarding the type of vehicle
they can use, instructs them how to do their work and controls how
they perform their work
uses rating systems to effectively performance
These factors indicated that Uber
had a level of control over its drivers that was consistent with
the drivers being workers for Uber, in that they personally
undertook to do or perform work for Uber. The drivers were
not acting totally independently and autonomously, as a
self-employed contractor would.
The Employment Tribunal decided
that the drivers were carrying out work for Uber when they had
their Uber App switched on, were in territory in which they were licensed to use the App
and when they were ready and willing to accept trips. This
indicates that the drivers may be 'working' even when they
do not have a passenger in their car.
The Employment Tribunal concluded
that when the drivers were working, they were entitled to the
National Minimum Wage and paid holiday. Gina Wilson,
Employment Partner at Clyde & Co LLP highlights that, besides
the right to pay and holiday, other rights workers are entitled to
include rest breaks and a maximum 48 hour working week, but they have no protection
from unfair dismissal, TUPE and redundancy.
Mark Howard, Pensions Partner at
Clyde & Co comments "This decision is going to also
attract the attention of the Pensions Regulator - which is charged
with ensuring employers comply with automatic enrolment
legislation. The definition of jobholder in the Pensions Act
is the same as the definition relied on by the Employment Tribunal
in this case. Uber could find itself facing substantial back
payments of pensions contributions, including interest
The decision is only a first level
Employment Tribunal decision and will almost definitely be appealed
- we will keep you up to date with any new decisions.
This judgment comes in the same
week that Ministers announced a new crackdown on firms using large
numbers of self-employed or agency workers in order to deny them
employment rights. The Treasury Financial Secretary said that
HMRC was "transforming" its compliance approach, with the
formation of a new team dedicated to tackling such issues.
There was also the decision on 24 October 2016 by the Commons
Select Committee on Business, Energy and Industrial Strategy
(previously BIS) to look into the future world of work, focusing
the status and rights of agency workers, the self-employed and
those working in the 'gig economy'.
These proposed policy changes
follow the announcement by Theresa May earlier this month that she
has ordered a review about how to extend workers' rights in the
In light of this and the apparent
lack of popularity of such contractual arrangements, the wind may
continue to blow against Uber.
It would be prudent for businesses
engaging self-employed contractors to review their contractual
terms and the reality of how these engagements are managed
In SSE Generation Limited v Hochtief Solutions AG and another decided on 21st December 2016, the Court of Session in Scotland considered a contractor's potential design liability under the NEC Form of Contract.
Case law concerning the Agency Worker Regulations remains limited. We recently advised a recruitment business involved in a dispute with a "temp" and a hirer regarding who was liable for an alleged breach of AWR Regulation 5.
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