HR · 28 October 2016

Uber employment tribunal sees drivers win right to be called “workers” and not self-employed

Uber has recently expanded into courier and food delivery services
Uber has recently expanded into courier and food delivery services

After months of battling between Uber, regulators and unions, an employment tribunal has sided with drivers and potentially put in place legislation which will drastically change how the technology heavyweight operates in the UK.

As Business Advice reported back in July, private hire drivers union GMB made it a goal to secure drivers’ rights so that they were classified as workers and not self-employed. The union believed that Uber was “unlawfully denying drivers fundamental rights” and that holiday pay and minimum wage were necessary – taking it to an Uber employment tribunal.

GMB has described the employment tribunal’s decision as “monumental” and said that similar contracts “masquerading as bogus self-employment” would be reviewed. The union brought two test cases to the Central London Employment Tribunal on 20 July, with the ruling set to impact how 30,000 drivers in the UK operate.

Maria Ludkin, GMB legal director, said: “Uber drivers and other directed workers do have legal rights at work.

“This loophole that has allowed unscrupulous employers to avoid employment rights, sick pay and minimum wage for their staff and costing the government millions in lost tax revenue will now be closed.”

Employment solicitor Steven Eckett, from Gardner Leader, believes that the ruling will have repercussions through the so-called “gig economy”, and that it’s likely that there will need to be a rethinking of the employment status of these kind of workers.

The difference between who is classified as a self-employed for freelance work and who is directly employed has led to a misunderstanding on where and when employment rights are enforceable, Eckett explained.

“The employment tribunal’s decision today certainly sheds clarity on the employment status of this new breed of ‘freelancer’ currently fuelling the growth of the UK gig economy. However, consequences of the judgment is likely to result in increased costs to the gig industry in order to comply with the new employment laws, and it’s probable that these will be passed on to the consumer, such as through higher fees, delivery rates and prices for goods and services,” he added.

A statement has yet to be made regarding the Uber employment tribunal ruling by the company and it has only posted two tweets on its UK Twitter account since 27 September, despite having made 18,100 posts since the account was activated in January 2012.

GMB research has found that, in one particular occasion, a member working only for Uber received only £5.03 per hour in August after costs and fees were accounted for – below the statutory national minimum wage of £7.20.

Dave Chaplin, CEO and founder of Contractor Calculator, an information and advice portal for self-employed workers, believes that the Uber employment tribunal ruling is a “disaster” for Uber and that the business could now face paying out retrospective compensation to drivers.

“It is a disaster for UK plc as it is certain to open the floodgates for more workers to challenge their employers in pursuit of their rights from companies which operate a similar business model to Uber. ,” he added.

“It will also arm HMRC with the ammunition to attack genuine freelancers under the rules of IR35 and I would urge all self employed contractors to seriously consider their IR35 position.”

The Association of Independent Professionals and the Self Employed (IPSE) was quick to send out a warning. “Government must be careful not to dissuade firms from making use of the highly-skilled, on-demand flexible workforce as a whole,” chief executive Chris Bryce said. “The vast majority of people who work this way made an active choice to do so and cherish their self-employed status. Research shows independent professionals innovate faster than any other group, and brought £109bn to the UK economy in 2015.”

Interested to read other similar content to this Uber employment tribunal story? Find out what self-employed cycling couriers can do to protect themselves.

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ABOUT THE EXPERT

Hunter Ruthven is the editor of Business Advice. He is also the editor of Real Business, the UK's most-read website for entrepreneurs and business leaders at the helm of growing SMEs. Alongside this, he is part of the team that hosts the Growing Business Awards, First Women Awards and Future 50 initiative. Prior to his role at Real Business, he was editor at competitor website Growth Business and head reporter at M&A Deals. Throughout his career he has interviewed leading entrepreneurs including Alex Chesterman, Lopo Champalimaud, Sarah Wood, James Averdeick and Alex Saint.

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