On 19 February 2021, the Supreme Court ruled that Uber drivers must be classified as workers and not independent self-employed contractors.
When making its decision, the Court looked to relevant legislation rather than looking at the wording of the actual contracts Uber had in place with its workers.
The Court’s decision was also heavily influenced by the level of control that Uber has over its drivers.
Consequently, from this week all 70,000 drivers who use the ride-hailing app are entitled to receive basic employment rights such as holiday pay, pension rights and minimum wage. Drivers may also be able to backdate related claims for up to two years. The ruling will undoubtedly affect millions of workers employed in the ‘gig economy’ including international businesses with UK operations.
Uber has indicated that it will pay its drivers the living wage going forward but suggest only when the driver is actually working, so it still remains to be seen how this is going to work in practice and how much the Uber drivers will actually benefit.
Whilst many like the freedom and flexibility of the gig economy, there has been a lot of commentary about the lack of protection provided to such workers. The decision now paves the way for the many working in the gig economy to claim such benefits.
Many of these costs will not be factored into companies’ budgets and, at a time where many businesses are already under significant pressure, they will need to act urgently to revisit the status of their workforce following this decision.
Gill Brown, head of the Employment Law team at Phillips said: “Uber say that this will not have huge financial implications for them so it remains to be seen how they will implement the ruling in practice and how they will deal with any tax implications arising from it.”
“It is also going to have wider implications on the gig economy with companies reviewing the employment/worker status of those they engage and the risk of claims to enforce worker’s rights.”
There are different criteria when it comes to employment status. An employee can typically be defined as a member of staff who works under a contract of employment, whereas a self-employed person is in business on their own account, providing services to a customer and is responsible for how and when they undertake work. A worker can be someone engaged just to work for a company but who is not an employee, or someone who is also self-employed.
Gill said: “In practice there is often a grey area between the different categories and so it can be difficult to correctly identify whether someone is a worker or self-employed. It is a complicated area of the law and it is not helped by the fact that tax law and employment law can diverge on their definitions.”
“It is important to get this right as there are different legal protections connected with being an employee, self-employed contractor, worker and self-employed worker. If someone is incorrectly categorised this could have legal and financial implications for both the individual and the business.”
If you need any guidance on the status of an employee, self-employed contractor or workers or would like assistance in drafting a contract please contact Gill by calling 01256 845605 or by emailing [email protected]
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This article is current at the date of publication set out above and is for reference purposes only. It does not constitute legal advice and should not be relied on as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.