First round to the drivers in a gig economy
It seemed never more straightforward to take a minicab than to hire an Uber. You download the app and book a car. You think that you are dealing with the mighty Uber, an organisation that has grown since 2009 from a group of 100 friends providing a black car service in San Francisco to a transportation network spanning 400 cities in 68 countries. But if you read the small print, you will find that you are actually entering into a contract with the individual driver who runs his own mini-cab business and that Uber is only acting as the driver’s agent to set up the ride.
On 28th October 2016, an employment tribunal threw this argument out and rejected the wholly artificial construct that Uber’s lawyers had very carefully (and cleverly) conceived, but which did not reflect the reality of the situation. The tribunal found that the drivers were in fact “workers”, a status somewhere between employed and self-employed, but who are entitled to limited protection under the employment legislation. Workers cannot be unfairly dismissed and they are not entitled to a redundancy payment; but some of the important worker protections do apply, for example, in relation to working time (the right to 5.6 weeks’ holiday, a 48 hour week and rest breaks), the right to be paid the national minimum wage, a prohibition on unlawful deductions from their wages, and protection against discrimination and in relation to whistle-blowing.
Uber has already said that it will appeal the decision, so the claimant drivers may have won the first battle but the war is not yet over. The present position is that, where an individual provides services as part of a business carried on by someone else, s/he is likely to have the status of a worker who enjoys limited protection against exploitation by the business in which s/he is engaged.
It remains to be seen whether the decision will have implications beyond Uber for the numerous companies in the “gig” economy that engage people to provide services without employing them, as well as for those people who work through personal service companies. Ironically, Uber is a victim of its own success as there is anecdotal evidence that many of its drivers positively like the flexibility that Uber offers them. Employment law may not have caught up with the gig economy but no amount of artificial contract drafting can change the substance of a situation. Contractual arrangements that do not reflect reality are likely to be rejected by the employment tribunals and courts.
This article was originally published in Global Payroll Association UK, and can be found here.
Partner, Hunters incorporating May, May & Merrimans