Is Uber a provider of taxi services? Or merely an app, an intermediary between taxi drivers and passengers? Are drivers working for themselves or for Uber? These were some of the questions before the Supreme Court last week. The issue being whether they are in law “workers”, and entitled to rights such as holiday pay and the national minimum wage. The outcome is business critical for Uber, but it will also have implications for many organisations who use non-employment models. This includes charities.
The appeal to an employer of a self-employed workforce is obvious. Ease of hire and fire. A belief that there are no employment rights. No employer national insurance costs, pensions auto-enrolment, holiday, or other benefits. There was a further cost saving for Uber. They don’t charge passengers VAT. Given, they contend, it’s each driver who comprises a taxi business. That’s a further huge cost competitive advantage.
So far Uber have lost in the Employment Tribunal, the Employment Appeal Tribunal and Court of Appeal. Will they fare better in the Supreme Court?
These Courts disregarded the terms of the complex written contracts Uber had in place. These were not reflective of the true agreement and reality of the working arrangements. The Employment Judge was scathing about this and recorded that:
“The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common platform was, in the tribunal's conclusion, faintly ridiculous.”
Uber, not their drivers, set the fares, route and bill passengers. In reality, there was no contract between drivers and passengers, rather Uber and passengers. Drivers, once logged on to the app, had 10 seconds to accept or decline a fare. If they repeatedly declined, they’d be blocked, ie not able to work for Uber again. Not so flexible after all then.
They were held to be workers. Not just when they were driving passengers, but also when they were logged in to the app and available. This was working time.
The Supreme Court decision will be delivered in due course. The outcome will further raise risk and awareness. The odds of Uber overturning the worker status finding are very low (but never say never). The outcome isn’t just relevant to them, or the “gig” economy (aka casual work.) But all organisations using non-employment models.
In recent decades, there has been a huge rise in self-employment in the UK. Together with other insecure employment. Some are professionals, who find the tax advantages as attractive as do their hiring organisation. However increasingly, they’re modestly paid and often on minimum wage rates. Without access to their employer’s usual benefits. Terminology confuses and can mislead; contractors, casual workers, consultants, zero hours workers, freelancers. Labels in the contract are not definitive, whether for tax status, nor for the separate issue of employment rights. It’s a myth that flexibility in a work arrangement or hours of work can only be provided via self-employment. The Courts have increasingly been finding that individuals engaged on non-employment models are workers. For more information on topics such as 'Self employed staff' and 'Our freelancer works for us for several days every week. How do we determine the distinction between freelance and employment?' join HRNet below.
In parallel, the government and HMRC are tightening up on tax avoidance, including IR35 where individuals operate via personal service companies. Join HRNet to read more about 'IR35 April 2020 changes delayed to April 2021'.
We’ve also seen how those in insecure work arrangements, or without access to sick pay, have been particularly disadvantaged during Covid-19. Albeit lack of or limited sick pay includes many employees too. From an organisational perspective, it’s critical to ensure that a workforce is engaged on the right contract. Not least so that you’re not next in the Employment Tribunal.
This article is dated 29th July 2020
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