11 September, 2016
It’s been a bad week for the American worldwide transport company Uber. An employment tribunal has just awarded two so called ‘self-employed contractors’ worker status.
As a result, the claimants, who are engaged as drivers by Uber on a contractor basis, will actually be entitled to the enhanced rights that are afforded to ‘workers’.
This means that the drivers will be entitled to 28 days paid annual leave (pro rata), a maximum average of 48 hours working week and rest breaks and the national minimum wage, amongst other rights afforded to workers.
As the drivers were not deemed to be employees, they will not be entitled to unfair dismissal, redundancy rights, protection afforded by TUPE or other rights reserved for employees.
For now the ruling is specific to the two drivers who brought the challenge, however it is highly likely that any other challenges on status would receive the same finding, even though the employment tribunal decisions are not binding authority.
Going forward it seems likely that Uber will appeal this significant decision.
The decision is significant. For Uber it will mean a complete overhaul of their business plan and structure. It is also a reminder that the tribunals, as always, are prepared to look at a situation in the round when interpreting contracts.
Other gig economy businesses like Deliveroo and Air BnB will be urgently reviewing their business structures and taking legal advice.
Gig economists propound that this style of working allows for work-life balance and ultimate flexibility. However, the trade-off is that income is not guaranteed and there is no job security.
Gig participants, such as Air BnB hosts and Handy (an odd job service) also find themselves subjected to ratings systems whereby clients can rate their services. Ratings by the user are decided on a whim and can be somewhat arbitrary creating an unregulated form of performance management.
The decision serves as a stark warning for all businesses who engage self-employed contractors. The risk is that contractors who have been considered ‘self-employed’ are actually deemed to be workers or employees, which would have a significant financial impact on any business.
Contact our employment law solicitors