Are your contractors actually workers?

An employment tribunal ruled on 28th October 2016 that two drivers who provide services to Uber have the status of ‘workers’, even though Uber considered them to be “self-employed partners”. This is the first type of its case to reach the tribunal.

Background

Uber drivers were alleging that they are being denied a raft of employment rights, because Uber were treating them as “self-employed partners”- what most people would recognise as “freelancers”.

Uber’s position:

  • That they are not providing a transport service, but are just a technology company which is essentially an “app” putting drivers and end users in touch. They are simply a facilitator of those 2 user groups
  • That the drivers are free to choose which fares to accept and do not have to work at particular times. They are required to maintain their own vehicles and pay for the running costs.
  • That the drivers do not have to work exclusively for Uber

The drivers said:

  • Uber control how much passengers are charged
  • Passengers pay Uber for the journey, and then pay a percentage of the fare to the drivers
  • Uber require the drivers to follow particular routes
  • Uber uses a ratings system to rate performance
  • Uber therefore have sufficient control over the drivers to warrant a “worker” relationship- not a self-employed one

The types of employment relationships

There are three types of employment status for employment rights purposes:

  • Employee: An employee has a contract of employment with their employer where the worker agrees to perform the work personally under the control of the employer and, most importantly, there is a guarantee from the employer that a certain level of work will be provided and from the worker that they will do it. A contract exists when terms such as pay, holiday and working hours are agreed. It’s important to note that the contract doesn’t have to be written down and terms and conditions can be agreed verbally. Employees are entitled to a range of rights including the right to claim unfair dismissal, the right to notice and redundancy pay and maternity leave.
  • Worker: A worker is anyone who agrees to perform work personally for another person, but is not defined as self-employed. There’s no requirement for an employer to guarantee to provide, or the worker to do, a certain level of work. Worker status therefore includes many casual workers, agency workers, freelancers and seasonal workers. While they do not have full employee rights workers are entitled to some employment rights including the National Minimum Wage and holiday pay as well as protection against discrimination.
  • Self-employed: A genuinely self-employed person is in business on their own account. They may contract with a client or customer to perform work personally or to get someone else to do it. The contract is for delivery of an outcome, rather than how the self-employed person must achieve that outcome. The customer is buying a service, rather than the labour of a particular worker or employee. Self-employed people don’t have the same employment rights and responsibilities as employees or workers, for instance they have to arrange paying their own tax and are not entitled to the National Minimum Wage.

The tribunal held that the drivers are workers. This means the drivers will be entitled to a limited number of employment rights including:

  • 5.6 weeks’ paid annual leave each year (pro-rata)
  • A maximum 48 hour average working week, and rest breaks
  • The national minimum wage (and the national living wage)
  • Protection of the whistleblowing legislation

As they are not “employees”, however, they will not be entitled to:

  • The ability to claim unfair dismissal
  • The right to a statutory redundancy payment
  • The protection of TUPE, if Uber sells its business
  • Minimum notice periods
  • Maternity, paternity & adoption leave pay

Uber are likely to appeal, however other companies who operate similar models in the “gig economy” (for example courier and delivery companies) are likely to face similar claims from their workers.

In light of this judgement, businesses need to seriously consider how they use and contract freelancers and the self-employed. Excellent HR support is imperative to ensuring that businesses are investing in their workers as they are likely to be demanding what they are rightly entitled to.

Guest article from Claire Jenkins of Effective HRM