InsightsInsight - Employment & HR - POSTED: February 26 2021
Uber ruling – what does this mean for employers?
This article looks at the recent decision in Uber v Aslam and why this is important for employers.
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Uber v Aslam – the outcome
The Supreme Court has upheld previous appeals in the long-running case of Uber v Aslam and has considered Uber drivers to be workers. Since 2016, Uber has argued that the drivers were contractors and that Uber was simply a platform which provided work to them. However, the drivers have a lack of control which would normally be an important element of being a contractor.
Legally, workers are protected by a greater amount of rights than contractors. Uber will therefore have to face the costly consequence of their drivers now being recognised as workers. Most prominently, an estimated 65,000 Uber drivers will now have the right to minimum wage and holiday pay. Previously, drivers were often earning less than minimum wage once the costs of fuel and the car were taken into account. This resulted in them working very long hours to fill the gap.
Uber will now have to cover the extra costs to ensure they are paid at least minimum wage. Additionally, they may have to pay up to £12,000 in compensation to their drivers. Legally, the judgment only classifies those drivers who directly brought the claim as workers. However, commercially it may be sensible for Uber to reconsider their business model to prevent many more costly legal claims and bad press in the future. Uber either need to make structural changes to make it clear drivers are self-employed contractors or provide the drivers with the greater rights required for workers.
Why are Uber drivers considered to be workers?
This comes down to the control Uber have over the drivers:
- Uber set the pricing limits; drivers could only charge a lower price and not adjust the price upwards. The drivers were therefore unable to negotiate the terms of business, only earning more by working further hours. The ability to negotiate and profit are key elements of genuine contractor relationships.
- Contractors can maintain professional relationships with their clients. Drivers were prevented by Uber from establishing a direct relationship and they were unable to contact their passengers after the journey.
- Uber and the drivers were not on an equal footing. They were unable to negotiate terms and their work was largely managed by Uber. Drivers could choose when they worked but there was a lack of control over how they worked. Drivers failing to accept passengers journey requests would be logged off the app and they would be unable to work for a short period of time that day. Therefore, Uber were requiring drivers to accept work or limiting the amount they could earn by logging them off the app. Logging drivers off the app and preventing them working if they received low ratings is akin to a disciplinary measure. Disciplinary procedures are not a characteristic of contractor relationships. Drivers were also told which route they should take to arrive at the passenger’s destination.
- Uber argued that drivers were only working when they were driving the passengers to their destinations. The Supreme Court stated this was not the case and that drivers were working for the whole period they are logged into the app. Drivers spend time waiting to get bookings, so the amount they could earn per hour varied hugely, impacted further by the pandemic. The latest ruling will provide drivers with greater certainty over the minimum they will earn.
- Contractors typically own and control their own equipment. Although Uber drivers used their own cars, these were inspected by Uber and had to fit a certain car criterion.
- Uber would deal with passengers’ complaints and would advertise the services. This indicates a high level of control and is a further indicator of a worker arrangement.
All these aspects demonstrate the subordinate relationship between drivers and Uber. These points on their own may not be fatal to establishing a contractor relationship. However, when collectively considered it indicates they are workers.
What rights are Uber drivers now entitled to?
- Protection against unlawful deduction from wages
- Itemised pay statement
- National minimum wage
- Paid holiday for 5.6 weeks
- Rest breaks
- Maximum working week of 48 hours unless drivers choose otherwise
- Right to be accompanied at a disciplinary or grievance hearing
- Protection for making a protected disclosure (whistleblowing)
- Pension Scheme
Before this recent judgment, Uber have over the years begun to implement changes. For example, drivers are not penalised for rejecting jobs, they have greater control over earnings and are provided with free insurance when they are sick or injured. According to Uber, this includes on-trip accidents and incidents outside of work. Uber have stated the free AXA insurance also covers payments such as maternity and paternity leave. More is now needed to be done by Uber to ensure that it meets its obligations towards its workers.
It is important to understand that workers are not the same as employees; therefore Uber drivers will not be entitled to redundancy pay or unfair dismissal claims as well as other rights reserved for employees.
What does this mean for you as an employer?
This case highlights the importance of considering a person’s employment status. You cannot simply look at the headline of whether they are ‘workers’, ‘employees’ or ‘contractors’. The detail in the agreement must be carefully assessed. If somebody is labelled as a ‘contractor’ but the contents of the agreement closely resemble a ‘worker’, then they are likely to be afforded the greater protection of ‘workers’ for employment law purposes.
We are yet to see the full impact on the wider gig economy. To minimise the risk of successful claims, employers must consider their relationship with those working for them. The rights they are being afforded must accurately relate to their employment status. Notably businesses providing delivery services or requirements to work when a customer orders, for example, food, parcels, taxi services must be mindful of this decision.
Brachers employment team can offer you support with assessing these working relationships and provide guidance as to what protection you should be affording them. If you would like more information as to how we can support you in understanding these relationships, please book a free 30 minute online appointment with a lawyer from our employment team for an initial discussion on your needs and how we can help.
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