Taxi for Uber!

In August 2016 we previewed the case of Aslam & Others v Uber. For a detailed background to the case a copy of the previous article can be read here.

On 28 October 2016 we broke the news on our twitter account, @bpe_employment, that the judgment from the preliminary hearing in the case had been released and made public. Preliminary hearings are often used by Tribunals to settle matters of law prior to final hearings. It is rather uncommon for Employment Tribunals to publically release judgments from preliminary hearings; however given the public interest in this claim, the release is understandable. 

As has now been well reported in the UK media, the employment Judge at the preliminary hearing found in favour of the drivers, ruling that they were workers and not self-employed individuals. So just how did they win the point on worker status and what does it mean for businesses in the UK?

The Judgment

In order to expedite the case, both parties agreed that two drivers out of the hundreds who brought claims would be chosen as “lead claimants”. The drivers main argument in this case was that they were workers and not self-employed. The difference in employment status is significant.  If Claimants can show that they are workers they are entitled to basic employment rights such as holiday pay and national minimum wage, something they were not receiving as self-employed individuals. 

In order to convince the Tribunal that they should be classed as workers, the Uber drivers were required to jump a number of hurdles including showing that they were not in business for themselves and that Uber held a certain degree of control over them.

In its preliminary hearing judgment, the Tribunal gave a number of examples as to why Uber’s defence must fail. Amongst the examples given were that Uber had control over what car were driven by drivers, what routes the drivers took, how much could be charged per journey and whether the driver could replace themselves with other drivers. Taking into account all of the above it was ruled that Uber could not claim that the drivers were truly self-employed. There could therefore be no other outcome than the drivers were workers.

This judgment has huge financial implications for Uber and as a result they have little option but to appeal the decision.  With a conservative estimate of 40,000 workers on their books, it has been calculated that taking into account back pay, auto enrollment, holiday pay and sick pay, Uber may be looking at a bill of close to £40m. Given that the latest accounts for Uber UK showed an after tax profit of £1.8m, failure to overturn this judgment could be catastrophic for the company.

It should be noted that this preliminary hearing judgment is a first instance decision. As it’s a decision made by an Employment Tribunal it is not binding on any other Court or Tribunal in the UK. This may change however if the judgment is upheld by a higher Court or Tribunal following various appeals.

This case will run for some time. We are unlikely to get a final decision on this topic until late 2017 at the earliest.

What does this mean for you or your business?

Whilst it is easy for many businesses to ignore this judgment in the belief that it does not affect their sector, there is more to this judgment than meets the eye.

Throughout the judgment the judge was critical of Uber’s business model stating that “the terms on which Uber rely do not correspond with the reality of the relationship between the organisation and the drivers…”.

This judgment shows the extent to which Judges are now looking behind contractual wording or blurb on a website to see exactly what the reality of an employment relationship is.  This is not limited to those who are “self employed” car drivers but could also extend to contractors who are contracted by businesses on the assumption that their status gives them little or no employment rights.

In the weeks prior to this judgment being released, HMRC announced that they are introducing a compliance team to specifically look at the changing nature of employment status. This followed an announcement the week before by the government that they were launching a review of workers rights in light of “gig economy” employers such as Uber.

What You Need To Be Doing Now

It is clear that there is a change in the air in respect of employment status.

If your business employs consultants on a regular basis, you would be well advised to analyse each individual appointment to ensure that any “self employed” consultants are as stated. Taking into account the Uber case, what is stated in a consultancy agreement, for example, and what happens on the office floor should be a true reflection of each other.

This potential change in employment status may leave your business liable to claims from “contractors” for discrimination, holiday and sick pay and whistleblowing protection, the very claims you sought to protect the business from by engaging a contractor.

Recommended Reading

For those who with a long train (or indeed Uber) journey ahead of them a copy of the judgment can be found here.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.