Uber drivers win landmark case at Employment Tribunal

Uber drivers win landmark case at Employment Tribunal

In a case at an Employment Tribunal, two Uber drivers were classified as workers for the purposes of the Employment Rights Act 1996.

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An Employment Tribunal has decided that two Uber drivers are 'workers' for the purposes of the Employment Rights Act 1996. The distinction between employees, workers and the self-employed is not always straightforward, involving detailed questions of fact about what and how people do their job 'on the ground'. However, it is a really important distinction because it determines entitlement to a number of important statutory protections. Whilst employees are the most protected categories, workers are entitled to significantly more protection than the self-employed. It is this which makes this decision important not just to Uber, but to other 'gig' economy and other employers who use large numbers of 'contracted', non-employed staff.

In particular, the decision gives Uber drivers entitlement to:

  • The protection of the Working Time Regulations:

- Paid annual leave of 5.6 weeks per year;

- Limits on the number of hours they can work per week; and

- Entitlement to paid rest breaks.

  • The National Minimum and Living Wage; and
  • The benefit of protection from whistleblowing legislation.

As workers, Uber drivers do not benefit from the protection of unfair dismissal and redundancy legislation (amongst other things), but it is important to note that is not what they were claiming.

This decision has been eagerly awaited and will be of concern to the large number of employers who use non-employment methods of engaging with their staff to give them flexibility, and perhaps more relevantly, workforce costs savings. Entitlement to protection from the Working Time Regulations and National Minimum and Living Wage legislation in particular, is likely to significantly add to payroll costs and require a review of working practices. In respect of the latter, the definition of what amounts to working time will make these models less flexible and more expensive.

All of that said, it is important to note that this is a First-tier Employment Tribunal decision and will undoubtedly be appealed by Uber. It is therefore likely that most employers will continue to watch the case progress but will not do anything differently in the short-term. It is also fact specific to Uber drivers, although as the case progresses more general principles are likely to emerge.

The Uber ruling is significant and comes alongside wider Government scrutiny around employment status, which has seen the following recent moves:

  • A consultation looking at IR35 in the public sector and how this will be enforced, with changes expected to be introduced from April 2017; 
  • HMRC setting up a specialist employment status and intermediaries team with a remit to take ‘all necessary steps’ to ensure that employers are paying the correct amount of tax and NIC and engaging workers correctly. This move is intended to clamp down on those employers and organisations operating in the 'gig economy'; and
  • The Business, Energy and Industrial Strategy Committee (BEIS) are launching an inquiry into the future world of work, please see the ‘other news’ section for further information.

The Uber case highlights the ever increasing scrutiny to which the employment status of workers is now subject. Moving beyond fundamental questions of tax and employment law compliance, this is an issue which is now rapidly assuming critical importance for businesses and individuals from a socio-economic perspective. We will watch with interest to see the wider ramifications of this ruling both in the UK and elsewhere in the world, for those businesses which operate similar business models.

 

For further information please contact :

Ian Goodwin

Patrick Martin

 

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