Be Uber careful if you are an employer

Court gavel

In October 2015, several drivers submitted claims against taxi company, Uber, claiming that they are workers and should, therefore, be entitled to claim various rights not otherwise accessible if they are self-employed contractors.

The Tribunal recently ruled that the drivers are ‘workers’ within the Employment Rights Act 1996. This ruling is significant as it means that the drivers are entitled to basic rights which self-employed contractors are not entitled to receive. For example, amongst other rights, workers can legally receive:

  • 5.6 weeks annual leave per annum;
  • National Minimum Wage;
  • A maximum 48-hour working week.

This means that Uber drivers who believe they are workers, as opposed to self-employed contractors, could have legal claims entitling them to receive back–dated holiday pay, sick pay (in some circumstances), arrears of pay if their salary has fallen below National Minimum Wage and the right to be included in pension auto-enrolment. There may also be costly tax implications for Uber.

The fact that the Uber drivers may have signed contracts stating they are self-employed is not determinative for employment law purposes. The Tribunal will look at the contract alongside the nature of the day-to-day working relationship to ascertain the individual’s status. As such, the Tribunal is at liberty to conclude that a person is a worker, not a self-employed contractor.

The Uber case could have significant legal and financial implications for businesses operating with the same or similar business model to Uber. This is colloquially known as the ‘gig economy’ and is made up of companies which require individuals to act as mini-businesses in carrying out their day-to-day work.

It is believed that similar cases are currently being brought against courier firms  City Sprint, and eCourier as well as taxi firm Addison Lee. However, each case will turn on the specific terms and arrangements between the individual and company they work for.

The Uber case also highlights the need for any business, whether operating in the so-called gig economy or not, to review the basis on which it engages staff. As mentioned above, a signed contract is not determinative of the legal nature of the relationship. However, it will certainly assist a business if it has an up to date and comprehensive written contract in place – this will often be the first place that a Tribunal will look.

It is very likely that the Tribunal’s decision will be appealed by Uber. Consequently, this is not likely to be the last we hear of it. However, in the meantime, if you engage self-employed contractors and are concerned about the potential implications of the Uber case; or if you do not have a written self-employed contracts in place, then feel free to get in touch with a member of our Employment team who will be happy to help.

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