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An “Uber” decision…

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An “Uber” decision…

An “Uber” decision…

The Decision

On Friday 28 October 2016, an Employment Tribunal ruled that drivers who drive customers for the transport network, Uber, are to be recognised as workers within the Employment Rights Act 1996 (“ERA 1996”). This means that Uber drivers will now be entitled to certain workers’ rights.

The ERA 1996 differentiates between those classed as “employees” and those classed as “workers”. Employees are afforded the greatest rights and protection. This includes the right to claim unfair dismissal, the right to statutory redundancy payments, the benefit of the implied term of trust and confidence and the protection of TUPE when a business is sold.

As the drivers in question are not classed as employees, but workers, they will not benefit from these rights. However, as a result of Friday’s Judgment they should now benefit from a minimum 5.6 weeks’ paid annual leave each year, a maximum 48 hour average working week, rest breaks, the national minimum wage and the national living wage.

At the Employment Tribunal, Uber presented various lines of argument as to why the drivers should not be classed as workers. This included an assertion that the drivers were never under any obligation to switch on the mobile app, or even if logged onto the mobile app, accept any driving assignment which may be offered to them. The Tribunal accepted this, but went on to state that a different legal analysis arises when the mobile app is switched on. The Tribunal further stated that “any driver who (a) has the mobile app switched on (b) is within the territory in which he is authorised to work and (c) is willing and able to accept assignments, is, for so long as those conditions are satisfied, working for Uber under a “worker” contract.”

Practical Implications

The judgment has been described as “monumental” with 30,000 drivers operating in the London area and 40,000 in the UK as a whole. Uber will now be required (subject to the decision being overturned on appeal) to compensate its workers retrospectively in relation to any employment rights which they have been deprived of. This will include backdating holiday pay and assessing if any pension contributions are to be made.

The decision is a reminder that the Employment Tribunal will look to identify the “real” relationship in existence between the parties when determining their employment status, not that which appears to exist on paper.

For those who use non-employment methods (for example, Uber engaged its driver under “Partner Terms” whereby “Uber offers information and a tool to connect “Customers” seeking “Driving Services” to “Drivers”) of engaging staff to minimise employment costs and increase flexibility, the decision is likely to be a concern. The decision could have a significant impact on those businesses which operate in the “gig” economy, which thrives on individuals working for multiple employers on a day-to-day basis without having a fixed contact.

It is also worth noting that the Business, Energy and Industrial Strategy Committee (BEIS) will be launching an inquiry into the rapidly growing and changing relationships in existence within an employment context. This will include looking at the rights of those who work within the gig economy, the self-employed and agency workers. To coincide with this review by the BEIS, HMRC has also announced a task force to “crackdown” on false self-employment in the “gig economy”.

What does this mean for you?

Uber have announced that they will be appealing the decision. This will provide uncertainty over the coming months, whilst the Employment Appeal Tribunal and potentially the Court of Appeal and Supreme Court consider whether the initial decision should be overturned.

Whilst the landscape is unlikely to change until the appeal has been heard, it would be prudent for employers to consider what terms their staff are engaged under. For those who may be classified as workers consideration should be given to the impact of backdating any holiday pay and pension contributions may have on your business.

If you have any questions, please contact one of our employment specialists 0345 070 6000.