A recent decision by an Employment Tribunal has ruled that two drivers who provided services to the driving company Uber should be classified as workers under the Employment Rights Act 1996. Even though Uber will be appealing the decision and the ruling is fact-specific to this company, the decision could in the meantime potentially impact the rights of similar gig economy workers throughout England and Wales.
Under statute, workers are granted certain employment rights that gig economy workers are not. These rights don’t quite reach the level of protection and recourse offered to workers with employee status, but they are rights that could still have a large impact on the companies that employ workers in these circumstances.
Workers are, by law, entitled to rights of a minimum amount of paid annual leave, a maximum 48-hour average working week and the national minimum wage (and national living wage). Had the ruling gone further and classified the workers as employees, they would also be entitled to rights like the ability to claim for unfair dismissal and redundancy (although these rights do have further qualifications such as a minimum of 2 years’ continuous employment).
It is still unclear how the decision will be treated upon appeal but, in the meantime, it is worth noting that for people working under the gig economy, they could have more employment rights than they first thought. For companies employing workers on this basis though, it could have more worrying implications. Companies like this should review their policies to ensure they are not caught out by potentially costly regulations.
It seems the Uber decision was heavily effected by how the company treated its drivers and, more particularly, the level of control it had over their decisions. Uber attempted to argue that its terms and conditions of ‘employment’ were clear, and that these specifically set out its drivers’ rights and responsibilities.
The Tribunal, in reaching its decision, relied on existing case law on the status of employees. This encourages looking beyond what a company tries to enforce in the wording of its terms and conditions, focusing instead on the practical implications of the employment situation. In general terms, this means that if a person is treated like a worker or an employee, they will be classified as such, despite what the employer company attempts to enforce in its contract.
In Uber’s case, the company’s business model means that it exerts a lot of control over its staff. The company actively recruits its drivers, handling the interviewing process itself, and controls certain key information that the drivers are not given access to. Uber controls the specifics of the drivers’ activities, including routes they must take and whether or not a job is accepted; the drivers have no say in this, and the conditions and driver rating system imposed on the drivers is, practically, the same as a disciplinary procedure.
Overall, this level of control led to the Tribunal’s ruling that Uber drivers are workers under the Employment Rights Act 1996. Although these facts are specific to Uber, similar business models are likely to be treated in a similar fashion and so, if you intend to employ workers under the gig economy, you should look at limiting the amount of control you have over their day to day activities while ensuring that your terms and conditions accurately reflect what occurs in practice. The more freedom you allow to those working for you, the more likely they are to be seen as self-employed under the gig economy and not workers.
This could all change depending on the outcome of any appeal but, in the meantime, this ruling has set a precedent that is likely to have a larger impact on the rights of gig economy workers. If you have any employment queries then please do not hesitate to call Jack Khurana, head of BHW Solicitors’ Employment Department, on 0116 402 7257.