Uber and The Gig Economy

The taxi-app company, Uber, is synonymous with the modern phenomenon known as the ‘gig economy’. Uber’s business model sees them engage around 40,000 self-employed staff in the UK. That was, however, until Friday 28 October 2016, when the London Central Employment Tribunal found that it’s self-employed drivers are actually ‘workers’ in law.

Uber had been challenged in the Employment Tribunal by a group of their drivers (supported by the GMB Union) who argued that they were not self-employed, but actually ‘workers’.

Workers have less rights than employees, but enjoy significant rights that the genuinely self-employed do not. In particular, workers have the right to the national minimum / living wage, 28 days’ annual holiday, whistleblower protection, and pension auto-enrolment.

The drivers complained that they were paid below the national minimum wage and that Uber was denying them their statutory rights.

Uber on the other hand, argued in Tribunal that they are a technology company only – not a transport company - and they simply connect customers to self-employed drivers who can choose where and when they drive.

The decision

The Tribunal found that Uber actually runs a transportation business. They considered Uber’s assertion that it’s 40,000 drivers were each running their own micro-businesses (linked by the common App platform) to be ‘faintly ridiculous’. 

As with all of the case law on ‘employment status’, the Tribunal looked at the reality of the relationship, rather than the written contractual terms between the parties. 

The Tribunal considered Uber to be perpetrating a fiction by insisting drivers were self-employed despite the fact that Uber (amongst other things) recruits its drivers, sets their routes and the price of fares, requires them not to cancel trips and resolves any customer complaints.

What Next?

Uber have appealed the decision, but it is likely to stand in our view. Meanwhile, employers in this sector are bracing themselves for similar claims and recruitment drives by Unions seeking to swell their ranks by enlisting gig economy workers. Gig economy employers will no doubt be poring over the Uber judgment and reviewing contracts and working practices, looking for ways to distinguish themselves from Uber.

The Government had already announced that they would be conducting a review of modern working practices, and in particular, the rights of those working in the gig economy. The fallout from the Uber decision highlights the pressing need for reform in this area and a sharper distinction between employees, workers and the self-employed.

Constantine Law shall be submitting a response to the government inquiry. Please contact us if you would like to share your views on the issues under review.

Christopher Tutton is a Partner at Constantine Law Limited.