The Uber appeal to the Employment Appeal Decision has today been rejected. In yet another decision which challenges the UK gig economy, Uber drivers have been found to have worker status and are not genuinely self-employed.
In a victory for those Uber drivers who brought the case, worker status means that they are not full-blown employees but they do have some important protections under employment law. This means that the drivers could benefit from employment rights such as the national minimum wage, paid holidays, and pension contributions.
On the other hand, workers do not benefit from self-employment tax treatment. Fundamentally, a worker status for drivers will increase the hiring cost to Uber both in terms of the worker benefits and the tax which must be paid. We are yet to see the impact this may have on this type of business model. There is also the issue of the crowdfunded VAT case against Uber. Uber does not collect and pay VAT because it classes itself as an agent for self-employed drivers, not as a service provider. The EAT decision would undermine this argument and potentially expose Uber to vast VAT liabilities. Like many global businesses which seek to reduce their tax bill, this is likely to garner little sympathy from the public.
On the other hand, there will be Uber drivers who do consider themselves genuinely self-employed and who also benefit from reduced taxation, who will also be unhappy with this decision.
However, today’s decision in the EAT is very unlikely to bring an end to issue. Uber will not be happy with the outcome and are expected to appeal. It is possible that this case could be brought directly up to the Supreme Court and heard alongside the Pimlico Plumbers case which raises similar questions.
Technological change and business models like Uber have freed up the world of work in an unprecedented way. Flexible and ad hoc working patterns are beneficial to some but create a risk of abuse of others. The traditional definitions of ‘employee’, ‘worker’ and ‘self-employed’ don’t fit neatly into the new world of work and this has led to the difficult cases we are seeing decided now.
Looking forward, the question of how we define employment status, and the implications for tax and employment rights, is one of the biggest issues in modern employment law. Information is being gathered at an executive level which will inform any future change, such as the Independent Review of Employment Practices in the Modern Economy, led by Matthew Taylor. In the meantime, we will keep watching the Uber story unfold.