On 28 October 2016 the London Central Employment Tribunal held that drivers engaged by Uber are not in fact self-employed contractors, but rather, they are ‘workers’. Clearly this new employment status has vast implications on Uber and similar companies that form part of the so-called ‘gig economy’.
Gig economy is a term given to the workforce in which someone is hired, usually through a digital platform, to work on demand, for a short-term engagement. Uber offers such a service via a mobile app which allows passengers to book a ride from their phone.
Before this decision, Uber's classification of drivers as self-employed contractors meant that they were not entitled to certain employment rights. However, the worker status brings with it an array of entitlement and now permits workers the following rights:
- Paid holiday leave;
- A maximum 48 hour average working week with rest breaks; and
- The national minimum wage.
Uber has always maintained that its drivers were categorised as self-employed contractors, as that was the status their drivers wanted. Indeed Uber engages its drivers with the tagline “Work for yourself, drive when you want, make the money you need”. Uber believed that its approach gave its drivers the flexibility to work as much or as little as they wanted. However, this recent ruling has highlighted the fact that contractual provisions regarding employment status are not necessarily definitive and may still be open to interpretation by a tribunal.
The common question of whether an individual is an employee, worker or self-employed contractor is not at all black and white. For years lawyers have debated this very issue and to date it remains impossible to outline a clear set of defining criteria against which an individual's status can be definitively determined.
• An employee is defined as "an individual who has entered into or works under a contract of employment".
• A worker is defined as an individual who has entered into or works under a contract of employment or any other contract, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.
Unfortunately, the distinction between the two is very blurred and so lawyers rely on a helpful test to assist in identifying employment status:
1) Personal service: Did the individual undertake under the contract to personally perform work or services?
2) Mutuality of obligation: was there mutuality of obligation between the individual and the "employer"?
3) Control: Was there control of the servant (individual) by the master (employer)?
Whilst this recent Uber decision is not binding, it has set a ground-breaking precedent that will most certainly impact all those working in the ‘gig economy’ and directly affect similar business models going forward.
Consequently, Uber drivers are now entitled to paid holiday, a decent living wage and regular paid breaks.
Unsurprisingly, Uber has confirmed that it will be seeking to appeal the decision.
