Back in September we explored the subject of employment status and the difference between workers, self-employed and employed people. At that time, an employment tribunal was taking place between Uber and two of it’s drivers, James Farrar and Yaseen Aslam. The drivers were employed on a self-employed basis but they argued that they should be classified as Workers and therefore be entitled to the minimum wage and holiday pay.
The main elements of the argument from both sides are summarised below.
Uber’s argument
These are the key points Uber made during the employment tribunal:
- Essentially, they are a software company who provide an app which puts customers in touch with drivers.
- The app provides drivers the chance to gain customers through the app.
- In the Terms of Business, it states clearly that the drivers are working for themselves.
- Uber earns a commission from providing the app.
- Drivers can work elsewhere. They are not contracted or obliged to work solely for Uber.
The drivers’ argument
The two drivers, on the other hand, argued that Uber was not just a software company providing an app and a platform, but a taxi company who engaged drivers to provide Uber services to customers. They argued that:
- There was no contract between the passenger and the driver on the basis that the driver did not know any details about the passenger apart from their first name and did not become aware of the destination until the passenger was in the car.
- Rules are imposed on the drivers by Uber in relation to fares and routes which is more in line with an employment relationship.
- Uber managed the marketing of its brand, took responsibility for the quality of service and risks for actions taken by the customer.
- Uber deactivated driver accounts because of poor conduct which, again is more in line with an employment relationship.
- Uber instructed the driver on the routes that should be taken.
- Uber set and managed the high standards of the drivers, including the requirement for the drivers to present certain documentation.
The outcome of the case
The Employment Tribunal upheld the drivers’ claim and agreed that they should be classified as workers. It’s worth noting that this is a preliminary ruling and Uber are likely to appeal the decision so things could change. If the decision doesn’t change however, Uber are left with the very difficult task of establishing what hours the drivers work.
Currently drivers can decide when they work and when they don’t work. The Tribunal found that as soon as the driver logs on to the App, the drivers are ready for work and can accept customers and therefore should be paid at least the National Minimum Wage in the periods in which they are waiting for customers as well as when they are driving passengers. The impact of this is costly to the business because they could be paying drivers when they are not bringing in business from paying passengers.
One solution to this would be to agree a daily average number of hours for each driver but this fundamentally changes the current business model of flexibility which is enjoyed by both parties and means Uber would need to consider its business model going forward in the following ways:
- How it allocates work to its drivers, ensuring there is an adequate balance between the number of drivers available and the amount of work available.
- Whether it changes the current practice of drivers being able to reject work they don’t want to take. Currently drivers can turn down work when it doesn’t suit them but Uber may be less inclined to allow this in the future if the drivers are being paid for the time in which they are logged on to the app but not carrying passengers.
- How it contracts with it’s workers going forward.
What does this ruling mean for my business?
This decision comes at a time when there is a lot of talk about the “gig economy”, (app based, on demand, freelance workforce) which, arguably, is very like a casual workforce. Companies are relying more on irregular and short term assignments to provide a service to their customers and are therefore looking for self-employed people to carry out this work to keep costs to a minimum. In this context, the impact of the Employment Tribunal’s decision on this case could be significant for other companies with a similar business model to Uber.
There have been similar cases raised by cycling couriers who also believe that they should be classified as ‘workers’ rather than self-employed. This decision is particularly significant for companies who only allocate work when the customer places an order (as in Uber’s case) because the Tribunal has ruled that the drivers should be paid when they are waiting for work to be allocated and not just when they are driving passengers. Businesses in these situations need to balance the risk of insufficient customer orders coming in to cover the cost of having workers available to meet demand.
It’s important to note however that every case is assessed on its own merits and each situation will be slightly different. Refer to our article ‘Employment status – employed or self employed?’ which provides some useful guidance on what to take into consideration when determining whether someone is a worker, employed or self-employed.
If this article has highlighted any issues in relation to your own organisation, please do not hesitate to contact us.
