HR Hub

Uber, employment status and the gig economy

As a tribunal finds that Uber drivers are ‘workers’ and so entitled to paid holiday, minimum wage and other rights, what is the ‘gig’ economy and what is its future?

The starting point is that the Uber case did not say that the drivers were employees, as has been reported by many media outlets who should know better; they decided that they are ‘workers’. All employees are workers but all workers are not employees.

A worker is someone who agrees to personally perform services or work but where they can pick and choose what work they do and when, they do not feel obliged to agree to do work and the company does not feel obliged to offer them work. They are not subject to the same levels of control as an employee, so they usually do not wear their uniform, appear on the employee phone list, get invited to the staff parties. They are entitled to paid holiday, minimum wage, daily rest breaks, the right not to be dismissed or suffer a detriment for whistleblowing and they must be enrolled in a pension scheme.

The line between worker and employee is a blurred one and each case is decided on its facts. To be an employee there must be an element of control, mutuality of obligation (is the company obliged to offer work and the employee obliged to accept it?), and personal service. This is the ‘golden ticket’ in terms of rights as an employee is entitled to paid holiday, minimum wage, minimum notice periods, not to be unfairly dismissed (subject to qualifying periods), the right to request flexible working, statutory maternity/paternity pay. The employer must enrol them in a pension.

However, Uber tried to argue that their drivers were neither worker nor employee but instead that they were self-employed. Uber said it was a technology company and not a taxi firm and that the drivers were in business on their own account and could even try and expand their business if they wanted to. These arguments were all given very short shrift by the employment tribunal. Indeed, it is clear from the judgment that the tribunal did not care for most of Uber's arguments or indeed its evidence.

If they had been independent contractors they would have had no right to paid holiday, rest breaks or minimum wage. A finding that they are workers has significant financial implications for Uber.

A ‘gig’ economy is one where a company takes on staff to do work on a task-by-task basis, literally ‘gigging’ at each place of work. This allows the company to be more flexible and to react better to peaks and troughs but it is also potentially depriving workers of rights. Many are taken on as ‘self-employed’ when they are nothing of the sort. The GMB union, which supported the two Uber drivers who brought the claims, have issued a stark warning to businesses saying that they will be coming after other employers who have ‘similar contracts masquerading as bogus self-employment - they say it is old fashioned exploitation under new-fangled jargon’.

It is important to remember that the Uber case is fact sensitive and not binding on other employment tribunals because it is a ‘first instance’ decision. But if it is appealed by Uber then the decision of the Employment Appeal Tribunal will be binding on other tribunals.