The Tribunal of the first instance has released its detailed reasoning in the Uber case which looks at whether drivers of cabs, controlled by Apps on a smart phone, are self-employed, or Workers.
The reason it is important, not only for Uber, for any business, is that a “Worker” is entitled to minimum wage, and paid annual holiday, whereas a self-employed person is not. The employer in this case clearly thought they would not have to worry about such expense.
In a nut shell, Uber said that the drivers were self-employed. They were called self-employed, they received what Uber called an invoice from the drivers, and they were free to not attend work if they wanted. Uber provided the App, passengers book the cab, and then Uber provide that booking to a driver. The driver takes the passenger, and then the passenger pays Uber with a credit card. At the end of the week, Uber then pays the driver, minus a commission from each fare.
Worker Or Employee?
There are in short three types of person who does work for money.
The self-employed, who pay their own stamp, pay their own tax, and have few rights. They cannot claim unfair dismissal, and they cannot claim holidays or the minimum wage.
Workers, who cannot claim unfair dismissal, but can claim holiday pay, and the National Minimum, or living, Wage.
Employees, who get holiday, the minimum wage, and the right to claim unfair dismissal after two years’ service.
This Case
Uber said the drivers were self-employed, and so did not pay holidays or minimum wage. With the number of drivers involved, 28 days paid holiday per year would be a significant bill. In addition, trying to monitor hours and payments to ensure compliance with the National Minimum Wage would be a huge headache, and expense.
The drivers claimed to be workers, and therefore entitled to minimum wages and paid holiday.
The Tribunal Judgement
In an entertaining judgement, which summarises the law and pulls together all of the recent case law, the Tribunal have found the drivers to be workers, and not self-employed.
It is clear that the Judge felt that Uber had worked hard to create the picture of self-employed drivers. However, it described some of the terms used as “Fictions” and noted the use by Uber of “Brand new terminology” such as the word “Onboarding”. Uber described the use of invoices, and tried to argue that the relationship was between the driver and the passenger. Uber said they were nothing more than agents.
The judge, clearly in theatrical mood, quoted Shakespeare saying that “me thinks the lady doth protest too much”!
The Definition Of A Worker
The statutory definition is contained in the Employment Rights Act at section 230. Paraphrasing, it defines a worker as
“…an individual who… works under a contract of employment, or, any other contract…whereby the individual undertakes …to perform any work personally…”
An almost identical definition is contained in the Working Time Regulations.
In this case the following facts seemed to be relevant:
What Employers Can Learn About Workers
In this case, it is true that drivers could decline to attend work at all. For any lawyer this points away from an employment relationship. However, the control that Uber exerted over the drivers if they did work, dictating how they worked, points away from self-employed status. Put in simple terms, Worker status is the middle ground between the two.
The cost of finding that your self-employed staff are actually workers is potentially ruinous to a business. For example, a business with 20 contractors who they think are self-employed, being paid say £250 per week, then discovering they are actually workers is simple to calculate. It’s a question of two years accrued holiday. 28 days per year, makes 56 days per worker. At £250 per week, the day rate is £50. 50 x 56 = £2,800. Multiply that by 20 workers and the unexpected bill for holiday pay is £56,000.
As an employer, it is important to ensure that you are clear on what risks lurk behind your workforce if you use self-employed. It is sometimes not as self-employed as you think it is. Very careful drafting of contracts, and close attention to how much control is exerted is well advised.
In this case, an important point was made that the terms of Ubers contract did not accord with reality. It underlines that the test a Tribunal will apply, will be what actually happens, not what the contract says.
Other Atypical forms of labour which can be just as serious a hidden risk include zero hours’ contracts.
How To Calculate Holiday For Workers Whose Hours Vary
The simple equation for employers is to look at the 12 week period before the holiday is taken, and calculate an average working week. Use this average to calculate the appropriate holiday pay.
The Future?
The current government has expressed concern about abuse of Atypical working patterns and may well launch a crack-down, particularly as Brexit unfolds with a commitment from the current PM to protect workers rights.
You can find the full case in the following link:
http://sherborneslaw.co.uk/wp-content/uploads/2016/10/20161031104115014.pdf
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