Worker status and the ‘gig economy’: Taxi for Uber?

10 November, 2017
by: Cripps Pemberton Greenish

Uber drivers are ‘workers’ and entitled to NMW along with other worker rights, says the Employment Appeal Tribunal as it upholds the Employment Tribunal’s original decision. 

Big news

The impact of this decision is not just limited to Uber – it will have significant ramifications across the ‘gig economy’ and further raises the classic question ‘is an individual an independent contractor, worker, or employee?’

>>> Worker status: plot thickens (Pimlico Plumbers)

Uber’s business model, alongside many other companies in the ‘gig economy’, relies on its staff being ‘self-employed’ primarily so that it can reduce costs and its responsibilities towards them.

Self-employed?

Self-employed individuals  have very limited rights on the basis they are viewed as being a business in their own right.

In contrast, although not enjoying the same level of protection as employees, ‘workers’ are entitled to certain benefits including NMW, holiday and sick pay.

>>>New destinations: employment status (Uber)

Here lies the problem for Uber and its fellow ‘gig economy’ business models.

If their staff are ‘workers’ and are entitled to receive NMW for the hours they work (along with other required benefits) the operational costs of the business may increase sharply making the existing business structure unsustainable.

Gig economy

The employment landscape has changed dramatically in recent years, with it claimed that nearly 25% of people currently in work are classed as ‘self-employed’.

Whilst there are obvious benefits to self-employment such as flexibility, the wide-spread concern is that some companies may be exploiting individuals.

This view is reflected by recent decisions in the employment tribunal and the government’s review of modern working practices.

What next?

It is very likely Uber will appeal the EAT’s decision, which along with other high-profile cases like Pimlico Plumbers, and more recently the expected challenge by elite cyclist Jess Varnish against UK Sport and British Cycling that she was an employee, means the topic of employment status is not going away any time soon.

In short, watch this space.