The
What does the law say?
Certain important employment rights are granted to those who qualify as "workers", even where they do not qualify as "employees". For example, workers have the right to:
-
be paid in line with the National Minimum Wage;
- to take paid annual leave and have rest breaks;
- to be paid statutory sick pay when sick;
- be auto enrolled into a pension scheme (if an eligible jobholder);
- protection from discrimination;
- protection if they blow the whistle; and
- protection from unlawful deductions from pay.
- signed into the app; and
- ready and willing to accept fares.
- Of major importance was the fact that
Uber dictated the remuneration paid to the drivers.Uber set the passenger fares (which, in turn, determined the drivers' pay). The drivers were not permitted to charge higher fares. They were free to charge lower fares, but they had to absorb the full cost of any reduction. Uber imposed the contractual terms on the drivers. The Court noted that there was "no practical possibility of [the drivers] negotiating different terms".- Once logged onto the
Uber app, the drivers' freedom to accept fares was constrained byUber .Uber controlled the passenger information provided to the drivers and also monitored the drivers' acceptance of fares.Uber penalised drivers for not accepting rides by automatically logging them off the app. The Court said this plainly placed the drivers in a position of subordination toUber . Uber exercised significant control over how the drivers delivered their services. It vetted the drivers' vehicles. It owned and controlled the technology at the heart of the service. It operated a rating system for drivers. Any driver who failed to maintain average ratings was issued with a warning and, ultimately, could have their contract terminated. The Court said this was "a classic form of subordination that is characteristic of employment relationships".Uber restricted communications between drivers and passengers and took steps to prevent an ongoing relationship being established, for example, neither had access to the other's mobile telephone number.
A worker is defined as an individual who has entered into, or works under a contract of employment or any other contract where the individual performs personally any work or services for another person who is not a client or customer of that individual's profession or business undertaking.
In the last few years, there have been a steady stream of cases (often brought against businesses operating in the gig economy) looking at whether individuals held out as self-employed contractors are, in fact, workers. When considering these cases, the Courts and Tribunals have consistently demonstrated a willingness to examine the reality of the relationship despite what the contractual documentation says.
What happened in this case?
As most people will know,
In 2016, a number of
The reality was the other way around.
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in the territory in which they were authorised to work;
The Tribunal's decision was upheld by both the
What was decided?
The
The Court said that in the employment context, the first step is to look at the underlying purpose of the relevant employment legislation (in this case, the national minimum wage and working time legislation). The purpose of such laws is to protect individuals in a subordinate position to the organisation which controls their work. The task for the Courts and Tribunals was to determine whether a claimant fell within the definition of "worker" so as to qualify for those rights. To take the contractual documentation at face value (where the facts suggested more than one possible legal classification) would allow the employer to decide whether or not employment legislation applied.
Here, the Court said there was no factual basis for asserting that
The Court held the Tribunal had been justified in finding that the drivers were workers. Although the drivers were free to decide when and where they worked, once they were working, they were workers. In reaching this conclusion, the Court highlighted the following five key aspects of the relationship:
Together, this meant that the taxi service was tightly defined and controlled by
Having ruled that drivers were workers, the Court also agreed with the Tribunal that their working time was not limited to the time spent driving passengers to their destinations. Instead, it included any period when they were logged onto the app in the territory in which they were authorised to work, and they were ready and willing to work. The Court noted that the existence of a right to refuse work was not fatal to a finding of worker status, provided there was at least an obligation to do some amount of work, which was the case here.
What does this mean for employers?
This decision doesn't mean that the contractual documentation put in place with contractors will be ignored. It will be a relevant factor, but the conduct of the parties in practice will also be considered. The worker status test will then be applied to those facts. As the Court said ".it is necessary to view the facts realistically and to keep in mind the purpose of the legislation".
Although this decision will have most impact in the gig economy sector, it would be sensible for all employers who engage self-employed contractors to audit how those relationships operate in practice to assess whether the contractual labels reflect reality. Where the hallmarks of a worker contract are present, the choice is to treat the individual as a worker and comply with applicable employment legislation or adjust the way the relationship works in practice to move it closer to a genuine contractor arrangement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Ms
The City
EC3R 8AJ
Tel: 203828 0350
E-mail: arpitadutt@bdbf.co.uk
URL: www.bdbf.co.uk
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