Earlier this year a survey of 2,238 people, undertaken by the University of Hertfordshire and Ipsos MORI on behalf of the Foundation for European Progressive Studies (FEPS), found that 21 per cent of the population – around nine million people – had attempted to find work via ‘sharing economy’ platforms and that one in ten, equivalent to almost 5 million people, had succeeded in doing so.
The numbers involved prompted calls for the impact upon workers’ rights, taxation policy and consumer protection to be investigated, and these calls were repeated with even more urgency following the recent Uber Employment Tribunal judgment.
The case involved two drivers, James Farrar and Yaseen Aslam, who argued, on behalf of a group of 19 Uber workers, that they were employed by Uber rather than, as Uber claimed, working for themselves. In finding on behalf of the drivers, the tribunal judges were dismissive of Uber’s claim that their working model consisted of thousands of individual small businesses linked by a technology platform, accusing the company of falling back on ‘fictions, twisted language and even brand new terminology’.
Meeting the criteria of ‘workers’
It should be noted that the ruling does not mean the drivers concerned now have ‘employed’ status, as it actually found that they met the criteria required to be considered as ‘workers’ as defined by the Employment Rights Act. This status occupies a middle ground between employed and self-employed. While it does not confer full employment rights upon those classified, it does mean they are entitled to certain provisions such as minimum wage, statutory holidays, whistle blowing protection and protection from unlawful deductions.
In the immediate aftermath of the ruling, Uber emailed the rest of their drivers to insist that:
‘…today’s decision only affects two individuals and Uber will be appealing it. There will be no change to your partnership with Uber in light of this decision…’
This could arguably – notwithstanding Uber’s intention to appeal against it – impact upon the status of all 40,000 UK Uber drivers, as well as the financial model through which Uber has flourished and the wider gig economy as a whole. Uber is also in the midst of contesting several similar claims in the US, and it has been widely predicted that the decision could encourage those working for other UK sharing economy platforms to take similar action. Although the success of any other claims is by no means guaranteed by the Uber Employment Tribunal’s decision, the outcome does form part of a general trend which seems set to radically alter the concept of the gig economy.
The focus of the Uber case, and of this wider shift, is the concept of the test of control, which seeks to define employment or self-employment on the basis of how much control the employer exerts over the employee. In the case of Uber, the tribunal noted that:
- Uber interviews and recruits drivers
- Uber controls information such as customer details, which are kept from the drivers
- Drivers have to accept trips and are penalised for any cancellations
- Uber sets the route to be taken
- Uber operates a driving rating system which operates as a management and disciplinary device
- Uber has the discretion to accept or reject bookings, and sets the fares charged
- Drivers are not allowed to share accounts or substitute for each other
- Uber deals with any customer complaints.
The Uber case is by no means the first employment law dispute to examine the issues in light of the test of control, but it does confirm a shift toward judging such cases on the basis of the reality of the working environment on a day to day basis rather than the terms and conditions as set out in any contracts involved. Recent cases which have signalled this include Quashie v Stringfellows Restaurants Ltd, in which a dancer previously deemed as being self-employed was found to be an employee, Hospital Medical Group (HMG) Limited v Westwood, in which the Court of Appeal found that a doctor was an employee of HMG despite paying his own tax and National Insurance contributions and the Supreme Court decision in the case of Autoclenz v Belcher and ors  EWCA Civ 1046.
The most significant case
The last case is perhaps the most significant in that the decisions was handed down by the Supreme Court, despite a previous PAYE review carried out by HMRC, which found that the workers at a car valeting company were self-employed. The judgment noted that the car valeters had no way of making a profit or loss from their work, did not provide substitutes and were always offered work and always accepted. Also of note is the fact that the court stated that, when the terms of any contract which had been offered and accepted were examined, the bargaining power of each of the parties should be taken into account.
The shift represented by these cases could have the biggest bearing yet upon wider UK employment law. In particular, the further responsibilities which ‘employer’ status would place on a business such as Uber would negate the financial model which, by keeping costs to a minimum, enables digital disrupters to undercut the more traditional competition and widen consumer choice.
Whether the Uber finding will lead, as some have predicted, to ‘the death’ of the gig economy, or merely to the creation of new and hybrid forms of employment, remains to be seen. The government has already launched an independent review examining how employment regulations are keeping pace with technologically driven changes to the labour market. Headed by Matthew Taylor, chief executive of the Royal Society for the encouragement of Arts, Manufactures and Commerce, the review, coupled with the developments in the US, may find that the pressure exerted by the threat of legal sanctions leads to parties collaborating to develop innovative solutions. Indeed, Rachel Holt, the Head of Uber’s North American operations, recently announced that the company had been looking into giving stock options to its drivers.
Whether the Uber ruling leads to such innovation in the UK remains to be seen, but what can be predicted with some confidence is that the status quo is simply not an option.
Sarah King is solicitor at Excello Law.