Uber drivers have won the right to be classed as workers rather than self-employed, meaning drivers for the ride-hailing app will be entitled to holiday pay, paid rest breaks and the national minimum wage.
Dave Chaplin, CEO and founder of Contractor Calculator says, ‘This is the most high-profile court case concerning employment in recent years and today’s ruling is a disaster for Uber, which will now be faced with compensating its drivers retrospectively.
‘What’s more, it is a disaster for UK plc as it is certain to open the floodgates for more workers to challenge their employers in pursuit of their rights from companies which operate a similar business model to Uber.’
It will also arm HMRC with the ammunition to attack genuine freelancers under the rules of IR35, Chaplin adds.
‘I would urge all self employed contractors to seriously consider their IR35 position.’
Businesses may be unable to absorb extra costs
Transport services, delivery drivers, couriers, IT contractors and warehouse businesses could all be hit, all of which are engaged on ‘self-employed’ contracts, says Beverley Sunderland, managing director of Crossland Employment Solicitors.
‘Small businesses that rely on such workers will be at particular risk as they’re unlikely to have the ability to absorb the higher costs associated with taking on these ‘workers’, especially where the flow of work is not guaranteed.’
Sunderland says that such businesses often argue that the use of self-employed independent contractors allows them to respond to customer demand in a fluctuating market and that such flexibility is essential to allow the business to grow and survive, as well as offering individuals the flexibility of choosing when and how much they work.
She adds that companies should remember that no matter whether staff are self-employed or ‘workers’, arrangements should never be abused. ‘If people are genuinely self-employed they should meet the key legal test for such status – they have freedom of control over their work in accordance with the law.’
Guglielmo Meardi, of Warwick Business School, is a professor of industrial relations and director of the Industrial Relations Research Unit. He says that the Uber ruling will demystify much rhetoric on the ‘gig economy’ being inherently liberating, and stimulate the debate on the opportunities, limits, challenges and ways of addressing the new forms of contracting work and activities that do not fit into the traditional categories of work.
‘With emerging platforms like Uber, nominally self-employed workers are more at risk of exploitation, hence the need for stepping in with more protection, especially in a country like the UK where overall employment and transport regulations are looser and the potential for exploitation, bigger.’