Employment Tribunal warns businesses to be Uber careful about the employment status of their staff

The Employment Tribunal was in the limelight last month as it ruled on the Uber drivers case. The tribunal decided that Uber’s 40,000 drivers are “workers”, not self-employed contractors. This means that they are entitled to minimum standards like national minimum wage, rest breaks and holiday pay.

The case is a useful reminder that simply labelling somebody that works for you as “self-employed” is not necessarily mean that they are. In broad terms, staff will be classified as a worker, and receive the associated rights, if they provide a personal service, are controlled by the employer and there are mutual obligations on both parties.

In the Uber case, the Employment Tribunal found that drivers did not have sufficient freedom to be classed as self-employed because of a number of factors, including the following:

  • Uber interviews and recruits its drivers;
  • Uber sets the route the drivers should take;
  • Uber imposes conditions on its drivers, such as the type of vehicles they can use;
  • the rating system operates as a form of performance management; and
  • drivers do not have the opportunity to negotiate the fare.

Despite Uber spending lots of money crafting legal documents trying to define its drivers as self-employed, the tribunal looked behind the documentation at the actual business operations. Uber was unable to escape from the reality that their business model meant that drivers could not be genuinely self-employed.

This will bring some early festive cheer to the Uber drivers who have recently started operating in Cambridge, but should cause businesses who have “self-employed” staff to review their practices.

The potential implications of employment status are not only in respect of workers’ rights: there are also tax repercussions in that income tax and national insurance contributions will be due in respect of the payments made to staff. It has been announced that HMRC have set up special units to pursue businesses that wrongfully classify staff as “self-employed”.

If you require advice as to the status and rights of staff please contact Adam Weston or Steve Hollis of this firm, who would be happy to assist.

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