Uber, the gig economy and the future

Posted on: December 21st, 2016

In October, two drivers at the mobile taxi hailing company Uber unsuccessfully argued that they were in fact workers and not self-employed. The case has interesting implications for the wider ‘gig economy’.

There has been a great deal of misleading information published following the recent decision in the Uber employment tribunal case, and so it’s important to distinguish between what this case actually means and what the wider implications are.

Firstly, the case technically only affects the individuals who brought the claim, not the 40,000 other individuals engaged by Uber. In addition, judgments from the Employment Tribunal are not binding on other cases. In other words, the suggestion that this is a landmark decision which will affect the hundreds of thousands of other people working under self-employed contracts is simply wrong.

What actually happened in the Uber case was that the Employment Tribunal analysed the facts of how the Claimants worked for Uber, taking into account well-established law relating to employment status and concluded that the individuals were in fact workers, rather than self-employed. Assuming that the majority of Uber drivers are engaged on similar contracts and work in a similar way, it is likely that another Employment Tribunal would also find that they are workers, but that is not guaranteed.

The well-established law in cases like these dates back to 1999, in a case which also concerned delivery drivers. In that case, it was found that one of the determinate factors in deciding whether an individual is genuinely self-employed or a worker is whether the individual is obliged to perform the services individually. In other words, if a driver doesn’t feel like turning up for a shift, can they simply send a friend in their place? Another key consideration is the level of control that the company has over the drivers.

One key element of the Uber judgement, which was not widely reported, was the fact that the Employment Tribunal said that nothing would prevent Uber from devising a business model that would ensure its drivers were not workers; it was simply that the current model failed to do that.

Uber has confirmed that it will appeal the decision, but, in any event, it and other companies operating in the so-called “gig economy” are likely to be reviewing their contracts and working practices to ensure that this decision is not repeated. The Uber case, as well as the ongoing reports of mistreatment of workers by organisations such as Sports Direct and Hermes has led to a huge ocus in the media on the gig economy. This, in turn, has led to the Government launching an inquiry into the future world of work, focusing on the status and rights of people working in the gig economy.

The last few years have seen significant increases in the number of temporary placements and in companies with non-traditional working practices, and there is no reason to think that the gig economy is going away; however, it is likely that over the next few years we will see an ongoing debate between the freedom of companies to make money versus the rights of the workers themselves. Further clarity, if not necessarily further regulation, is to be welcomed from all sides.

For further information please contact our Employment team on 023 8048 3770.