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Does landmark court ruling mean a drastic rejig for the gig economy?

Published 22 February 2021
The momentous verdict in the Uber taxi drivers’ case could have far-reaching implications for many self-employed workers employed by app-based platforms.

The UK’s Supreme Court ruled that Uber drivers must be treated as workers rather than self-employed (1)

It means they should have the same employment rights as those with permanent employment contracts.

The decision could mean thousands of drivers who work for the ride-hailing app are entitled to minimum wage and holiday pay.

There are different levels of the National Minimum Wage and currently for workers aged 25 and over it is £8.72. The hourly rate is set to rise to £8.91 in April and it will be paid to those aged 23 and over (2)

Almost all workers are legally entitled to 5.6 weeks’ paid holiday a year (known as statutory leave entitlement or annual leave) (3)

In a lengthy court battle Uber had maintained its drivers were self-employed and it therefore was not responsible for paying any minimum wage nor holiday pay. The assertion was rejected by the Supreme Court.

James Farrar, co-lead claimant and App Drivers &Couriers Union General Secretary said the ruling will fundamentally re-order the gig economy and bring an end to rife exploitation of workers (4)

He said the reality for drivers had been illegally low pay, dangerously long hours and intense digital surveillance. He added that the government must urgently strengthen the law so that gig workers may also have access to sick pay and protection from unfair dismissal.  

The gig economy is a labour market characterised by the prevalence of short-term contracts or freelance work as opposed to permanent jobs (5)

The court unanimously agreed that drivers were working ‘for and under’ Uber, regardless of how the arrangement was written into the contractual agreement, and therefore the relevant employment legislation applied.

The court considered several elements in its judgement:

  • Uber set the fare and as a result dictated how much drivers could earn
  • Drivers had no say in the contract terms set by Uber.
  • Request for rides is controlled by Uber and it can penalise drivers if they refuse too many fares.
  • Uber monitors a driver's service through the star rating and has the capacity to terminate the relationship if after repeated warnings this does not improve

Considering these and other matters, the court ruled drivers were in a position of subordination to Uber as the only way they could boost their earnings would be to work longer hours.

In response to the court ruling Uber is reported to have said that it only applies to the handful of drivers that filed the initial case, but it will start a nationwide consultation, which will take a number of weeks. “This process will seek the views of all active drivers to help us shape the future of flexible work,” the San Francisco-based company is reported to have said in a statement (6)

The impact of the court ruling and what it now means is the topic of much discussion and speculation.

It is thought that the judgement could affect over 2.8 million people engaged within the gig economy and have significant implications for others, such as couriers and delivery drivers.

The ruling was described as sending a warning to other businesses using app-based platforms that the current employment legislation exists to give protection to vulnerable individuals who have little or no say over their pay and working conditions.

A headline in the Financial Times said the ruling threatened to crash the Uber model as the company would now have to deal with holiday pay, minimum wage, sick leave and pension contributions (7). The report included the suggestion that drivers may be entitled to £12,000 compensation.

Being self-employed should give you complete flexibility over your working life. As an employee working for a company you will receive sick pay, holiday pay, a pension and other perks. 

“A reputation built on success”

For employment law advice or if you are affected or want information and support by any of the issues in this article please give us a call. 0333 772 0611

 


References

(1) Uber drivers must be treated as workers rather than self-employed [Internet] www.independent.co.uk [Cited 22.2.2021] https://www.independent.co.uk/news/business/uber-supreme-court-holiday-pay-b1804549.html

(2) The hourly rate is set to rise to £8.91 in April [Internet] www.nidirect.gov.uk [Cited 22.2.2021] https://www.nidirect.gov.uk/articles/national-minimum-wage-and-living-wage.

(3) All workers are legally entitled to 5.6 weeks’ paid holiday a year [Internet] www.gov.uk [Cited 22.2.2021] https://www.gov.uk/holiday-entitlement-rights.

(4) Re-order the gig economy and bring an end to rife exploitation of workers [Internet] www.adcu.org.uk [Cited 22.2.2021] https://www.adcu.org.uk/news-posts/supreme-court-landmark-victory-over-uber

(5) What is Gig economy?  [Internet] www.bbc.co.uk [Cited 22.2.2021] https://www.bbc.co.uk/news/business-38930048

(6) ‘This process will seek the views of all active drivers to help us shape the future of flexible work’ [Internet] www.bloomberg.com [Cited 22.2.2021] https://www.bloomberg.com/news/articles/2021-02-19/uber-loses-u-k-top-court-ruling-on-drivers-employment-status

(7) Holiday pay, minimum wage, sick leave and pension contributions [Internet] www.ft.com [Cited 22.2.2021] https://www.ft.com/content/643de8f2-8098-41a3-9e9e-b9eee25f4593.

A reputation built on success

For employment law advice or if you are affected or want information and support by any of the issues in this article please give us a call. 

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