The so-called ‘gig economy’ has increasingly been in the news recently. It refers to an environment where businesses contract independent workers for short-term, flexible engagements and temporary work is common. High profile examples of companies working under this type of arrangement include Uber, delivery company Hermes and food delivery service Deliveroo.
While these arrangements do provide flexibility, there has been growing criticism of the lack of protection for those working under them, with investigations suggesting some Hermes delivery drivers receive less than the living wage and Deliveroo coming under fire for including a clause in their contracts whereby drivers warrant they will not raise a tribunal claim to determine that they are in fact employees or workers. This comes on the back of other recent criticisms made of non-traditional employment arrangements, perhaps the most profile of which was retailer Sports Direct’s use of agency workers.
The most recent instance of these working arrangements coming under review is the Employment Tribunal case of Aslam and others v Uber, where a London employment tribunal declared that two Uber drivers are “workers”, were not self-employed contractors and on this basis are entitled to certain legal rights and protections. With this decision likely to open a gate for similar claims, how will this impact on this type of employment arrangement and what are the implications for those companies who operate in the “gig economy” or who offer similar working conditions?
The key issue at the heart of this dispute is employment status. Those who are self-employed or independent contractors do not benefit from most employment based statutory rights. Workers have a status in between that of a self-employed contractor and an employee and are entitled to some rights and protections, including rights:
- under the Working Time Regulations
- under the Equality Act
- to receive the national minimum wage
- providing protection for whistleblowing; and
- providing protection against unlawful deductions from wages.
Workers do not have the right to claim unfair dismissal, are not covered by the TUPE regulations and are not covered by the ACAS Code of Practice. The Employment Rights Act 1996 defines a worker as someone who personally works for or provides services to another person or company, but who is not running a business on their own account which would make that person or company a client or customer.
Uber is a company that provides transportation services, largely by way of a mobile app through which customers can book a driver. These drivers have been treated by Uber as self-employed. A number of Uber drivers raised a tribunal claim arguing that they are in fact “workers” and entitled to certain rights, as set out above. Mr Aslam and Mr Farrar were selected as ‘test claimants’ for the tribunal to decide as a preliminary issue whether they are workers or not. There was no argument advanced by the Claimants that they were employees.
Determining whether someone is a worker requires consideration of a number of factors. Uber argued that each driver was running their own business and they simply provided an ‘IT platform’ through which the drivers could obtain customers. The tribunal strongly disagreed with this and found that the contracts issued by Uber to the drivers providing that they were self-employed and made their own individual contracts with passengers did not reflect reality. They found that the drivers are workers, taking into account factors including the following:
- Uber interviews and recruits drivers;
- Uber controls key information about passengers and the driver does not receive this;
- Uber requires drivers to accept trips and not to cancel trips;
- Uber sets the default route which drivers should follow;
- Uber fixes the fare and the driver cannot negotiate a higher fare;
- Uber imposes numerous conditions on drivers, instructs them as to how to do their work and controls the performance of their duties;
- Uber subjects drivers to a rating system which the tribunal considered effectively amounts to a performance management/disciplinary procedure;
- Uber handles customer complaints, including complaints about the drivers;
- Uber accepts the risk of loss, which would fall on the drivers if they were genuinely self-employed; and
- Uber reserves the right to amend the driver’s terms unilaterally.
The tribunal was also particularly critical of the lengths to which Uber had gone in its contractual documentation to avoid establishing any sort of employment relationship, commenting that it had resorted to ‘fictions, twisted language and even brand new terminology’, which they thought merited scepticism.
Given there are around 40,000 Uber drivers in the UK, the implications of this decision are significant. If Uber’s drivers are entitled to holidays and the national minimum wage, this is likely to create a significant financial burden for them which their business model would not seem to have accounted for and the costs could run into the millions of pounds. It is considered extremely likely that Uber will appeal, but the findings of fact made by the tribunal do suggest it will be extremely difficult for Uber to establish its drivers do not have worker status.
There have been similar claims raised by those working for various cycle couriers in London and it appears likely that these types of case may increase in volume. In the last few days, it has been reported that workers for Deliveroo in the UK are looking to gain workers’ rights. The union of Independent Workers Union of Great Britain are seeking recognition by Deliveroo to engage in collective bargaining on rights such as pay on behalf of couriers, and if rejected may make a claim which would require it to be decided whether or not Deliveroo couriers are workers.
These developments highlight the complex nature of employment status. Companies can put on paper that those engaged by them are self-employed contractors, but tribunals can look behind this to the reality of the arrangement. Given the number of companies now engaging people in the ‘gig economy’ it looks likely that there will be increasing litigation on their employment status. It will be interesting to see the opinion of the appeal courts in this regard, which may begin to provide more clarity about when individuals engaged in the ‘gig economy’ really are workers and must be afforded the rights to which they are entitled.
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