Following the recent Supreme Court ruling that Uber drivers are workers and not self-employed, Sara Ellison, chartered legal executive at Banner Jones, takes a look at why the case is important – and what it could mean for employers
On 20 February 2021, the Supreme Court handed down its judgment in the long-awaited Uber case (Uber BV and Others v Aslam and Others). All six judges unanimously ruled Uber drivers were workers, not self-employed contractors and as a result were entitled to basic employment rights like National Minimum Wage, holiday pay and sick pay.
Why is this case important for the gig economy?
In 2019, it was estimated by the TUC that more than 5 million people were employed in the gig economy and it would be fair to assume that this figure has risen because of the pandemic and the increased reliance on delivery drivers, for example. This illustrates the potential number of workers who will be looking at the Uber case and questioning their own employment status. For any employers relying on casual contracts it could mean an increased risk of expensive claims where the employment relationship is not clear.
In the UK there are currently three different types of employment status:
- Employees – they have the most employment rights and are afforded the most protection by employment law. While employees have more labour security, the employer has more control over when, where and how the work is carried out.
- Workers – they have more flexibility over how they work and some basic employment rights and protection, such as the right to be paid the National Minimum Wage, holiday pay and sick pay.
- Self-employed/contractors – they have very little employment law protection but should, in theory, have full control over the terms upon which they carry out their services (and the most symptomatic of the gig economy).
Simply labelling someone as a self-employed contractor does not make them self-employed if, in reality, they are being treated as a worker or an employee with little self-control of how they carry out their services. Uber has found this out to its detriment and, no doubt, at a huge cost when the Employment Tribunal determines how much compensation the Uber drivers should now be awarded.
The Uber judgment follows the recent review of the gig economy in the Government-commissioned Taylor Review, which resulted in the Good Work Plan that came into force in April 2020. The Plan aims to secure a better balance between flexibility and employment rights. Part of this protection is to ensure all workers are given a statement by their employer on the first day of their relationship, confirming their status and their terms and conditions for undertaking work.
Following the Uber judgment, and in line with the Good Work Plan, employers in all industries, not just the gig economy, should be ensuring their contracts are up to date and the right ‘label’ has been correctly applied to the relationship. Employers need to ensure the contract terms are provided on day one – this is now mandatory in all cases and could lead to claims for failure to provide them.
Many employers in all sectors have understandably been preoccupied with the pandemic since the Good Work Plan came into force, so now may be a good time for employers to review their contracts. Our team are here to help.