The Uber Ruling: Is it the end for the self employed?

The GMB won their case against Uber last week as the London employment tribunal has determined that Uber has acted unlawfully by not providing drivers with basic workers’ rights.

The question hung on whether Uber drivers were employees or self-employed contractors. This matter usually takes into account the ‘badges of trade’ in the specific circumstances and these are set out in HMRC’s Employment Status Manual which states that someone is probably self-employed if most of the following are true:

• they are in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit
• they can decide what work they do and when, where or how to do it
• they can hire someone else to do the work
• they are responsible for fixing any unsatisfactory work in their own time
• their employer agrees a fixed price for their work – it doesn’t depend on how long the job takes to finish
• they use their own money to buy business assets, cover running costs, and provide tools and equipment for their work
• they can work for more than one client.

These badges are not all black and white in the online world of ‘apps’ and the gig economy however I suspect that apart from not being able to hire someone else to do the work – the right of substitution – most of the other badges,  to a greater or lesser extent, are in place for an Uber driver.  Should a black cab driver using Hailo or Gett to source their work be treated as employees?

Uber claim that in a recent survey undertaken by the company, 76% of drivers say that being self-employed and being able to choose their own hours is preferable to having things like holiday pay which come with being employed.

Many employees in this country would prefer not to have PAYE tax deducted at source from their earnings, so this is not a strong argument for defending Uber’s position. However, the fact that Uber drivers supply their own vehicles, decide how and when to work, and can (and often do) undertake other work outside their Uber contract, would seem to place them firmly under the self-employed tax framework. This was clearly not the conclusion of the tribunal, and as a result drivers will be entitled to holiday pay, paid rest breaks and the national minimum wage.

Earlier this month, the government announced the Taylor Review, an independent review into UK employment practices, headed by RSA chief executive Matthew Taylor. This will look into employment practice in the UK, particularly the prevalence of self-employed contracts, and general employment terms and conditions.

The outcome of an Uber appeal will be very interesting – but the ruling certainly puts many of the new, so called ‘gig’ economy, businesses on notice that they must look very closely at their employment practices.  For further information regarding employment of staff speak to Grazyna Baldwin who heads our Payroll and employment team.