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News

Have Uber set a precedent for self employment rights?

15 November, 2016

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Last week two Uber drivers succeeded in their tribunal case in which they argued that they were workers and should be treated as such, with the right to a minimum wage and sick and holiday pay. Currently, they are considered to be contractors, in a similar sense to that of franchise owners, where they receive business from Uber but are not considered to be employed by them. They use their own vehicles, but work from the Uber app which provides them with work. Uber argue that they are a simple technology platform, rather than an employer. However, the drivers argued that as they were working by Uber’s rules and regulations, and giving Uber a percentage of each journey fee, they were therefore employed by Uber as workers and should be given the same rights as any other worker in the UK. The court agreed, and said that they should not be considered as self-employed. The drivers were understandably overjoyed at this, whereas Uber have promised to appeal the case. However, this has already opened the floodgates for those working with a similar business model to come forward, with Deliveroo drivers announcing they are taking steps to gain workers’ rights and are seeking to unionise. Deliveroo are a food delivery service, who work on behalf of thousands of different restaurants across the country. Again, as with Uber, they are considered to be ‘independent contractors’. So what does this mean for other companies who work this way? And is the ruling enough to change what is defined as self-employed?

So what about other companies that provide a similar service with a similar model? Just Eat for example, should the restaurant owners be demanding a wage from Just Eat because they are taking a percentage of sales and providing this service to them? Or is this taking the ruling too far? A more likely example would be that of the delivery service Hermes, whose drivers work in a similar way to Uber’s. As with the Uber case, their drivers often end up with minimum wage or less as a result of the way their job works. Hermes delivery drivers are referred to as ‘lifestyle couriers’, largely because they are able to fit the job around their lifestyle. However, many Hermes delivery drivers moan on forums dedicated to them that the pay is low and the hours are long. However, Hermes argue that the pay is competitive and fair, and there are plenty of opportunities for drivers to negotiate their pay. Yet, one driver spoke to The Guardian about how he earned between 50p and 80p per parcel, some of which took up to 45 minutes to find the delivery address. Not only this, but the drivers are required to foot any costs such as petrol or breakdowns themselves, as they are required to use their own vehicles. Are companies like this praying on the needy and taking advantage of those who would take any work to stay afloat? Despite this, Hermes continue to be successful, and their target (which they are on track to meet) is to deliver more than a quarter of a billion parcels this year, with a 15% growth in deliveries year on year.  Yodel run a similar model of business to that of Hermes, although they are a slightly smaller company, but other parcel companies such as Royal Mail and Parcelforce pay a set salary along with holiday and sick pay. So why is it so difficult for Hermes and Yodel to do the same? Hermes are also subject to less regulation, as with other ‘lifestyle couriers’, in comparison to the Royal Mail who are subject to strict rules. This is a similar situation to that with Uber, with many arguing that Uber provide the opportunity for drivers to take advantage of the public with no as much regulation of their drivers as black cabs and other such registered vehicles.  It would seem that the appeal of ‘working for yourself’ is more than being secure and well-paid. It especially appeals to parents who are able to fit their deliveries around the school run and homework. But should this be enough legally? Or is the Uber case a sign of what the law will accept with these new modern forms of employment? 

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So what are the arguments for and against the Uber case? The drivers have asked how they can be considered self-employed when Uber get a percentage of each journey? This is essentially a referral fee but suggests that the drivers aren’t as independent from the company as Uber would like to claim. They are not employees in the standard sense as it’s up to them when they sign in and how long they work for, or whether they work at all that day, but they argue that they are working unnecessary hours for very little pay just to cover their costs. The drivers also argue that because they have to follow the standards and rules of Uber they are therefore employed by them and should be afforded the rights of workers. But you can’t have your cake and eat it, they can work whatever hours they want but should that come with sick pay etc. when they have chosen to work this way? However, Uber can’t have it both ways either. When employees are found to be breaking the law, being rude to passengers or just in general breaking the rules of Uber they are fired. If they are not their boss, then surely they don’t have the full ability to do this? For instance with a recent lawsuit over alleged sexual assault by a driver, Uber settled despite the women saying the company were responsible. The court rejected Uber’s argument that they could not be held liable as their drivers are independent contractors.  This case, and the recent employment case is not the first time that Uber have been forced to confront the employment status of their drivers. In April, they argued a similar case in the US and lost, and were forced to pay $100m to almost 400 drivers across Massachusetts and California. However, Uber argues that because their hours are not set or dictated to them, that is enough to make them their own boss and Uber should not therefore be liable for their actions.

If the case wins on appeal then the entire way Uber operates could be forced to change. There will likely be more restrictions to the hours that drivers do, and they will no doubt have a higher commission to pay as Uber will be footing a bill of millions of £s for holiday pay and will have to cover it somehow. This will also mean prices rise for customers, who for many the reason they use Uber (especially in London) is that they are cheaper.  And not all drivers want this, so it may be very controversial on both sides. Some argue that this case is making it harder for people to work for themselves, when we should be making it easier. After all 41% of people polled by Citizen’s Advice said that they would prefer to work for themselves. However, some drivers claim that they are earning way below minimum wage, and to keep afloat they are having to work extreme hours which can be detrimental to their health. For many, if the case goes ahead it will mean a much better quality of life. And shouldn’t we want that for all our workers? Should technology really mean that we care less about some than others? Technology has given companies a platform to do something different as a business model, and companies like Uber and Deliveroo have taken advantage of this to its full potential. However, there has to be limits as with everything else. Employment laws are there for a reason and an app shouldn’t negate that, or give a way around it. Consumers are becoming more aware of brand values and reputations than previously, and the more Uber fight against this case the more they will alienate consumers who want to use a company who value their workers (whether they see them to be workers or not).

Richard Coulthard at Michael Lewin’s, who specialise in employment law and work with First4Lawyers, welcomes the ruling and says that ‘Larger companies are finding increasingly innovative ways to attempt to circumvent the obligations provided by an Employer – Employee relationship, whether this is by providing staff with zero hour contracts or arguing that workers are self-employed such as is the case in the Uber decision. In the Uber case, the Employment Tribunal have made a sensible decision looking at the circumstances of the particular case and I believe that one of the factors taken into account by the Tribunal is the sheer number of drivers affected. This decision will inevitably lead to other individuals taking action to challenge the status of their employment and we are potentially already seeing this with the Deliveroo action. It will be interesting to see where the Tribunal ultimately draws the line as many relationships of this nature are entirely lawful but it is important that the scope of each relationship is considered, for instance does the individual only work for one company and do the company control the pattern and number of hours worked by the individual. These are all factors to consider.’