Are there Uber consequences for the gig economy?

Uber’s defence to this claim was the drivers were engaged on a self-employed basis and not entitled to statutory workers’ rights. Uber also claimed it does not provide transportation services; it provides a platform for drivers to perform transportation services as an agent for Uber.

After considering the evidence, the Court held that the drivers were ‘workers’, meaning they are entitled to statutory workers’ rights e.g. holiday pay, rights to be paid at least the National Minimum Wage. 

The case did not consider the tax treatment of the drivers’ remuneration, but they would pay tax and NICs as self-employed individuals.  Employment status for tax/NIC and employment law purposes are looked at separately and do not always align!

The key facts

An individual’s employment status is determined by a number of factors including how much ‘control’ the engaging business has over the individual.  Whilst this case is headline news from an employment law perspective, it did not break in how employment status is ultimately decided and considered for employment law or employment purposes.

The Court noted the evidence found by the employment tribunal that the drivers could choose where and when they worked, but that Uber had a high degree of control over the driver, including:

• The remuneration paid to drivers, minus a service fee, was fixed by Uber;
• Uber dictated the terms on which passengers were to be transported;
• Uber retained absolute discretion whether or not to accept any request for a ride;
• Uber monitors driver trip acceptances and cancellations which, if demonstrating inadequate performance, could lead to the contract being cancelled.  Poor passenger ratings targets could also lead to intervention and potential cancellation of the driver contract;
• Restrictions on communication between passenger and driver.

What are the remuneration consequences?

The consequences for Uber are that the status of the drivers is as workers from the moment they log on to the App and the case will return to the employment tribunal to determine the level of compensation for the workers.  The law firm representing more than 2,000 workers with claims linked to the case, said they could each be due up to £12,000. 

Additionally, if HMRC successfully challenged the working relationship between Uber and the drivers is akin to ‘employment’ from a tax/NIC perspective, Uber could also be held liable for any unpaid tax and NICs (and Apprenticeship Levy).

For the wider gig economy, the consequence of this case could encourage individuals to bring similar cases before the courts now this precedent has been set.  However, this case does not automatically mean that every gig worker for other operators in this sector would be entitled to workers’ rights.

Whilst this case may not add any simplification to determining an individual’s ‘worker’ or ‘employment’ status, it might prompt HMRC to revisit Matthew Taylor’s 2017 recommendation following his review of modern working practices that the taxation of labour be made more consistent across employment forms. 

How can we help?

At Mazars we have a dedicated team of specialists who help businesses navigate through the complex world of determining employment status. 

We provide technical analysis and offer practical solutions helping clients to arrive at correct employment status determinations.  This is especially important now that medium and large-size ‘end-clients’ are required to undertake an employment status assessment for workers’ services provided via their own Personal Service Company (or other intermediary).

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