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Uber and employment law

Uber and employment law
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Uber and employment law
Alex Lee by Alex Lee
Solictor - Buss Murton Law

Tech giant Uber’s legal battle over whether its drivers are self-employed or company workers is set to shape the gig economy landscape of the 21st century.  The case in the Court of Appeal will have repercussions for companies of all shapes and sizes.  Alex Lee  of Buss Murton Law analyses how the potential outcomes could shape employment law. 

Uber’s many legal battles

The $70 billion transport company dominates the taxi industry; yet, every day it seems, they receive knockback after knockback:

  • Last year, Transport For London announced their ban on Uber from operating in London, affecting an estimated 45,000 drivers, according to the company. Uber continues to appeal the suspension of their licence in London and was awarded a provisional one for 15 months, but dependent upon a number of conditions, which are being strictly supervised by Transport For London.
  • In June of 2017, co-founder Travis Kalanick was removed from the organisation.
  • In November 2017 it was revealed that passengers and drivers were not informed about a hack that in turn earned the company an $148m fine that haunts them to this day.

This is just the tip of the iceberg of trials and tribulations that the taxi giant has found itself in.

Gig economy and the Supreme Court

More commonly ignored by the media, however, is the story of Uber’s fight against a Supreme Court ruling that their drivers should be regarded as workers, and not as self-employed, which now sees it taking its arguments to the Court of Appeal, in what would be a revolutionary case.

Uber’s chances of success dramatically declined after a ruling from the European Court of Justice (ECJ) saying that the company served the purpose of employing drivers, as opposed to being an ‘information society service’ as it had been claiming prior to the ruling. This ruling was decided after Uber was ordered to conform to the same rules as local taxi drivers in Barcelona.

Uber’s case draws noteworthy parallels to the Smith versus Pimlico Plumbers case, in which Gary Smith took on Pimlico Plumbers in the Supreme Court and won, fighting for the right to be regarded as a “worker” and therefore entitled to certain rights that come with this title. The Supreme Court supported him and Mr Smith was in turn awarded these benefits.  The Smith-v-Pimlico Plumbers is regarded as a breakthrough case for the gig economy; however, it did not lead to any changes to the law or even in any changes in enforcement of new guidelines for employers.

Why the gig economy is forcing a rethink of employment laws

The rapidly changing economic environment and the epidemic of powerful multinational giants are forcing current industry regulations for anyone – consumers, employees and employers – out of existence. When the prevailing rules and standards were created, the concept of a ‘gig’ economy had not even been conceived.  This makes cases such as Uber’s appeal and Mr Smith’s fight against Pimlico Plumbers even more significant as they will be critical in shaping how rights for employers, employees and consumers are determined in the future, in our brave new employment world.

For Uber, the UK is Europe’s vital asset, engaging over 50,000 freelance drivers; however, the key term of its employment agreement is that Uber simply joins customer and driver and isn’t responsible for managing them. “Almost all taxi and private hire drivers have been self-employed for decades, long before our app existed. The main reason why drivers use Uber is because they value the freedom to choose if, when and where they drive and so we intend to appeal,” says Uber UK’s general manager, Tom Elvidge.

This was the central argument put forward by Uber in the Court of Appeal.  Dinah Rose, QC, representing the tech firm, said the agency model – with Uber acting as an agent between drivers and passengers – had been used in the private hire industry for years , but the Uber app ‘”enables it to operate on a much larger scale than traditional minicab companies”.

What happens if Uber loses?

Uber argues that if the status of its drivers were forcibly changed to “workers”, awarding them the rights that come with this title, it would change their entire business model: drivers would be given “shifts” and would have to be scheduled in rather than giving the drivers the freedom to work whenever they want, as they do now.

This may also force Uber into having to pay significantly higher taxes, including employer’s national insurance and VAT. The company would also have to give their drivers paid holiday and sick leave, as well as paying them a minimum wage.

Why Uber’s current policy doesn’t work

One of the original workers who took the case to the Employment Appeal Tribunal, Yaseen Aslam, made a statement in the summer, saying: “As the holiday season approaches, drivers should be looking forward to the security of a guaranteed minimum wage and holiday pay. Instead, they now face many more months of poverty, stress and uncertainty, while Uber profits at their expense.”

Aslam was one of two former Uber drivers who appealed against the taxi company, supported by the Independent Workers Union of Great Britain. They say they are more confident after the Supreme Court halted Uber’s attempt to bypass the Court of Appeal. The Independent Workers Union of Great Britain has also said that if the ruling is successful, this would mean that drivers would still be technically self-employed, but would enjoy greater protections.

Some more examples of companies embroiled in employment law disputes

As mentioned before, Uber and Pimlico Plumbers are two cases of employment law disputes, however these cases are far from isolated.  The food delivery app, Deliveroo, recently suffered a loss against 50 of their couriers, whose claim that their current employment status was unjust won them a shared six-figure  recompense. These disputes have not been limited to any particular industry, either. With the gig economy infiltrating into every sector, companies such as Addison Lee and CitySprint, who have also been challenged over their employment contracts in the courtrooms, show that no one is safe.

The government and employment regulations

Of course, as more and more of these cases occur, discussions have been sparked as to what the government should be doing to acknowledge changes in the dynamics of employment. Currently, the government is leading a review into the employment market, employer-employee statuses and how different employment models, such as the “contractor” model, can help prevent any injustices involving employment rights. The review is still underway, with hopes that it will shed light on many areas of the employment market that remain  in the dark.  However, this uncertainty and ongoing lack of clarity, makes future planning difficult; it may well be that when the conclusions of the review are finally published and implemented, it will lead to many employers having to significantly rewrite their contracts and how they manage their staff.  

The significance of the Uber Case on the future of UK Businesses

The Uber case will inevitably change the structure of UK businesses. If for the better, it cannot be said, however, one thing is for certain: the self-employment standards and gig economy regulations will far better represent the dynamics of the modern work force. In a society that is becoming more and more digital everyday, Uber may be the App-based employer in the firing line, but it most certainly will not be the last.

With such significant changes to employment law pending, it is more important than ever for small businesses to take professional advice about their contracts and the rights of their staff.  The last thing any small business owner wants is to follow Pimlico Plumbers to become a benchmark legal case.  But as the court judgements are given, Capital Space will look to update you, to help you understand your commitments to the staff who help you deliver your business.

To find out how Capital Space business premises could benefit your growing business,

call 0800 107 3667