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What have we learnt from the recent Uber ruling from the Supreme Court?

The practical take-aways for every business.

Who has Uber taken for a ride?

origami question

According to the Supreme Court, the answer is both their customers and their drivers. 

The long running legal drama concluded in February with the Supreme Court confirming that Uber drivers are ‘workers’ when they are ready and willing to work in their allotted area with their Uber app switched on.

Have you noticed the lawyers now advertising for drivers to join group actions for compensation?  It tells you how expensive this could be for Uber and how challenging it could be for their financial model.   The costs come primarily because workers are entitled to the national minimum wage for waiting time as well as when carrying passengers, paid holidays and consideration for pensions auto enrolment, as well as other legal protections.

Whilst the threat is not existential for most businesses, the increased attention on status for both employment and tax purposes (see also the imminent IR35 changes), make it important for them to assess any exposure and act where necessary.

The main elements that led to the Courts’ decisions on Uber were:

  • The reality of the relationship between Uber, its drivers and customers was different to how it was described in contract documents – and reality always wins the day.
  • A contractual agreement cannot override statutory protections e.g. a signed agreement that says you are self employed is not valid if the conduct of the parties indicates otherwise.
  • The starting point for consideration of status is not the contract, but the purpose of the legislation that protects workers.
  • Uber exerted a high level of control over the drivers, e.g.
    • Remuneration was fixed by Uber – drivers could not charge more than the app prescribed and the ‘service fee’ deducted by Uber from each fare was fixed by them.
    • Contractual terms were dictated by Uber with no room for negotiation.
    • Once logged in to the app, the driver’s choice on which rides to accept was constrained.
    • Uber vetted the type of car a driver could use and imposed performance measures and penalties.
    • Uber limited communication between the driver and the customer and the ability for their relationship to extend beyond the individual trip.

The main lessons from Uber are therefore:

  • Make an honest assessment of whether the people you are engaging might be protected as workers. 
  • If it is not clear, decide whether you can give the workers more control of their service delivery to put them more squarely in the ‘self-employed’ space, or consider them workers or even full employees and put in place the controls you need to run your business successfully, taking account of the additional costs you will incur. Trying to ‘have your cake and eat it’ will most likely fail.
  • Prepare contracts that reflect the reality of the arrangements you arrive at.
  • Operate in accordance with the contracts.

When making your assessment, consider the general indicators of worker status:

  • They are required to provide personal service, e.g. there is no, or a limited, opportunity to provide a substitute under the contract.
  • The ‘dominant feature’ of the arrangement is to personally perform work rather than to deliver a particular outcome or objective.
  • They are, essentially, ‘in a subordinate and dependent position’ to their employer.
  • They don’t actively market their services to other potential customers.
  • They were recruited to be an integral part of the employer’s operations.
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