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Uber Loses Landmark Tribunal Decision

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On 28 October 2016 the Employment Tribunal handed down a very important decision, one that would have the subsequent impact of employers questioning the employment status of contractors within their workforce.

Two taxi drivers who provide services to Uber were considered “workers” within the meaning of the Employment Rights Act 1996 after the case was brought by GMB trade union following allegations that Uber had disregarded its drivers’ basic employment rights.

Uber is a new concept which has hit the UK by storm by allowing smartphone users to hail a driver using the location software in the passenger and driver’s phones. A driver in the area is then called, making it more efficient than booking or taxi or hailing a taxi. Uber drivers use their own vehicles and pay for their ow fuel. The app is connected to the passenger’s credit card, with journeys being charged for a per mile and minute basis, with small referral fee going to Uber and the remainder to the driver.

The company has always maintained that its drivers are self-employed contractors rather than permanent employees and therefore this decision will no doubt have a significant impact on the business “gig economy” model Uber has been using to date.

So what does this decision mean? Well by giving these drivers worker status, means that Uber may have to grant its drivers basic employment rights including:-

  • 5.6 weeks’ paid annual leave each year
  • 48 hour average working week
  • rest breaks
  • national minimum wage
  • protection of the whistleblowing legislation

It is, however, important not to consider them as employees (as both groups have entirely separate rights) and will therefore not be entitled to (amongst other rights):-

  • the right to claim unfair dismissal
  • the right to receive a statutory redundancy payment
  • the protection of TUPE
  • minimum notice periods

So what implications will this decision have on other Uber drivers as well as other groups who operate this gig economy model (i.e. couriers and delivery companies)? It is likely the courts will receive an influx of claims from other drivers seeking for the same status, given that there are considered to be around 40,000 drivers in the UK who could potentially be affected.

It is almost certain, however, that this Tribunal decision will be appealed and could potentially go all the way to the Supreme Court.

For now, the advice we can offer is consider the practical ways in which your business runs rather than the paperwork it is written on. If challenged, Tribunals will always consider the true relationship between the parties.