Summary of court ruling
A couple of months ago, the Supreme Court handed down a landmark decision which will have significant consequences for the gig economy. The court rejected Uber’s appeal purporting that 35 of their drivers were self-employed, thus unentitled to basic work rights such as minimum wage and paid holidays. This means that Uber drivers are now unequivocally considered workers and will be afforded relevant worker’s rights protections. Companies like Uber who rely on gig workers will bear the brunt of this decision as it will have significant remuneration and tax implications.
The Uber decision is the ammunition gig workers need to establish worker’s rights in the sector more widely. The general debate goes like this; a gig worker is on a short-term contract and is therefore an independent contractor/self-employed individual. Often, Gig workers work for companies on a flexible and unpredictable basis, thus various worker’s rights such as insurance are uneconomical. As well as this, gig workers agree to terms that explicitly state they are not an employee.
Not buying it? Neither did the Supreme Court, so congratulations! You are one step closer (out of 6405) to becoming a Supreme Court Justice.
Just as the Unfair Contract Terms Act 1977 prevents what it says on the tin, Uber will now be prevented from entering into agreements where drivers are not workers. This makes a lot of sense since Uber exercises a great degree of control over drivers, by unilaterally allocating their work and dictating fees. Not only this, to disallow employment status to someone who works 48-hour weeks for a company exercising such controls is problematic. This is to lay undue emphasis on the traditional meaning of worker/employee instead of viewing the work of an Uber driver in light of its purpose.
Implications for Uber
Companies like Uber providing skills-based work have been able to profit off the short-term contracting of independent workers. By categorising drivers as contracted independent workers, Uber’s tax liabilities are significantly lowered. One Bloomberg Analyst believes this leaves Uber at risk of paying about $1.3 billion in unpaid taxes now that its drivers are deemed workers.
The contracting independent workers setup also allowed Uber to avoid paying their drivers minimum wage, thus widening the company’s profits. This Supreme Court decision means that the case will return to the employment tribunal so that the claimants' compensation can be determined. Each claimant may be entitled to up to £12,000, and there are over 2000 more workers who are fighting for parity.
This decision is major. For many it is seen as the first step in reversing exploitative techniques wielded by Uber. For the UK gig economy, it should be seen as a wake-up call.