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Legal challenges to workers’ employment status

Legal challenges to workers’ employment status

Uber, the company which enables users to book and pay for a cab using a smartphone app, has appeared before an employment tribunal following claims by two of its drivers that it is acting unlawfully by not offering them employment rights such as holiday pay and the National Minimum Wage. Uber categorises its drivers as self-employed contractors and therefore it does not provide them with employment rights and benefits. However, a case against Uber has been taken by 19 drivers who argue that they are, in reality, workers and not self-employed contractors. Two test cases, backed by the GMB union, have now been heard at the Central London employment tribunal. The tribunal’s judgment is likely to have an impact for the thousands of Uber drivers in the UK.

Uber’s legal position is that the drivers can pick their own hours and work completely flexibly and that it is a technology company, not a taxi company, which simply puts customers in contact with drivers. Passengers pay Uber directly for the journey through the app and then a percentage of that payment is passed on to the driver. Lawyers for the GMB argue that Uber exerts significant control over its drivers, in respect of the hours they work and what they earn, and the terms and conditions of their work mean that they are not self-employed; rather, they are “workers”.

UK employment law currently recognises three general categories of employment status: employees, workers and the self-employed. Workers have fewer rights than employees but they are still entitled to a number of key rights, including the National Minimum Wage, holiday pay, working time rights (e.g. rest breaks and maximum weekly working hours), pension auto-enrolment, protection from discrimination and the right not to have unauthorised deductions made from their wages. In relation to wage deductions, the drivers have also alleged that Uber frequently deducts sums from their pay, including when customers make complaints, and that these deductions are unlawful. The employment tribunal will now need to consider whether the drivers factually satisfy the legal definition of worker as set out in the various pieces of applicable legislation – how a relationship is labelled is not decisive of its real legal status.

Although not a stranger to litigation elsewhere, this is the first time that Uber has faced legal action in the UK over the issue of whether its drivers are self-employed or workers. If the drivers’ claims succeed, and subject to any appeal, it means they will potentially be entitled to the range of employment rights and benefits available to workers.

Successful claims against Uber are also likely to open the floodgates to similar claims against other companies that categorise their workforce as self-employed, such as some courier and delivery companies. Indeed, Deliveroo has apparently amended its contracts with its cyclists in order to try and deter claims by inserting a clause to the effect that the cyclists agree they will not present a claim to the employment tribunal or any civil court in which they contend that they are either an employee or a worker and, if they do so, they will indemnify Deliveroo against any costs and expenses that it incurs in defending its position. However, whilst such a clause might prove to be a useful deterrent, it is highly unlikely to be legally enforceable.