Does a self-employed business model work following the Uber case?

If you've never heard of Uber or they haven't made it to your town yet, it's a global business which allows people to order taxis via it's mobile app. Once you enter your journey you'll get a price and the app contacts an available driver closest to your location to offer them the trip.

Uber drivers use their own cars and are responsible for all their own expenses in running it as a taxi. This kind of industry is known as the 'gig economy' where work is done by undertaking a series of 'gigs' that are contracted out by a provider of on-demand work.

But in October some drivers took Uber to an employment tribunal to challenge this relationship.

What was the Uber employment law case about?

Uber claim that they are technology business, not a transportation provider and that anyone who drives for them are independent self-employed contractors.

The Uber drivers that brought this case claim that they are actually employees of Uber and not self-employed.
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What difference does being self-employed make?

A lot of the employment law rights for workers do not apply to the self-employed, including:
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• Whilst an employee must be paid at least the National Minimum Wage, there is no similar provision for the self-employed.
• An employee is entitled to holiday pay and statutory sick pay, while a self-employed person is not.

Employees may also have additional rights such as the ability to claim for unfair dismissal after a minimum length of continuous employment with an employer. However a self-employed person does not have this right regardless of length of their contract.

One of the drivers in the Uber employment case claimed that he was earning less than the National Minimum Wage (£7.20 per hour in 2016 for those 25 years old and over) as in some months his earnings equated to only £5.00 per hour.​

Uber also did not provide sick pay to their drivers if they were unable to work.

Employee vs. Self-employed

Employment rights that are not applicable to someone self-employed

• Statutory sick pay
• Statutory maternity, paternity, adoption and shared parental leave
• Minimum notice periods for employment ending
• Unfair dismissal protection
• Time off for emergencies
• Flexible working requests
• Statutory redundancy pay and rights

Business Employment Law Support

​What did the Employment Tribunal decide?

The Tribunal decided that the drivers were employees and not self-employed contractors. In reaching this decision the Tribunal looked closely at the written agreements between Uber and the drivers but also at what happened in practice contrary to the agreement and other publicity material used by Uber.

The drivers submitted that the written terms between Uber and the drivers should be read sceptically as they did not properly reflect the relationship and in fact misrepresented the relationship. The tribunal was ultimately satisfied that the supposed driver/passenger contract was a pure fiction.
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However, the Tribunal also stated that Uber could have devised a business model not involving them employing drivers but the current model fails to achieve that aim.
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​What does this mean for other businesses that work on a self-employed model?

Well in December 2016 Uber appealed the decision so this probably won't be the end of the story.

But what is clear is that if a case ends up in front of a tribunal it will not simply be a review of the written agreement that will determine whether a person is an employee or a self-employed contractor. If the business maintains control of the person to the extent that the business would control an employee and holds the person out as an employee publicly then it may appear to the tribunal that the only reason that the person is not classed as an employee is to deprive them of their statutory employment rights. In such a case the tribunal is likely to decide the person is an employee.

Now is the time to re-assess your contracts and policies and make the necessary changes to ensure you have a legitimate business model that would hold up to scrutiny by a tribunal.

Interestingly there are over 40,000 Uber drivers in the UK and only 19 were involved in the case. Although it is possible there are many more waiting for the final outcome to decide whether or not to pursue a claim.
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Even though this case is being used to highlight businesses that are potentially taking advantage of people by depriving them of their statutory rights, it must be remembered that there are many individuals who want to be self-employed and not be constrained by the terms of an employment contract, they want the freedom to decide when and who they will work for.