Workers’ Rights, Uber and the Gig Economy

Uber and Deliveroo have recently made the headlines over workers’ rights.  Uber was the subject of a London employment tribunal case that decided that Uber drivers were not self-employed and therefore entitled to workers’ rights.  Now a group of couriers who deliver for Deliveroo are taking legal action to gain the right to union representation and to earn the NMW: effectively requiring that they also be classed as workers, having workers’ rights.

What is the Gig Economy?

The business model of gig economy companies such as Uber and Deliveroo is typified by a could-based marketplace with the ‘product’ (usually a service or digital product) delivered by a self-employed workforce. The company provides a virtual platform for freelancers to advertise their services and to find clients/buyers.

People working through such companies are able to work the hours that suit them, providing great flexibility. The downside is that there is no guaranteed income nor any of the benefits, afforded by law, to workers or employees.

Uber is probably the granddaddy of the gig economy but there are plenty of other examples around such as:

  • 90 Seconds – a video production platform
  • – for online work such as web development
  • Toptal – for freelance software developers and engineers
  • Peopleperhour – web design, media, video and other online services.

Uber drivers provide a physical service within a specific geographic area (as do Deliveroo couriers), but that’s not always the case with gig economy companies.

What are workers’ rights and what’s the big deal?

In England and Wales workers are granted, by law, certain rights including paid holidays and minimum wage.  Being an employee (which is different from being a worker) grants additional rights including:

  • protection from unfair dismissal
  • statutory sick pay
  • statutory maternity, paternity, adoption, shared parental leave and  pay
  • statutory redundancy pay.

Workers may, in some circumstances, be entitled to the various types of statutory pay listed above.  In any case, the statutory rights afforded to employees is more extensive than those afforded to workers.

Self-employed, freelancers and contractors do not (generally) have these rights.

Statutory employment rights can have big financial implications for people on lower incomes, so being classified as self-employed rather than a worker or employee can be very significant.  As with the issue of zero-hours contracts, there is a question of fairness (as well as legality) if employers are looking to hire workers ‘on the cheap’ using casual or self-employed terms to avoid paying NMW, sick pay, holiday pay etc.

What’s the difference between being a worker and being self-employed?

Whether a person is an employee, worker or self-employed or is a matter of law and takes into consideration all factors of the particular business relationship.

Someone would generally be classed as a ‘worker’ if:

  • there is some form of contract (which doesn’t have to be written) to work personally for some form of reward
  • the reward is money or a promise of future benefit
  • there is a limited right to subcontract
  • they have to turn up for work even if he/she doesn’t want to
  • the employer has to provide work for the duration of the contract
  • they aren’t working through their own limited company.

A self-employed person is:

  • not paid through PAYE
  • runs their own business and is responsible for it success or failure

and they typically:

  • get work by putting in bids or quotes
  • submit invoices for work done
  • not under direct supervision
  • pay their own NI and tax
  • don’t get paid when on holiday or off sick.

Most people are pretty clear about whether they are workers, employees or self-employed.  If there’s a question over workers’ rights then an employment tribunal can make the decision.

The GOV.UK website provides useful information about the differences between workers, employees and self-employed.  Of course, there are personal taxation implications as well and the HMRC may assess someone as self-employed even if they have workers’ rights.  Check out the GOV.UK website if this is a concern for you or your business.

The Uber case

In the Uber case, Uber argued that its drivers were self-employed and that they merely provided a platform to connect drivers with paying customers.  They said that drivers could work where, when and they wanted to.  The Tribunal rejected this argument and went on to say that “the notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous … Drivers do not and cannot negotiate with passengers … They are offered and accept trips strictly on Uber’s terms.”  Drivers are also interviewed and recruited by Uber, subject to disciplinary procedures and many aspects of the work itself are fixed by Uber.

Uber has said that they will appeal the ruling so the case could rumble on for some time yet.  But it does seem likely that similar cases will arise where there is a question that an employer is exploiting a ‘self employed’ workforce.  The question of fairness in the workplace was prominent in the headlines this year with Sports Direct being taken to task over it’s use of agency workers and zero-hours contracts.  It may be the turn of Uber, Deliveroo and the like to come under the spotlight in 2017.