The Uber debate in the ‘Gig Economy’
29 November 2016
The media attention over the recent Uber tribunal case, has brought the so-called ‘Gig economy’ into the spotlight. Lois McMurtrie, HR Consultant at French Duncan HR Services, looks at the facts and implications on this recent case law.
What is the Gig Economy?
The phrase ‘gig economy’ was coined during the recession where generally the unemployed worked several part-time jobs to make a living. Over the past year or so, the terms has updated to encompass the growing trend of technology allowing anyone to work on an on-demand basis, for example Task Rabbit where someone will come out and complete the tasks you don’t want to do in your home for a fee, such as cleaning or ironing. Often people ’gig’ on the side of their full time role but some have lots of small gigging jobs to make up their pay. ‘Gig’ workers are paid a rate or commission for the work or service they carry out.
Uber Tribunal Case Outcome
Uber is arguably the most recognised brand in the so-called gig economy market. Uber describe themselves a transportation network, with around 40,000 drivers in the UK and around two million passengers signed up to the service in London alone. Passengers request a driver through the Uber app and the closest driver is sent to them, taking them to their destination. The passenger is then charged directly by Uber, who pass on the commission to the driver, less a service charge of 20-25%. An important point is that Uber take the risk of any unpaid fares rather than the driver who would usually still get paid for the journey. Uber also have fairly strict rules on how the driver treats the customer such as the route they take.
The employment tribunal case saw two drivers raise a claim against Uber for incorrectly labelling them as self-employed contractors as opposed to workers, who would be entitled to be paid the minimum wage, receive paid holidays and raise a whistleblowing allegation. In the preliminary case, the Tribunal has agreed that these two drivers are workers, allowing them to pursue their claims.
Some Uber drivers are gladdened by the outcome of the case, knowing that they will receive paid annual leave and will always be paid at least the minimum wage per hour. However, others argue that the minimum wage is not enough to pay their expenses and feel that they are their own boss and do not wish to lose that control.
Implications of the Uber Case
This decision will force Uber to look closely at their working practices in the UK and potentially make some fundamental changes to the way in which they operate.
In addition, other industries using the ‘gig economy’ should take note that the employment status of those providing services for their platform could be brought into question.
Out with the ‘gig economy’, it is unlikely that this judgement will lead the way for all businesses as the case is particularly fact sensitive. However, it should encourage any business who engages with individuals on a casual or ‘self-employed’ arrangement to consider their employment status and ensure the agreements they have in place reflect what happens in practice.
We have outlined below clarity on the various types of employment status:
- A self-employed contractor has complete control over the work or service they provide to their client or company. They can work for as many clients as they want and can send a substitute to provide the service.
- An employee works under a contract of employment, carrying out work on behalf of the employer with the employer able to exert a certain amount of control.
- A worker falls in between a self-employed contractor and employee in that they personally perform the service for the other party who is not a client or customer.
Establishing employment status can be tricky due to the fact that both parties can agree on the employment status, but the law may take a different view based on several tests such as control and mutuality of obligation.
If you require further information on employment status or any other employment law issue, we would be delighted to assist you. Please contact Louise McCosh who leads the French Duncan HR Services team on 0141 221 2984 or email firstname.lastname@example.org.
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