When are your employees not your employees, and vice versa?

02-11-2016

We look at the landmark Uber ruling and its implications for your business

Contract work is the lifeblood of many businesses.

From creative agencies to manufacturing, companies of all shapes and sizes value the ability it gives them to upscale without the overheads associated with growing an in-house team.

This trend is becoming ever more prevalent, with the emergence of the so-called ‘gig economy’, which allows people to earn extra cash flexibly by working ‘freelance’ for everything from delivery companies to online design and copywriting ‘warehouses’ yet a landmark legal ruling has moved the goalposts significantly.

In the last few days, taxi drivers working for high tech transportation firm Uber won their claim asserting that they are actually employees, entitled to basic employment rights such as holiday pay and remuneration in line with the National Minimum Wage, and not just casual workers.

The 40,000-plus people affected by this London Central Tribunal decision have set a precedent which is potentially good and bad for industry and employees all over the UK.

While superficially positive for many, it raises questions over the sustainability of this element of the flexible economy, and the future of employees who have their own reasons for wanting to work when, where and how they wish.

Although the decision was made just days ago, the hearing took place in July. Uber argued that its drivers were not entitled to employee rights, as it is a technology company providing a platform from which the drivers choose to make money on a self-employed basis. However, the drivers claimed their contribution was central to the firm’s success, and meeting their company responsibilities saw them working long hours under pressure.

Global Uber allows people to order taxis via a mobile app. Users submit their trip request and the app automatically contacts the nearest driver and sends them to complete the trip. Drivers use their own cars and are paid automatically via the Uber app.

What could this mean for your business?

Although Uber is expected to appeal the decision, the legal ripple effects of the case outcome are set.

Clearly an employee’s status has financial and tax implications, but it is particularly important for a business to establish what rights the employee has and the company’s obligations to them.

Employment tribunals use a number of factors to determine a person’s employment status, including the level of control a company has over them and the way they work, who arranges payment of tax and national insurance and whether there is an obligation for the person to take any work that is offered. Each situation will be different but it is important to clearly define this relationship at the outset to avoid the risk of any legal implications because, as Uber has discovered, these can be extremely costly to a company.

This is where the important of a contract of employment becomes clear because, while many employers aren’t keen on setting things out in writing, it becomes much easier to defend a claim relating to employment status if the intentions of the parties are set out in black and white from the very beginning.

Ultimately, the contract of employment should truly reflect the real working arrangement. Many employers will issue zero hour or casual contracts to employees in order to avoid carrying any obligations to workers that ordinary employees have. However, if the reality of the situation is that the worker is given the same hours each week, is bound to accept those hours and is treated the same as other employees, an employment tribunal may well find favour in labelling them as an employee, affording them extra rights.

Five things to do without delay

There are some steps you can take straightaway, to ensure your business is ready for the fallout from the Uber experience.

  • Take a look at your workforce and check the statuses of your staff members.
  • Realistically assess the status of any workers who are engaged by the company but are not deemed to be employees.
  • Seek advice on any worker who you do not deem to be an employee.
  • Recognise what your legal obligations are to each worker.
  • Ensure that your working arrangements are reflected in written agreements for all staff

If you are concerned about the Uber outcome and how this may affect your business, why not call me on 01482 974470 or drop me an email at sara.brown@jameslegal.co.uk to discuss where you stand.


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