In a recent ruling, Uber drivers were found to be workers, not self-employed by the Employment Tribunal. This recent decision reminds us just how subtle the distinction is between the different types of working arrangements…
Types of working arrangements
It’s generally accepted that there are three distinct types of working relationships in employment law:
- Self-employed individuals
Employees are protected by a whole host of employment rights, such as the right not to be dismissed unfairly, to receive a statutory redundancy payment, and holiday entitlement.
Workers are a ‘halfway house’ as they’re able to benefit from some, but not all, of the protection offered to employees. For example, workers benefit from National Minimum Wage and holiday entitlement, but they’re not eligible to complain about the fairness of a dismissal.
Self-employed individuals, meanwhile, don’t have any of the above rights.
Categorising working relationships
It’s often hard to identify the category a person falls into. Over time, the Employment Tribunal has developed a broad test to identify whether someone is an employee, a worker or self-employed. These include:
- Mutuality of obligation - an employee doesn’t have the freedom to turn down work and is expected to perform the work they’re given
- Personal Service - an employee couldn’t send a substitute to work on their behalf
- Control - the employee will be integrated within the employer’s business. They don’t have great freedom in how they perform their work, and will be subjected to the employer’s rules and disciplinary sanctions.
This test is not definitive, though, as there are other indicators that may be relevant. One example is whether the individual used their own tools to perform their work - employees wouldn’t be expected to use their own resources to perform the employer’s work.
If a person doesn’t fulfil all the employee criteria - for example if there’s no mutuality of obligation, but the other limbs of the test have been met - the individual could be deemed to be a worker instead.
This is distinct from a person who provides services as their legitimate business, offering services to the world at large, and not just the employer in question. A self-employed person would have greater autonomy in how they perform their services, would often use their own tools to perform the role, and would bear their own risk associated with their services.
The Uber Case
Uber argued that it wasn’t a transportation business, nor did it employ its drivers. They maintained that their role was to offer drivers the use of its app as a platform to provide transportation services to customers. Uber denied there being any employee/worker relationship and argued they were a client of their drivers, who had a contract with the customers directly.
The Tribunal didn’t accept this explanation, and found the drivers were workers and not self-employed. In the judgement, which extends to a total of 40 pages, the Tribunal revisited the test for employment status, and held that the drivers couldn’t be self-employed due to the fact that:
- The written contracts stating the drivers to be self-employed didn’t match up with the actual relationship between the parties
- Drivers would be penalised for not accepting trips by being suspended from the Uber app for a period
- Uber fixed the fare between the driver and the customer and the driver had no autonomy to increase this
- Drivers would be subjected to a disciplinary procedures for poor ratings by their customers
- Uber handled complaints made by the customers, without input from the driver
- Uber interviewed and recruited drivers for the role
- In some circumstances, Uber would bear the risk of non-payment by its customers and not the driver
- Uber reserved the right to amend its terms and conditions with the driver unilaterally.
Overall, the level of control asserted by Uber was not compatible with that of a self-employed individual and their client. The Tribunal found that the drivers were workers.
This case shows how easy it is to unintentionally create employment rights when engaging ‘self-employed’ individuals. Those that engage self-employed individuals should carefully consider the true nature of the relationship. The written agreement between the parties is only the starting point, and if it doesn’t reflect what happens in reality, the stipulation of a ‘non-employment’ relationship will not be upheld.
Unsure of how the Uber ruling may affect you? We offer clear and practical advice on all aspects of employment law, to both employers and employees. Please feel free to email me or call our Employment Team on 01908 660966.
Image courtesy of 123rf.com.