Legal Experts Say Outcome May Increase Costs For Similar Businesses

Legal experts say the outcome of an employment tribunal between cab service Uber and two of its drivers could have serious consequences for other businesses that follow similar business models.

The two drivers are claiming Uber, a service which allows users to book and pay for cabs via a smartphone app, is acting unlawfully by not offering holiday and sick pay.

The test cases examine whether the drivers should be classified as workers or, as Uber claims, as self-employed.

The two terms give rise to different employment rights which dictate that workers are given similar rights to employees and are entitled to holiday pay, protected from unlawful deductions from their wages and may be entitled to sickness pay.

Self-employed drivers are not afforded the same benefits and Uber maintains its stance that its drivers fall within that category.

The test cases, involving drivers James Farrar and Yaseen Aslam, are the first time that Uber has faced legal action in the UK, and will determine a further 17 claims against the firm by the GMB union.

The union claims that at present Uber fails to ensure its drivers are paid the minimum wage or that they receive paid holiday.

Expert Opinion

“The two test cases, which began on 20 July, centre on the drivers' claim that the terms and conditions of their work with Uber mean that they are not technically self-employed and should be entitled to a range of benefits including sickness and holiday pay. <br/> <br/>“In his witness statement, one Claimant said that his net earnings for August 2015 after expenses were just £5.03 per hour, which is significantly less than minimum wage. However, Uber claimed that, based on the total number of hours logged into the app, he had been paid £13.77 on an average hourly basis. <br/> <br/>“On the first day of the tribunal, Counsel acting for Uber sought to show that the Claimants were self-employed as they can freely choose when they work. Uber argue that drivers have choice over their work and that there is nothing requiring them to work exclusively for Uber. <br/> <br/>“However, the Claimants disagree, stating that they do not believe they have free choice and that they are controlled very closely by the company. <br/> <br/>“This case follows on from the Pimlico Plumbers case and attempts to address key concerns around classification of workers and self-employed. The outcome of this case could have serious implications for Uber. If the drivers are deemed employees, Uber and many other UK businesses with similar business models may be seriously affected. <br/> <br/>“Over recent years, there have been a number of cases attempting to deal with the blurred lines between self-employed and workers. Increasing numbers of individuals miss out on employment rights due to the companies they work for misclassifying them as self-employed, which helps them avoid the costs of minimum wage, holiday pay, sick pay and possible National Insurance Contributions. <br/> <br/>"A ruling in favour of the drivers could therefore open the floodgates to an array of individuals coming forward and claiming they have been wrongly labelled, this could lead to some substantial payments to HMRC and compensation to individuals whom companies wrongly failed to treat as workers. Businesses should therefore start reviewing the terms and conditions of their working arrangements to try and prevent any claims in the future.” Melanie Stancliffe - Partner