Decision Has Huge Ramifications For Gig Economy

Uber has lost its battle in the high profile legal challenge over workers' rights and according to lawyers at Irwin Mitchell, the case is now almost certain to be appealed further.

The hugely significant gig economy case focuses on two Uber drivers who through the IWGB union, argue that they should be considered as workers rather than being regarded as self-employed. 

Uber argues its drivers are independent contractors and that most of its drivers value the flexibility that working for the company provides. The drivers in this case, however, claim that they are unfairly missing out on the rights to the national minimum wage, holiday and sick pay among other benefits.

The drivers were successful at Tribunal which found that Uber’s contracts drafted by “armies of lawyers” did not reflect the reality of the relationship. Uber appealed and the Employment Appeal Tribunal heard the case at the end of September this year.  The judge has delivered her ruling today and has upheld the original decision.

The EAT has concluded that the original tribunal was correct to find that the contractual relationship between Uber and its drivers did not reflect the reality of that relationship.  Uber are not a “normal” taxi driving service.  Its drivers were incorporated into the Uber business of providing transportation services, subject to arrangements and controls that pointed away from their working in business on their own account.  Its drivers were not therefore in a direct contractual relationship with the passenger each time they accepted a trip and the complicated arguments put forward by Uber about agency were rejected.

Glenn Hayes, an employment partner at law firm Irwin Mitchell, said:

Expert Opinion

“Today’s decision will not just affect Uber but will have a huge impact on other gig economy models. Workers from Deliveroo have brought similar claims and both Citysprint and Addison Lee are appealing against decisions which also found that their drivers were workers rather than self employed. These have not yet been determined and this decision is likely to affect these and other claims where the self-employed models of working are challenged.

“However, I suspect we haven’t seen the end of this particular case. There is so much at stake for both sides and I think it’s inevitable that this will now move to the Supreme Court and might be heard as early as February 2018.”

“Uber have been keen to treat this case as being discrete and have tried to suggest that it has no bearing on the rest of its workforce of around 50,000 drivers in the UK. That is nonsense. This case examines Uber’s business model which applies to all of its drivers and I would expect to see many more claims being issued.

“It isn’t just about the employment rights of Uber’s workforce and the potential flood of similar claims that it could face - there may be significant tax ramifications, if, HMRC decide to challenge the status of the drivers for tax purposes. This will mean that Uber has to account for National Insurance payments. However, there are other, potentially even higher tax risks to the business. If the appeal courts decide that Uber is providing transportation, HMRC may also argue that it should be charging VAT to customers and paying it to HMRC – and this liability can be backdated by up to four years.”
Glenn Hayes - Partner & National Head of Employment Law