18th September 2018

How Uber Is Transforming Employment Law in the UK

Putting it lightly, it has not been Uber’s year.

With every breaking news story comes another crippling blow to the $70bn tech giant. The TFL announcement that they would not be renewing their license to operate in London, having its co-founder forced out as CEO in June and failing to disclose the hack that affected over 57 million Uber passengers and drivers, are just a few of the ordeals the company happens to be struggling with.

Although Uber have, however, appealed the decision and was granted a 15-month probationary licence, the Judge said Uber would have to meet a number of conditions, including regular audits. These conditions will be thoroughly monitored and enforced by TFL.

Uber’s Supreme Court Rejection

A story that has garnered less attention is Uber’s pursuit to appeal against the ruling that drivers should be classed as workers, not as self-employed. After getting rejected from the Supreme Court they must now take their case to the Court of Appeal, in what could be a landmark legal battle, set to shape the gig economy landscape for the 21st century.

However, their appeal is now less likely to succeed after the European Court of Justice (ECJ) ruled that Uber is a transport company for the purpose of employing drivers, as opposed to the ‘information society service’ it had previously claimed. This ruling came about when Uber was told to obey local taxi rules in Barcelona, the same as any other transport company.

It should also be noted that Uber’s case is closely linked with the case Smith -v- Pimlico Plumbers where Gary Smith won in the Supreme Court against Pimlico Plumbers. The court upheld the decision of the Court of Appeal that Gary Smith was a ‘worker’ and was therefore entitled to certain benefits and employee rights.

Whilst this was a landmark case for the gig economy the judgment rested heavily on the facts of the case as opposed to setting out any new guidelines for employers or even changing the law.

Existing rules and regulations that protect employers, employees and consumers, have now become obsolete in the face of the new multinational businesses arriving on our shores. Rarely has the gig economy been considered when regulating employment rights, which is why Uber’s dispute with the Employment Appeal Tribunal (EAT) and the Smith -v- Pimlico Plumbers case is paramount to the future of these sectors.

The UK is Uber’s most crucial market in Europe, working with around 50,000 independent drivers on the premise that it is simply connecting them with customers, not managing them. Uber UK’s acting general manager, Tom Elvidge recently said: “Almost all taxi and private hire drivers have been self-employed for decades, long before our app existed. The main reason why drivers use Uber is because they value the freedom to choose if, when and where they drive and so we intend to appeal.”

The Repercussions if Uber Loses the Court Case

If forced to change the legal status of its employees to “workers”, they would be obligated to give them the rights that come with it. Uber argues this would change their entire business model, revealing it would have to schedule drivers for shifts rather than allowing them the freedom they currently have.

The ride-hailing company is also at risk of paying significantly higher taxes, due to employers’ national insurance contributions along with value-added tax. On top of this, they would be expected to give drivers holiday pay, sick leave and a minimum wage.

The Disadvantages of Uber’s Current Employment Policy

Yaseen Aslam, one of the two drivers who brought the case forward originally to the Employment Appeal Tribunal stated at the beginning of summer: “As the holiday season approaches, drivers should be looking forward to the security of a guaranteed minimum wage and holiday pay. Instead, they now face many more months of poverty, stress and uncertainty, while Uber profits at their expense.”

The two former Uber drivers are being backed by the Independent Workers Union of Great Britain whose confidence has grown following the Supreme Court’s decision to block Uber’s attempt to leapfrog the Court of Appeal. The IWGB has commented that if the ruling was to go ahead, drivers would still be technically self-employed, but would enjoy greater protections.

Other Companies Involved in Employment Law Disputes

Uber and Pimlico Plumbers are not alone in this legislative warzone. Deliveroo, the food delivery app, lost a legal case brought upon them by a group of 50 couriers who said their current employment status was unjust. The couriers who brought the claim shared a six-figure payout. Gig economy firms across other sectors have also been involved in the conflict, with Addison Lee and CitySprint all seeing their own employment disputes.

What the Government Is Going to Do About Employment Regulations

As to be expected, these cases have sparked a government-led review into modern employment practices, focusing its sights on the often overlooked “contractor” model. A lot is still unknown at this point in time, but what everyone can agree on, is that the ramifications are coming, and for some businesses, when that penny drops, it won’t be pretty.

The Effects That Uber’s Case Will Have on UK Businesses

Things are changing; for better or worse, it’s too early to say. The gig economy and self-employment regulations will soon be transformed to better represent the needs and wants of the present-day. App or platform-based jobs have seen scrutiny first, but they definitely won’t be the last.

Andrew Linton
Managing Partner