Why employers should worry about Uber’s tribunal

Uber’s drivers have taken legal action against the business targeting better employment conditions. Richard Devall and Ed Marchant explain why this case could have far reaching effects

Uber is currently embroiled in tribunal proceedings considering the employment status of 19 of its drivers in the UK. Uber is arguing that its drivers, or partners, as it calls them, are self-employed, while GMB (the union representing professional drivers, and bringing the claim) is arguing that they are in fact workers and should be entitled to additional employment rights as a result. Although the case is only about 19 drivers, any judgment will impact all other drivers.

A finding that the drivers are workers would undoubtedly have a huge impact. It is not just Uber drivers who will be following the progress of the case with interest; couriers, delivery drivers and other individuals working through apps such as Deliveroo are likely to be directly affected. Besides those groups, any decisions on the distinction between workers and the self-employed may result in individuals being re-categorised in a number of completely unrelated industries.

Why is Uber so concerned?

Well, working individuals in the UK are categorised into three main, distinct groups all of which are entitled to different rights, and subject to different obligations:

Self-Employed

Those who are genuinely self-employed (i.e. in business for themselves) do not enjoy any significant statutory employment rights.

Workers

Workers are a category who are entitled to certain rights, but do not have the status of ‘employees’. Workers have the right to be paid the National Minimum Wage, holiday pay and pension contributions (subject to meeting eligibility criteria), as well as sometimes having TUPE rights and the right to claim sick pay. Additionally, they have the right not to be discriminated against.

Employees

Employees have additional rights on top of those of workers, including the right to maternity/paternity pay and shared parental leave, statutory notice on dismissal, redundancy payments and a right not to be dismissed unfairly (after 2 years’ continuous service).

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The potential fallout

The impact and cost to Uber increases with each batch of additional rights their ‘partners’ accrue depending on if they are deemed workers or employees. GMB are focusing their energy into obtaining a judgment that ‘partners’ are workers, as opposed to employees.

Most damagingly, many Uber drivers claim to earn well below the National Living Wage (a band of the National Minimum Wage set for those aged 25 or over) and some may earn as much as £3 per hour less than that figure (currently £7.20 per hour). If that is the case, the worker will be entitled to re-claim the backdated additional payments they should have received in the two years prior to the ruling. Uber is estimated to have 30,000 Uber drivers in London alone, so backdated payments of up to an additional £3 for every hour worked over two years to 30,000 drivers will have a substantial cost.

It isn’t just National Minimum Wage either, holiday pay amounts to an additional expenditure of around 12.5% of pay, whilst pension contributions can add up to 3%. On top of this, it is likely Uber will receive significant bad press as a result of any Tribunal decision stating they mistreat their ‘partners’; it is difficult to place a value on any such adverse publicity, but it seems reasonable to assume it would make customers less inclined to use Uber services in future.

What does it mean for the customer?

If Uber drivers are deemed to be workers, it is likely to impact on other similar industries, most notably couriering. It is fair to assume that the extra costs of engaging people as workers will be passed onto customers, so expect to pay more for those packages and taxis. If, further down the line, a decision is indeed made that Uber drivers are workers, there will certainly be one group feeling vindicated; Black Taxi drivers.

Written by IBB Solicitors employment partner Richard Devall and trainee solicitor Ed Marchant.

This article originally appeared in HRD Connect’s sister title Financial Director.

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