On Friday an employment tribunal ruled that drivers engaged by Uber are not self-employed contractors, but fall squarely within the definition of "worker". This means they will be entitled to certain employment rights such as holiday pay, rest breaks and the national minimum wage.

The Facts

On Friday an employment tribunal ruled that drivers engaged by Uber are not self-employed contractors, but fall squarely within the definition of "worker". This means they will be entitled to certain employment rights such as holiday pay, rest breaks and the national minimum wage. However, as they are not employees they will still not be entitled to the full suite of employment rights such as unfair dismissal, right to a redundancy payment etc.

For an individual to qualify as a "worker" there must be a contract between the individual and the "employer" under which the individual undertakes to do work personally, and the "employer" must not be a client or customer of a business operated by the individual. The tribunal considered the documentation as well as examining in detail how the relationship worked in practice before finding that those conditions were satisfied.

What does this mean for employers?

Uber has confirmed it will be seeking to appeal the decision and therefore this is unlikely to be the end of the line for this case. In addition there are several other cases going through the tribunal system which involve the so-called "gig economy", a number of which involve app based on-demand freelance workforces.

The implications of this case are clearly wider than the Uber drivers. It also follows the trend to closely scrutinise purported "self-employed" status evidenced by, for example, the recent government consultation on off-payroll working in the public sector (which also affects private sector companies contracting to the public sector) and press reports of HMRC's compliance inquiries into possible false self-employment following allegations by low paid workers.

Interestingly in the Uber case, the tribunal noted that nothing in its reasoning should be taken as doubting that Uber could have devised a business model that did not involve it employing drivers; it was simply that Uber's chosen model failed to achieve that aim. As such, other businesses who wish to use a freelance workforce should carefully consider the terms and arrangements they put in place, whilst remembering that what happens in practice will be as important as the terms and conditions written into any agreement with individuals.