Employment Tribunal in London holds Uber drivers have “worker” status.

What's the issue?

One of the vaunted benefits of the gig, sharing or collaborative economy business models (and there are many different ones), is their supposed flexibility for those working for them. You can work for a delivery company part time while studying or while your kids are at school; you can choose the hours you work; and you are independent. If you are genuinely self-employed, you do not have the rights which are associated with being an employee, like sick pay, holiday pay and a minimum wage. Some people who work in the gig economy believe they have been wrongly classified as self-employed by businesses wanting to avoid the regulation that comes with having employees, or the intermediate category of “workers”. A group of Uber drivers brought a case against Uber companies before the London Employment Tribunal to determine their status.

What’s the development?

The Tribunal ruled that Uber drivers have “worker status” and are not self-employed. The Tribunal decision is not legally binding and is almost certain to be appealed. An appeal is likely not only due to the potential costs for Uber, but also because the final decision could affect over 100,000 people across a range of industries and will help shape policy in relation to the gig economy. The impact of this decision can already be seen from the announcement that a group of Deliveroo workers are seeking to unionise in order to bargain collectively as workers.

What does this mean for you?

Worker status would give Uber drivers the right to 5.6 weeks of paid vacation per year and to the national minimum wage (currently £7.20 per hour for the over 25s). It could also give rise to a right to pension contributions. This has very serious ramifications for businesses which are suddenly classed as having a workforce of “workers” rather than contractors and costs will either have to be swallowed by the business or passed on to consumers.

Beyond the most obvious cost implications lie a raft of other considerations for platforms including employer liability (which is already a complex area in relation to “workers”), having to revise business models as well as potential competition issues.

The collective umbrella of ‘collaborative’ ‘sharing’ and ‘gig’ economy businesses can be very misleading as the businesses which come under its use a wide range of models. Even if the Uber decision is upheld on appeal, it is by no means certain that it will apply to all platforms in the sharing economy space. A crucial element in terms of employment status is the control the platform has over its workers, for example, in setting pricing, in taking payments, and in being able to take sanctions in relation to customer complaints. It is unlikely that the resolution of the Uber case will prove definitive for these new, disruptive business models, but it will undoubtedly be significant for many.

This case is just one of many actions directed at gig economy businesses around the world. Uber’s is by no means the only business model under scrutiny in this space. There are also major issues in the lettings sector, for example. In the USA, for instance, many cities have laws preventing owners from renting out their properties for less than 30 days without a licence and many leases contain provisions which prevent subletting. Various jurisdictions have laws which require safety standards and inspections before properties can be rented out or which have stringent zoning laws which do not allow for short term rentals. Tax treatment is another major area in which policy is yet to be fully developed.

This Employment Tribunal ruling is not the first case to scrutinise Uber’s business model (and by extension that of other gig economy businesses) and it will most certainly not be the last.