According to the Office of National Statistics, around 15% of the UK’s workforce is ‘self-employed’. We have, we are told, a ‘gig economy’ – no longer fuelled by employees but freelancers, self-employed entrepreneurs picking up ‘gigs’ to perform work when and where it suits. But with Uber challenging the Employment Tribunal decision that its drivers are ‘workers’, and yet at the same time fighting for its Transport for London licence, we thought it was time to look at employment status, the distinctions between workers, employees and the self-employed – and the question of ‘control’.
The importance of employment status
Employment status – whether you’re an employee, a worker or self-employed – impacts on the rights and benefits the employing organisation is required to provide. It determines how much protection an individual working for an organisation can rely on. It also determines how much control the organisation can exercise over the individual. An employee has the benefit of the full range of employment rights, but is subject to the most control by his or her employer. The ‘worker’ has fewer employment rights but more autonomy. The employer doesn’t have to offer work, and the worker does not have to accept work offered, although once work is undertaken, the employer must pay, and the worker must carry out the work or deliver services on a personal basis, with very little opportunity to sub-contract. Workers are still entitled to some rights and protections – to receive the National Minimum (or Living) Wage, for example, but don’t benefit from the full range of employment protection. The truly self-employed person is not subject to any control by the organisation they work for. He or she is free to accept work, and will work under a contract for services to complete the work. There will be agreement around what is to be provided, and terms relating to delivery and payment, but no element of control. Crucially, the truly self-employed have no employment protection.
Looking at the reality of control
Gig economy businesses such as Uber have developed using a model that relies on ‘self-employed’ independent contractors to fulfil thousands of contracts for services taxi journeys, deliveries, plumbing assignments every day. Professional services are also delivered in this way – freelance assistants, web designers, consultants. The theory is that the self-employed contractors are free to accept or refuse work at will, to work when they want, using their own tools. There should be no control exercised by the business over how the service is delivered. It’s long been accepted that ‘control’ is a matter of fact in every case. The way organisations and individuals describe their relationship in official documentation is not enough. The reality of the relationship is what must be examined – and the analysis of the Employment Tribunal in the Uber case is a great illustration of this. It pinpoints a number of areas where the reality of the facts as the tribunal found pointed to control by Uber over the drivers.
- Protesting too much
From the outset of its analysis, the tribunal makes it clear that the lengths Uber goes to, to seek agreement as a matter of contract about the nature of Uber and the relationship with the drivers, raises suspicion
- Slipping from the ‘party line’
The tribunal makes several remarks about the careful choice of language by the primary witness for Uber. However, it then points out the frequent occasions when Uber uses language such as ‘our Drivers’. Other language (which we’ll come back to) used in official communications with the licencing authority transport for London, also suggests a greater degree of synergy between Uber and the drivers than Uber would have liked the Tribunal to believe. [para 67]
- Offering ‘products’
Despite Uber’s assertions that it is not a transportation service but a facilitator, it markets different ‘products’, for its own benefit.
- Denying the reality of the situation
Uber’s “faintly ridiculous” notion that “ Uber in London is a mosaic of 30,000 small businesses linked by a common platform ” [para 90] looks set to become one of the most quoted of 2017. Essentially, Uber can only help the individual drivers grow their businesses by driving more hours for Uber. Equally, the drivers have no control over fares – they can only be offered and accept fares on Uber’s terms.
- Fictionalising the relationship between driver and passenger
The tribunal held that the assertions Uber make that the contract is between driver and passenger did not reflect the reality – not only ‘manifestly unconscionable’ but also “incompatible with the shared perceptions of Uber drivers and Uber decision makers” [para 91].
- Ignoring the ‘little things’
In para 92 of its decision, the Tribunal list a number of ‘little things’ that all point to an element of control by Uber over the drivers, and ultimately lead the tribunal to its conclusion that drivers are ‘workers’. These include Uber’s interview and recruitment process, Uber’s control over route and fare, and Uber’s acceptance of the risk of loss and complaint handling.
The contradiction of control
Uber has recently appealed the tribunal decisionand we await the outcome. However, for Uber, the question of the control it exercises over its drivers has taken an unexpected turn following the loss of its licence from Transport for London to operate in the city. TfL indicated that Uber’s licence would not be renewed on 30 September 2017 over concerns including Uber’s failure to carry out sufficient background checks on drivers, and approach to reporting criminal activity. This comes in the wake of reports of assaults by Uber drivers on passengers. The employment tribunal referred to comments made by Uber to TfL and relied on these as part of the evidence supporting its findings that the drivers were controlled by Uber and were ‘workers’. Uber will want to demonstrate to TfL that it is a ‘fit and proper’ private hire operator, to be re-licenced. To do so may involve demonstrating even more ‘control’ over drivers, which would be potentially at odds with its arguments in the Employment Appeal Tribunal. The debate about employment status will continue through the Uber case, and also the forthcoming appeal by Pimlico Plumbers, due to be heard in the Supreme Court. We’ll be watching the outcomes of these cases with interest. In the meantime, if you have any questions about your employment model, and would like some practical advice about the implications, get in touch. Equally, we can help if you are working on a ‘self-employed’ basis but think you may actually be a worker or an employee.