The Supreme Court’s decision in the Uber case has brought to the spotlight the issue of employment status for thousands of workers.
It has been an unfortunate fact of life for many workers that their employers have been able to use legal precedents and authorities dating back decades to deny them their most basic employment rights such as the right to a minimum wage and to paid holidays. Employers have relied upon the law of contract to establish that if an individual signs a contract that states they are actually self-employed and are not under any obligation to accept offers of work, then they will not have any basic employment rights. Taxi drivers, plumbers, delivery drivers, car valeters, tour guides and hairdressers are but a few examples of groups of employees who have commonly been asked to sign contracts where they have signed away their basic employment rights. The Supreme Court’s decision in Uber has come as welcome relief to many of these groups of workers. Central to the Supreme Court’s decision was a finding that there is a complete inequality of bargaining power between an employer and a worker when it comes to entering into a contract in the first place. Thousands of employees involved in the gig economy are simply not in a position to negotiate the terms upon which they contract with the likes of Uber et al. The Supreme Court also gave short shrift to what has been a common argument used by similar employers, namely that Uber’s drivers had no obligation to accept a minimum amount of work. As with the car valeters in the previously decided case of Autoclenze v Belcher, the contract bore no resemblance to the reality of the situation. The taxi drivers were not free to decline work as they wished but rather were, by the operation of an app, penalised for failing to accept a minimum amount of work.
However, lying behind the Supreme Court’s decision in Uber is a secondary question that deserves analysis. That is, if those who work for Uber can claim the national minimum wage and statutory minimum holidays, why can they not have protection against unfair dismissal? After all, the right not to be unfairly dismissed is one of the most fundamental employment rights available to employees. The answer to this question lies in the murky distinction between “worker” status on the one hand and “employee” status on the other. Only employees have the right not to be unfairly dismissed. Only workers have the right to the national minimum wage and statutory minimum holidays. All employees will be workers but not all workers will be employees.
So, what is the difference between and employee and a worker?
As with so many areas of employment law, the difference is hard to ascertain. In this respect it is important to note that the Supreme Court in Uber was not tasked with the question of whether or not the Uber workers were in fact employees.
The problem with differentiating between workers and employees is that previously decided cases on whether an individual is a “worker” have adopted many of the same tests that Employment Tribunals have used when determining whether a person is an “employee”.
For example, the issues of whether or not there is mutuality of obligation (i.e., an obligation on a worker to accept work if offered and on an employer to offer work) and the obligation of personal service are both factors which are relevant to whether a person is a worker or an employee. For a long time it was accepted that the “mutuality of obligation” test was specific to employees and not workers. However, in recent years, the Courts and Tribunals have found that the issue of mutuality of obligation is actually central to determining whether a person is a worker as well as an employee. This has recently been confirmed by the Court of Appeal in the case of Windle v. Secretary of State for Justice. As many commentators have argued, it now appears that the same tests are being used to determine the existence of both an employment contract and a worker contract, but that if the tests are satisfied to a high standard, the individual will be classified as an employee. If the tests are passed to a lower standard, the individual will be classified as a worker. Clearly, therefore, there will always be an element of uncertainty and doubt when determining whether an individual engaged in the gig economy is a worker or an employee.
There are a number of other key points that a Court or Tribunal should consider when determining whether a person is an employee rather than a worker, including:
- Whether a person has an unqualified right to appoint somebody else to perform their duties if they are unable to do so;
- Whether a person is free to engage with other businesses when providing their services;
- Whether the individual is engaged for a finite period to carry out a specific task or project;
- Whether an individual is sufficiently integrated in to their “employer’s” business;
- Whether an individual is required to provide their own equipment and materials (a factor no doubt relevant in the Uber case);
- Whether there is an element of financial risk such that the individual risks their own initial outlay in the business and will be personally responsible for any losses arising from their work;
- Whether an individual is responsible for payment of their own income tax and for registering for VAT.
However, as the Courts and Tribunals have noted on a number of occasions, no one of the above factors is determinative of whether a person is in fact an employee.
It was clearly arguable the taxi drivers in Uber could be differentiated from other classes of gig economy workers as they had to provide their own car. The Supreme Court noted that they had more control than would most employees over the physical equipment used to perform their work. Nevertheless, the Court also noted that Uber vetted the types of car that may be used. Furthermore, the technology which was integral to the service was wholly owned and controlled by Uber and was used as a means of exercising control over drivers.
No doubt there will be numerous other decisions in this area of law brought by different sectors of gig economy workers and where further clarification will be provided as to their employment status.
For more information, get in touch with the employment team at Linder Myers today: email@example.com.