Uber case an important reminder of 'employee' status criteria

The recent highly publicised Employment Tribunal case involving Uber drivers is a reminder that businesses and employers need to be aware that the legal definition of employment (and indeed being self employed) is not always straightforward.
A small number of Uber taxi drivers have successfully established that they must be treated by Uber as “workers” under employment legislation and not self employed contractors as maintained by Uber. This is despite the fact that their written contracts specifically described them as “self employed”. This decision provides the Uber drivers involved in the case additional rights, impacting Uber’s bottom line.

The decision is by no means the end of this Employment Law saga, with Uber expected to challenge it. Nevertheless, the Employment Tribunal decision, if upheld, has significant ramifications for businesses operating similar models to Uber, such as delivery and many courier businesses. Beyond these obviously similar business models however, the case acts as a reminder to all employers of the different categories within which all working individuals will fall and the implications of each for the employer.

These categories are:

Employees

There is no single legal definition of employee status. A Tribunal will look at the relationship between employer and employee and how the work is carried out day to day. This is known as a “control test”. An essential requirement of employment status is that there exists “mutuality of obligation” between employer and employee; this means the employer is obliged to provide work and the employee is obliged to perform it.

Those individuals working under such a relationship are entitled to the following:

• The minimum wage.
• Statutory paid holiday.
• Rest breaks.
• Protection from unlawful discrimination.
• Protection from unfair dismissal

Workers

This is often described as a hybrid between full employment status and truly self employed. There may be no “mutuality of obligation”, but in most other respects the “employer” maintains a significant level of control over how and when the work is undertaken. For example, the Worker may have no control over hours worked or rates of pay. He or she may also be provided with tools or other equipment and told how to perform their work.

Although not entitled to full employment law protection (a Worker cannot claim unfair dismissal for example), they are nevertheless entitled to the following:

• The minimum wage
• Statutory paid holiday
• Rest breaks
• Protection from unlawful discrimination

Genuine Self Employed

Those who provide services in the course of a business may satisfy the key tests for being self employed. Again there is no single definition, but the factors taken into account are:

• How much control, if any, is exercised over the individual regarding the manner in which the work is performed;
• That the individual service provider sets the fee;
• The individual provides and uses his or her own tools or equipment;
• The individual decides in what manner the work is undertaken;
• The individual raises an invoice in respect of the work undertaken.

The Uber case highlights that there is no one legal definition of employment status and that Employment Tribunals will look at the facts and circumstances of each individual employment case. This includes ignoring any written contract which may purport self-employed or some other status.

Getting it wrong

If an employer wrongly classifies an individual employee, or its entire workforce (as potentially Uber have done), this could result in protracted and costly Employment Tribunal claims. Statistically, most disputes are settled either before or after Tribunal proceedings are brought; nevertheless, these disputes can still drain resources and involve significant costs to the business. Like most Employment Law issues, it is more cost-effective for the employer to protect against such cases, than to have to defend them.

Need Employment Law advice?

If you are unsure as to the status of your workforce, or you require advice on some other aspect of Employment Law, you should seek advice from a specialist Employment Lawyer such as those at Holmes & Hills Solicitors.