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End of the 'Gig' economy model

Tribunal rules that Uber drivers are workers

14 December 2018

For the purposes of statutory employment rights an individual's 'employment' status will dictate what (if any) rights are available. Employees enjoy the full range of statutory employment rights (subject to meeting qualifying conditions) including the right not to be unfairly dismissed, the right to redundancy pay, the right to take maternity and shared parental leave and so on. 'Workers' are in an intermediary category that enjoys some protection including the right to paid holiday and not to be subjected to detrimental treatment for making a protected disclosure. For tax purposes a 'worker' could be either an employee or self employed as tax legislation does not have a concept of worker.

It has been clear for some time that greater clarity and certainty is needed around the 'employment' status of some atypical workers; individuals may be workers with some statutory employment rights such as the right to paid holiday but be treated as self employed for tax purposes; in other scenarios the individual may be regarded as an employee for statutory employment protection purposes but not for tax purposes. The case law is complex and the employment and tax tribunals do not always reach the same conclusion on employment status. 

This lack of clarity prompted the Business, Energy and Industrial Strategy Committee to launch an inquiry into 'the future world of work and rights of employees' shortly before the Uber decision was handed down. One of the questions raised by the inquiry is whether the term 'worker' is defined sufficiently clearly in law at present. Linked to this is the question of what should be the status and rights of agency workers, casual workers and self employed for the purposes of tax, benefits and employment law?

Following swiftly on the heels of the launch of the inquiry the Employment Tribunal held that contrary to the position of Uber two of its drivers are "workers" and not self employed. Accordingly they are entitled to paid holiday and to take rest breaks in accordance with the Working Time Regulations; in addition as workers they are entitled to be paid the national minimum wage and have the right not to be subjected to detrimental treatment for blowing the whistle.  

This decision clearly has far reaching consequences for Uber's business model as a result of the additional holiday pay and minimum wage costs that could arise across the workforce. It has also been suggested that there may be adverse tax implications if HMRC conclude that the Uber 'workers' are in fact employees rather than self employed for tax purposes.

This is only a first instance decision and therefore has no binding authority. However the Tribunal did undertake a thorough and comprehensive review of the key case law and Uber's appeal will only succeed if it can persuade the Employment Appeal Tribunal (EAT) that the Tribunal got the law wrong and/or that its decision was perverse on the facts.

We can expect further guidance from the EAT on the 'employment' status of such atypical "gig" economy workers. If the EAT uphold the Tribunal's decision it is highly likely that Uber will appeal further and given the increasing uncertainty about the employment status of such gig economy workers this case would perhaps merit use of the new leap frog procedure to bypass the Court of Appeal in favour of a final determination by the Supreme Court.

Any judicial clarification on the determination of worker status is unlikely to be forthcoming until next year and in reality Government has been mulling over the complex issue of employment and worker status and the associated tax issues for some time and no concrete plans to address the problems is yet in sight.

[Aslam and Farrer v Uber BV &Ors - Case Numbers: 2202551/2015]