November 4, 2016

The implications of HR

Uber drivers are not self-employed, but are workers, and are thus entitled to receive the national living wage, paid rest breaks, pension contributions, sick pay and holiday pay. So ruled the Employment Tribunal in a landmark decision that could have far reaching implications for other organisations in the gig economy.

Around 40,000 Uber drivers should be accorded worker status, although Uber has announced that it will appeal against the decision.

So, what does this ruling mean for other organisations in the gig economy? Or organisations that are trying to strike a balance between traditional working models and new, emerging work models? And what do HR professionals need to know about the present situation and potential repercussions?

In the Uber case, the tribunal judge ruled that the drivers were indeed like employed workers and as such came under the Employment Rights Act 1996, the Working Time Regulations and National Minimum Wage Act. They should not be self-employment independent contractors, as Uber has claimed. The tribunal judge said that because Uber exerted a high degree of control over its drivers, they should not be classified as self-employed.

Part of Uber’s defence was that it was a technology company, rather than a taxi provider, and that its business model meant that drivers did not have the same rights as traditional workers.

Any organisation that uses digital platforms as a means to connect customers with service providers ‘on demand’ could be affected by the ruling in the future. In particular, it is expected that other businesses in the service industry will be affected, such as couriers, portable cleaning providers, fast food delivery organisations, with the floodgates having now been opened for other workers to lodge claims. Four cycle courier companies already face a tribunal at the end of this year, being brought by a group of couriers who are contesting their self-employed status under the Employment Rights Act 1996.

It’s not just gig economy operators that need to be worried though. Traditional organisations that have recently reclassified their workforce as self-employed will also be keeping a very close eye on proceedings and how the situation unravels in the coming months.

Unions will be delighted with the Uber ruling. Frances O’Grady, the Trade Union Congress’ general secretary, said of the outcome: “The GMB deserve huge credit for shining a light on conditions at Uber and winning this landmark action. This case has exposed the dark side of so-called ‘flexible’ labour. For many workers the gig economy is a rigged economy, where bosses can get out of paying the minimum wage and providing basics like paid holidays and rest breaks. What is happening at Uber is just the tip of the iceberg. Lots of people are now trapped in insecure jobs, with low pay and no voice at work”.

What does this mean for the future? It is widely expected that this will not be the end of the Uber-worker story, as Uber has already said it will appeal. Plus, there are all the other organisations that will no doubt come under the tribunal spotlight in the next few months.

The Employment Tribunal judgement can be read in full here.