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UK – Uber drivers win landmark tribunal case, drivers entitled to minimum wage and worker rights

31 October 2016

A London employment tribunal has ruled in a landmark case that Uber drivers in the UK should be classified as workers and not self-employed, thus they should be paid the minimum wage and be entitled to the same rights as regular workers.

The ruling comes after a couple of drivers in London, Yaseen Aslam and James Farrar, filed a lawsuit against Uber in July over employment rights and claims that they should officially be recognised as employees and not freelancers and that they should be entitled to benefits such as healthcare and holiday pay.

Uber immediately said it would appeal against the ruling.

The ruling could have an effect on gig economy workers which has been the subject of debate of whether or not they should be classified as employees or self-employed contractors.

Uber could now be open to claims from all of its 40,000 drivers in the UK, who not currently entitled to regular workers rights.

Fiona Coombe, Director, Legal & Regulatory Research at Staffing Industry Analysts, commented:

“This ruling is only a first instance decision of a tribunal in relation to a group of drivers, so it is not binding on Uber in relation to drivers who were not party to this case. However, this is certainly a blow to Uber’s business model because if all drivers in the UK are workers rather than self-employed, Uber will have to pay drivers the minimum wage, sick pay and holiday pay as well as other paid benefits.”.

The law firm Leigh Day represented the driver, who were also supported by the GMB Union. Nigel Mackay from the employment team at Leigh Day commented: “We are delighted that the Employment Tribunal has found in favour of our clients. 

“This judgment acknowledges the central contribution that Uber’s drivers have made to Uber’s success by confirming that its drivers are not self-employed but that they work for Uber as part of the company’s business. Uber drivers often work very long hours just to earn enough to cover their basic living costs. It is the work carried out by these drivers that has allowed Uber to become the multi-billion-dollar global corporation it is. 

“We are pleased that the employment tribunal has agreed with our arguments that drivers are entitled to the most basic workers’ rights, including to be paid the National Minimum Wage and to receive paid holiday, which were previously denied to them.”

Annie Powell, a lawyer in the employment team at Leigh Day who also worked on the case, added “This is a ground-breaking decision. It will impact not just on the thousands of Uber drivers working in this country, but on all workers in the so-called gig economy whose employers wrongly classify them as self-employed and deny them the rights to which they are entitled.”

Maria Ludkin, GMB Legal Director, said: “This loophole that has allowed unscrupulous employers to avoid employment rights, sick pay and minimum wage for their staff and costing the government millions in lost tax revenue will now be closed.

Leigh Day stated that there would be a further hearing in the Employment Tribunal to calculate the holiday and pay that the drivers should receive.

Recruitment and Employment Chief Executive Kevin Green also commented:

“Uber has said it intends to appeal this employment tribunal ruling, so this case is far from over. It may take quite a while to get a definitive view as it is likely to end up in front of the Supreme Court. In the meantime, the government should provide greater clarity to employers and individuals about who is legitimately self-employed. HMRC has already said it is investigating Hermes, but we have no timescale for a decision on this and some other cases. UK consumers want to maintain the many the benefits that ‘gig economy’ platforms such as Uber provide. At the same time the people who provide the services for these tech companies should be fairly treated and rewarded,” Green said.

Tania Bowers, General Counsel at The Association of Professional Staffing Companies (APSCo) commented:

“This is a landmark case - while Uber classed its drivers as independent self-employed contractors who had the choice of where and when they worked, this ruling, if not successfully appealed, means that the drivers will be entitled to the minimum wage, paid holidays and breaks. While not directly affecting the professional recruitment market, the ruling will have a significant impact on the ‘gig economy’ where individuals work for multiple employers day to day without having a fixed contract.”

“While it is right and proper for workers’ rights to be protected, it is important that the distinction is made between lower paid and potentially vulnerable workers who need this type of protection and professional contractors and interims who do not need – or indeed want such protection,” Bowers said.

“Recruitment firms have been responsibly supplying compliant agency workers and professional contractors to the employment market for decades before the phrase "gig economy" was coined and will continue to be an essential component of the flexible labour market. Nonetheless, it is important that the recruitment sector does not get landed with the responsibility – and ensuing liability - for determining an individual’s employment status – as is planned by the proposed changes to IR35 legislation for workers in the public sector.  We believe there is a need for greater clarity and we support the Review of Modern Employment to be undertaken by RSA Chief Executive Matthew Taylor at the request of the Prime Minister.”

“The fact it takes an employment tribunal to decide whether these drivers are self-employed shows that proving employment status is an extremely complicated and costly process,” Gillian Guy, Chief Executive of charity Citizens Advice, told the Guardian. “For many people struggling at the sharp end of insecure work, such as in false self-employment, taking such a case is simply not an option.”

The landmark ruling could have implications for other upcoming cases involving gig economy workers as next month, a London cycle courier, will make similar claims against CitySprint for which she has worked for several years as an "independent contractor,” reports the Times. Three more couriers are bringing similar cases, against, respectively, Addison Lee, eCourier and Excel. They are being backed by the Independent Workers Union of Great Britain. The GMB union, which backed the Uber claimants, is supporting other cases.

Research by Citizens Advice has suggested that as many as 460,000 people could be falsely classified as self-employed, costing up to £314 million a year in lost tax and employer national insurance contributions. Recently UK Ministers have ordered an HMRC crackdown on companies that deny work rights to self-employed workers.

Uber has also been fighting over the classification of its workers in the US. 

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