UK Tribunal Classifies Uber Drivers as Company Employees
A recent decision of a UK Employment Tribunal could have significant implications on Australia’s Uber Company, and will likely have a run-off effect on Australia’s rapidly growing “gig economy”.
The Central London Employment Tribunal has given a landmark ruling that Uber drivers should be treated as employees, entitling them to statutory protections including the National Minimum Wage and holiday pay in the UK.
The case was initiated against Uber by the GMB Union on behalf of two Uber drivers. It examined the threshold requirements as to when a worker is an independent contractor or employee.
Contractor or Employee?
In determining whether the drivers were employees opposed to independent contractors, the Tribunal examined Uber’s business model in detail, considering the whole working arrangement as it operated in reality, rather than Uber’s contracts, which the Tribunal described as “fiction” and “twisted language”.
Despite drivers’ having rights and freedoms consistent with that of independent contractors, such as the ability to work for other organisations, having to cover the cost of their vehicles and being self-employed for tax purposes, the Tribunal found a number of factors pointed to an employee-employer relationship. In particular, Uber:
- Interviews and recruits drivers.
- Requires drivers to accept trips and/or not cancel trips, and enforces the requirement by logging off drivers who breach those requirements.
- Sets the route and fixes the fare and the driver negotiate a higher sum with the passenger.
- Imposes a number of conditions on drivers (such as the acceptability of their vehicle) and controls them in the performance of their duties.
- Subjects drivers through the rating system to what amounts to a performance management/disciplinary procedure.
- Determines issues about rebates and handles complaints by passengers, including complaints about the driver.
In summary, the Tribunal concluded that Uber is essentially a taxi service which employs drivers to provide the service to its users, which, in a number of ways, Uber controls.
Uber has said it will appeal the decision.
What does this mean for Australia?
This judgement is expected to have significant implications on start-up companies effectively utilising Uber’s “gig” economy business model, where companies use apps and the internet to match “customers” with consumers.
The ruling is a reminder for employers to exercise caution when engaging independent contractors. If a contractor has some or all the features of an employee, it is likely that you will need to review your arrangements. You cannot simply ‘classify’ a worker as a contractor to avoid providing them their full rights as employees.
If you have a query about your contractor arrangements, or the minimum entitlements you may owe as an employer, please contact Surry Partners Lawyers.
(02) 9318 6415