UK Supreme Court says Uber drivers are not independent contractors

Uber's "gig economy" business model is under attack around the world.

by Timothy B. Lee in ars Technica- 2/19/2021, 5:14 PM

The Supreme Court of the United Kingdom has ruled that Uber drivers are legally workers, not self-employed contractors as Uber has argued in courts around the world. The ruling means that drivers in Britain and Northern Ireland are eligible for additional benefits and protections, including a minimum wage.

Uber claims that it merely acts as a technology provider and broker between independent drivers and their customers—much as eBay facilitates sales between buyers and sellers. In Uber's view, this means that it doesn't owe its drivers benefits like unemployment insurance, doesn't need to reimburse drivers for their costs, and isn't bound by minimum wage and overtime rules. Uber emphasizes that its drivers are free to decide when, where, and how much they work.

But critics point out that Uber exerts a lot more control over its drivers—and over the driver-passenger relationship—than a conventional platform like eBay or Airbnb. Uber sets fares, collects payments from customers, deducts its own fee, and remits the remainder to the driver. It requires drivers to accept a large majority of the rides they are offered. It handles customer complaints and kicks drivers off the platform if their average rating falls too low.

“A position of subordination and dependency”

So the UK Supreme Court ruled Friday that Uber drivers are legally Uber workers, not independent business owners who happen to get most of their business from Uber.

“Drivers are in a position of subordination and dependency in relation to Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill,” said Lord George Leggatt, one of the justices of the Supreme Court, as he handed down the ruling.

One consequence is that Uber drivers must be paid at least the minimum wage. And importantly, the high court held that drivers must be paid not only for the time when they're driving but also for time they're logged in to the app waiting for another fare.

This could have significant implications for Uber's relationship to drivers. While drivers will presumably appreciate a minimum earnings guarantee, this could also mean that Uber will restrict when drivers are allowed to work—since having too many drivers online during periods of low demand could cost Uber more than it earns in fares.

According to the Financial Times, the ruling means Uber must set up a pension program for its drivers. Thousands of drivers could be eligible to sue for back pay as a result of the ruling.

A global battle

In recent years, Uber has been fighting over the same issue in jurisdictions around the world. California passed legislation in 2019 requiring Uber (and Lyft) to treat its drivers as employees. Uber and Lyft fought the law in court for the next year, delaying its implementation until voters overturned it in a November 2020 vote.

According to the Financial Times, UK law has three legal categories—employees, workers, and independent contractors. Workers in the UK have more rights than independent contractors, but not as many as employees. Employment law in the US generally just has two categories—employees and independent contractors.

Last year, France's top court ruled that Uber drivers must be treated as employees. Spanish courts reached a similar conclusion in September. Uber is facing a class-action lawsuit in Canada over the same issue.

Uber is also facing litigation in Massachusetts over the legal status of its drivers.

Of course, Uber may ultimately overturn some of these rulings in the courts or national legislatures, or through referenda. But it seems unlikely that Uber will prevail in all of these fights. Which means that unless Uber wants to abandon broad swaths of hard-won territory, it's going to have to figure out how to make its business model work while treating drivers as employees.

That might mean higher prices for consumers and less flexibility for the drivers. But advocates say that drivers will ultimately benefit from having the same legal protections as most other workers.

Tribunal rulings threaten bogus self-employment in the gig economy!

City Sprint courier - Maggie Dewhurst
By
Derek Pattison - President Tameside TUC (in a personal capacity)

The Government has come under pressure to clarify the law on 'self-employment' following a huge increase in the number of so-called 'independent contractors' being employed in the gig economy. As 'independent contractors', workers do not get a regular wage but are paid for the 'gigs' they do, such as delivering food or making a car journey. Typically, contractors are on short-term contracts or freelance work and do not, as independent contractors, qualify for the living wage, sick-pay, pensions, holiday-pay or basic employment rights. They also have to pay their own NI and tax contributions.

Last year, an Employment Tribunal ruled in a case brought  by two Uber drivers, James Farrar and Yaseen Aslam, members of the GMB Union who were represented by the firm 'Leigh Day', that workers who accept these 'gigs' were  not independent contractors but "workers to who certain employment rights are due." In what is seen as a landmark ruling, the tribunal found that they were entitled to the same rights as full-time employees. Uber is currently appealing against the decision on the grounds that it is a technology company and not a taxi firm.

In February, an Uber driver speaking to MPs on the House of Commons work and pensions select committee, told them that although he worked 90 hours per week, he still needed to claim state benefits. Minicab drivers working for Uber, have also stated that after Uber's 20% cut and car expenses have been deducted from their pay, their earnings fall below the minimum wage. It was also revealed at the select committee that the courier 'Deliveroo',  had included a clause in its contracts that forbade riders from challenging their employed status in the courts.

An investigation by the Guardian newspaper, found that some 10,000 so-called "life-style couriers" working for the company Hermes, who deliver parcels for retailers such as 'Next' and 'John Lewis', were earning less than £6 an hour. In January, the delivery firm 'Jinn', based in East London, told its couriers that it was scrapping its hourly rate of £8 an hour for its self-employed contractors and introducing a piecework system based  on payment per delivery. A Jinn courier based in Leeds told the Guardian that he'd been paid £125 for a 72-hour week.

Two other legal challenges are also likely to impact on the gig economy. In January, a London  Employment Tribunal, found that Maggie Dewhurst, a 29-year-old bicycle courier from South London who worked for City Sprint, who have 3,500 couriers, should be classed as an employee rather than self-employed and was entitled to basic employments rights such as the minimum wage, holiday pay and sick pay. The tribunal ruled that the company had acted unlawfully when they failed to pay Ms. Dewhurst two day's holiday pay. Tribunal Chair, Joanna Wade, said that City Sprint's contractual arrangements were: "contorted", "indecipherable" and "window dressing".

Another case that has been widely reported is that of Gary Smith vs Pimlico Plumbers. Having worked as a plumber for six-years until 2011, Mr. Smith was dismissed by the firm when he suffered a heart attack and he sued Pimlico for sick pay. The Court of Appeal recently ruled that Mr. Smith was entitled to basic employment rights such as sick pay in spite of being technically self-employed.

Other legal challenges are already in the pipeline and are being taken against companies such as Addison Lee, Excel and eCourier. What all these cases have in common, is that they consider the real relationship that exists between independent contractors and the companies that they work for. Although the meaning of "worker/employee" is defined in section 230 of the Employment Rights Act 1996, in employment law, what it seems to boil down to is this: who is really in control? Clearly, there are certain distinct advantages for many employers to maintain the fiction that the people who do the work are not workers but self-employed. But as Maggie Dewhurst pointed out at her tribunal hearing, she was not a genuinely self-employed person because she could not "pick and choose" which jobs to accept:

"We spend all day being told what to do, when to do it and how to do it. We're under their control. We're not a mosaic of small businesses and that is why we deserve basic employment rights like the national minimum wage."

Maggie Dewhurst, who was represented by the law firm Bates Wells Braithwaite and backed by the Independent Workers of Great Britain (IWGB), believes that workers need to wake up and take action to stop this "on-demand model" of employment spreading. She said:

"Unless we take drastic action, we will all wake up in five years time on bogus contracts, with no employment rights, paid per task, and managed by a smartphone."

The Government have announced that a review led by Matthew Taylor, CEO of the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA), is to investigate the gig economy and the rise in self-employment and zero-hour contracts. It is expected that the review will lead to recommendations for the law to be changed.  It has also been disclosed that the exchequer is facing a £6bn shortfall in NI revenue by the beginning of the next decade as a result of the rapid growth of self-employment in the UK - up by around 1 million since 2009.

Plumber wins legal case on worker's rights

THE Court of Appeal decided that a plumber, Gary Smith (pictured) who worked for Pimlico Plumbers for six years until 2011, is entitled to basic rights such as sick pay even though he was technically self-employed.

Gary Smith had claimed that he was dismissed following a heart attack and sued Pimlico Plumbers for sick pay.

The case is one of several that have considered the relationship between independent contractors and companies such as Uber, Deliveroo and parcel delivery firm Hermes and City Sprint UK Ltd.

This decision in the Appeal Court could mean more protections for thousands of independent contractors working job-to-job with little security and limited employment rights.

With the number of workers in the gig economy jobs surging in recent times, campaigners have claimed that it leaves many with no guarantee of earnings and no protection if they can't work.  In some cases workers have claimed they are being paid less than minimum wage.

However yesterday, a Judge warned that the ruling would not necessarily be applicable to all workers in similar positions.

Unite support's a Citizens Basic Income!

By Derek Pattison,

President, Tameside TUC, (in a personal capacity).

 

IN this country and abroad, we are seeing a growing interest in the idea of a guaranteed universal unconditional basic income scheme for all citizens. What seems to be driving such initiatives, is the realisation that the world of work is becoming more precarious with jobs under threat from technology and automation. The Bank of England now estimates that as many as 15 million jobs are under threat from technology and a third of jobs in the retail sector, are predicted to disappear by 2025, due to such things as online shopping.

Another factor is the way in which the world of work is changing. One is seven Britons is now classed as self-employed. Although some of this so-called self-employment is possibly bogus, as in the case of Uber and Deliveroo, the latest official data shows that 83% of new jobs created in the UK between March and May 2016, were self -employed. Such is the rise of the so-called 'gig economy' that in 2015, the Organisation for Economic Co-operation and Development (OECD), reported that since 1995, 'non-standard' jobs - temporary, part-time or self-employed positions, - accounted for the whole of net jobs growth in the UK since 1995.

Employment law in the UK also makes it easier to hire and fire workers by using zero hour contracts and agency working where employees have very few employment rights. The self-employed don't get sick pay, holiday pay, pensions or employment protections nor are employers obliged, to pay their NI contributions or the living wage.

My own union, 'Unite', supports in principle a universal basic income scheme and is urging other unions to support such a scheme. At the Unite policy conference in July (2016), the following resolution was adopted:

"Conference notes the growing crisis of low pay, in work poverty and precarity in a labour market increasingly characterised by casualised forms of employment that offer low pay, zero hours contracts and no long-term security.

Conference further notes the evident inability of our bureaucratically costly social security system, with its dependence on means-testing and frequent arbitrary sanction, to provide an adequate income floor.

Conference believes that a Basic Income, an unconditional, non-withdrawable income paid to everyone, has the potential to offer genuine social security to all while boosting the economy and creating jobs.

Conference welcomes the ongoing exploration of the concept of a Basic Income by the think-tank Compass, the innovation charity Nesta, the Royal Society of Arts, and others; further welcomes the planned practical experiments in Finland and Utrecht, Netherlands.

Conference calls upon the union to actively campaign for a Universal Basic Income and eradicate poverty for all."

Although the Tories have rejected the idea of a basic income scheme as unaffordable, Scotland is considering a universal basic income scheme pilot and the Labour Party is considering a universal basic income which would replace means-tested benefits with a flat rate payment.

Postscript (11/12/2016):

The Trades Union Congress (TUC), passed a composite resolution supporting a Universal Basic Income Scheme, at their September 2016 TUC Congress.