It has recently been announced in the press that the GMB Union is to bring legal action against the company behind London’s popular taxi-app, Uber, for alleged failures to pay drivers National Minimum Wage and holiday pay and alleged failures to comply with statutory requirements regarding rest breaks, holidays and working hours.
The GMB backed claim rests on the argument that drivers who sign up to work for Uber are ‘employees’ of the company entitled to assert rights of an employee including the right not to be unfairly dismissed, the right to sick pay, maternity and family related pay, the right to holiday pay, breaks and rest periods and the right to National Minimum Wage.
It is Uber’s position that their drivers are ‘Partners’ working as self-employed contractors and are therefore not entitled to assert rights of an employee.
Who is an Employee?
Under S.230 Employment Rights Act 1996, an employee is defined as ‘an individual who has entered into or works under a Contract of Employment’. There are four elements that must be present for someone to be an ‘employee’:
- There must be ‘mutuality of obligation’ between the parties - the employer must be under an obligation to provide work and the employee must be under an obligation to accept work
- The employer must have sufficient control over how and when the employee performs their duties
- The employee must perform the contract personally and provide a personal service
- The employee must not be in business for their own account
What are the Key Indicators?
If the drivers are paid and taxed through PAYE and pay National Insurance, are required to work set shifts, would be disciplined if they did not show up for set shifts and are told how and when to perform their duties these would be indicators that they are employees.
If the drivers pay tax via self-assessment, can choose which shifts they want to work, can turn down work as and when they wish and have flexibility in how they perform their role these would be indicators that they are self-employed.
What Effect Will a Ruling of ‘Employee’ Have?
If Uber drivers are found to be employees this will result in substantial pay outs to their existing drivers. Drivers’ flexibility to sign up for work as and when they wish will be removed and this is likely to result in less availability of drivers, longer waits for pickups and inevitably a hike in taxi fare rates as Uber seeks to recoup the additional expense of having employees on the books from their customers.
The Importance of Getting Employment Status Right
It is vital that employers get the employment status of their staff correct. A court will consider the contractual paperwork; however they will look behind the ‘label’ and will examine the true nature of the relationship between the parties. It is important that employers assess the status of all staff working for them, put the correct and accurate contracts in place and assess what rights individuals who work for them have.
If you require advice on the status of your staff or require contracts to be drafted please don’t hesitate to contact the Nockolds’ Employment Team for assistance on 01279 755777.