Following the ruling by the UK Supreme Court on 19 February 2021, which relates principally to the classification of Uber’s drivers as ‘workers’ and not ‘independent contractors’, we look more closely at the differences between contractors and employees.
It’s important to understand that the judgment didn’t say that Uber drivers should be employed, just that they should be considered ‘workers.’ Let’s look at the differences.
What’s the difference between self-employed, workers, and employees?
In employment law terms, an employee enters into a so-called “master and servant” relationship with its employees, with the employees occupying the position of “servant.” The law seeks to give the most protection to employees because of the subordinate position they hold in the relationship.
In this traditional employment relationship, the employer provides the employee with the tools and equipment required for the job, tells the employee what hours they are required to work and instructs the employee on what tasks and duties are to be performed and how they are to be done. An employee may be required to wear a uniform provided by their employer. There is also an expectation of “delectus personae,” meaning that the employee is expected to do the work and cannot opt to have someone do it for them.
In return for all of this, the employee receives a regular income and, relatively speaking, job security. Their employer will be responsible for notifying HMRC of any income tax and other liabilities and the employee’s pay will go through PAYE.
In contrast, at the other end of the spectrum, a self-employed contractor is viewed by the law as being able to enter into contractual relationships on an equal footing with those persons or businesses that require their services. They have the choice as to whether to take the work on, how it is done, and whether they do it themselves or get someone to do it in their place.
In addition, they are expected to use their own tools and equipment to perform the work and can do so as a sole trader, limited company, or any other lawful legal entity. They will be responsible for invoicing their customers and clients and will be responsible for dealing with their own income tax and any other liabilities incurred as a result of the performance of the work.
Workers usually fall somewhere in between employees and self-employed contractors. As such, the role they perform may have some of the characteristics of self-employed contractors and some of the characteristics of an employee. For example, they may be required to account for their own income tax but may be required to perform the tasks in a particular way and are likely to be told when and how the work is to be performed. They may even be expected to wear a company uniform (as in, for example, the famous Pimlico Plumbers case which also found its way to the UK Supreme Court and also found the ostensibly self-employed contactors to be more properly ‘workers’).
Why did the court rule the way it did?
If it looks like a duck, swims like a duck, and quacks like a duck… As with most cases of this nature (employment lawyers refer to them as ‘employment status’ cases) there were a number of factors that led the Court to rule the way it did:
- Uber drivers do not have any freedom when it comes to the charges levied on the riders. Uber controls this entire process, and nothing gives the drivers any independent freedom in this regard in relation to the riders.
- Uber dictates the contractual arrangement entirely. Not only does this include drivers being required to accept Uber’s standard form of written agreement, but the terms on which they transport passengers are also imposed by Uber and drivers have no say in them.
- Once a driver has logged onto the Uber app, a driver’s choice about whether to accept requests for rides is constrained by Uber. Uber retains complete discretion as to what rides to accept and what rides to decline.
- Uber exercises a significant degree of control over the way in which drivers deliver their services. Drivers provide their own car but Uber vets the types of car that may be used. Moreover, the technology which is integral to the service is wholly owned and controlled by Uber and is used as a means of exercising control over drivers.
- Uber restricts communication between passenger and driver to the minimum necessary to perform the particular trip and takes active steps to prevent drivers from establishing any relationship with a passenger capable of extending beyond an individual ride.
Everything taken together means that Uber is able to exert significant control over the services performed by the drivers.
Will the judgment affect other industries?
The Uber case is the latest (but unlikely to be the last) in a long line of employment status cases that have found their way to the highest court in the land; the UK Supreme Court. The explosion of the ‘gig economy’ workers in recent decades suggests that the trend towards seeking ‘worker’ status is likely to continue.
In order to benefit from the Uber decision, wannabe claimants will need to be able to demonstrate substantially similar characteristics to those evidenced by Uber drivers. What the case demonstrates, however, is that businesses seeking to avoid employment relationships must tread with care if they are to avoid their so-called independent contractors gaining the status of worker or, in some cases, even that of the employee.
If you have any questions on the scheme or need advice, please contact Dawn Robertson on +44 (0)131 220 9579 or at dawn.robertson@rooneynimmo.co.uk.
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