Uber: impact on gig business model?

What impact will last month's ruling in the Uber case have on business models used by gig employers with similar tech-based platforms? That is one of the many questions doing the rounds exactly one month after the Supreme Court's unanimous ruling that the Uber drivers were 'workers', not self employed, bringing to and end 5 years of bitter litigation between Uber and its drivers and opening the door to potentially huge claims back pay for employment rights including the minimum wage, paid annual leave and sick pay. The court ruled that notwithstanding what the drivers' contracts said, they were, essentially, 'in a position of subordination and dependency in relation to Uber' and that was, ultimately, the decisive factor. 

People Management reports how the ruling could upend the way the app-based economy works in the UK and quotes the views of a number of lawyers.  One says the judgement will shape future cases on the gig-economy. Another says the ruling “clearly sent a warning” to other businesses using similar app-based platforms that it will now be much harder for companies engaging people via digital platforms to assert that they are self-employed whatever their contractual documentation says. Another says how the businesses will need to ask questions including: Who controls what goes on? Who takes the financial risk? Who supplies the equipment? And can the individual appoint a substitute to carry out the work? 

So what's our view? Given the demand for tech-based flexible working platforms has never been stronger what impact will this case have? Emma Johnston has been advising clients on this - she joined me by video-link from Edinburgh:

Emma Johnston: “Now we're seeing in this future world of work, more flexible working models like you see in the gig economy which is exactly the nature of this litigation and we're seeing clients more often grappling with the complexities that come with identifying employment status off the back of that. The difficulties arise from the fact that the law is inherently unclear in this area and it's very dependent on case law which is developing all the time. So when you look at the Uber decision, for example, there's been years of litigation about whether these individuals are self employed drivers or they're actually workers and the significance of that can't be understated because the national minimum wage obligations and paid holiday entitlements are actually extremely valuable across the board and therefore it can be an extremely difficult situation for these businesses to deal with if they've set up their business model based on these individuals being self employed and then later it's established that actually they are workers. The difficulty that we have is that not only is the law out of date and it's not necessarily coping so well with these more flexible working models that we're seeing, but also there's divergence in terms of how the tax tribunals treat employment status versus employment law and the employment status. So quite often you can find you'll have a situation where an individual from a tax perspective is treated as self employed contractor, whereas there'll be considered a worker, as is the case in the Uber litigation, meaning that from an employment law perspective they have worker rights to national minimum wage and paid holidays."

Joe Glavina: "Yes that tax dimension certainly complicates things - tricky for your average gig employer watching on and trying to judge the risks they face. What do they need to weigh up?"

Emma Johnston: "So there are a number of pointers that are really important when establishing employment status. Mutuality of obligation is very relevant, personal service, but also the level of control that's being exerted by the business over these individuals. In the Uber litigation it was very clear that one of the main reasons why these individuals were deemed to be workers is because of the level of control that the Uber app placed on those individuals. So for example, the fare was set by Uber, the route is set by Uber, there's much more control, it isn't up to the individual as to which fares they are going to take and how they're going to charge for those fares. So control is a very big issue and where businesses are looking to try and stay away from a risk of individuals being deemed to be workers, quite often, what we're working with clients to do, is to look at ways in which we can relinquish some of that control so that the individuals are able to work more in accordance with their needs to reduce the chances of worker status being applied."

Joe Glavina: "Last question Emma. On the business model, which we know many employers are now reviewing in light of this case, what changes are you seeing?"

Emma Johnston: "So what we're doing at the moment is that we're working with a number of clients in order to help them review their business models to get to a place where they have a model that works best for them with the least amount of risk relating to employment status and things like control can be a really important factor in all of that and one way in which you can help reduce the amount of control is where there's this multi-app concept where individuals, so for example in the Uber case, could be logged in to a variety of apps and able to accept work from a variety of companies rather than just the one. If you can get to a place where you can evidence that that is happening on a regular basis it's far more difficult for individuals to establish that they are workers and that they are exclusively providing work to a particular company."

This case not only triggered a review of employers' business models it has also triggered a fundamental review of the contractual documentation used by gig employers. Uber's contracts were their front line of defence in this case but they were shot down by the Supreme Court. We have looked at that issue in detail in our programme called Uber: 'worker' status not framed by contract. That is available now for viewing from the Outlaw website.