Each week we feature a short explanation of a piece of employment law jargon with the aim of highlighting to employers key points to be aware of within the jargon.
This week we focus on the Gig Economy which is a term that has featured in a number of recent high profile employment cases featuring in the news.
The Gig Economy, also known as the Sharing or Platform Economy, is described as transactions between peers, with technology platforms taking the role of brokers between peers. Businesses can make use of online platforms to outsource tasks, which would normally be delegated to a single employee, to a large pool of workers.
The work can be differentiated between physical services, such as plumbing, child care or taxi services, which need to be performed locally, and work which is transmitted over the internet and can be performed anywhere, such as accounting or translation tasks.
So in the case of Aslam and Farrar –V- Uber BV & Others, an Employment Tribunal found that Uber taxi drivers were workers and entitled to certain employment rights that had been denied them by Uber. Whilst the decision may well be appealed and is not binding on other Tribunals it demonstrated that the Tribunal was prepared to disregard the employer business model if it was not satisfied that it reflected the reality of the arrangement.
Section 230(3) of the Employment Rights Act 1996 defines a worker in somewhat longwinded terms as “any individual who undertakes to perform personally any work or services for another party to the contract provided that the other party is not a client or customer of any business carried out by the individual”. Anyone whose employment situation is found to fall within that definition is entitled to a number of specific employment law rights including the right to receive the national minimum wage for each hour of work and rights to holiday and rest periods in respect of their working times.
In this case a number of drivers brought claims for unlawful deductions from wages through an alleged failure to pay the national minimum wage and a failure to provide paid annual leave. There are approximately 40,000 drivers registered with Uber in the UK. The Employment Tribunal considered two particular Uber drivers as test cases and undertook a detailed analysis of Uber’s assertion that it does not offer taxi services, but instead it is in business to provide access to a technology platform which facilitates the provision of taxi services.
Uber’s position was that it acts as an agent for the drivers through the use of the Uber smart phone app but the contract for the provision of the taxi service is between the individual Uber driver and the passenger. Therefore Uber treated its drivers as being genuinely self-employed and not entitled to the employment rights applicable to workers.
The Tribunal identified a number of factors which undermined this position and demonstrated that Uber exercised significant control over the arrangements for the taxi services. The factors included that Uber:-
- Interviews and recruits drivers and subjects them to an induction process.
- Controls the passenger’s key information and does not share this with the driver.
- Requires drivers to accept fares, and issues warnings and ultimately locks drivers out of the app if too many fares are refused.
In light of this the Tribunal concluded that the Uber drivers were workers at all times when they satisfied each of the following conditions:-
- They had the app switched on.
- They were in the territory in which they were authorised to work.
- They were willing and able to accept fares.
The decision has implications for all businesses which seek to offer customers the type of job by job services provided by Uber through the engagement of independent contractors. Arrangements between the business, the individual and the customer will be disregarded if these do not reflect reality.
For any advice on employment status and rights please do not hesitate to contact a member of the employment team.
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