An Employment Tribunal verdict which ruled that Uber drivers are ‘workers’ under the Employment Rights Act 1996 is sparking widespread concern that the decision will open up the floodgates for claims for more costly terms and conditions among organisations that rely on contractors.
The ruling means that while Uber drivers may not be entitled to statutory redundancy payments or protection against unfair dismissal as employees, they now have rights which include being entitled to the national living wage, 5.6 weeks’ paid annual leave a year - and 48-hour average working weeks with defined rest breaks.
The concerns focus on organisations including local authorities who depend on contractors such as foster parents and carers to support social care provision and plug gaps when resources are too stretched to meet obligations – as well as companies that commission construction workers.
Although established service arrangements will see much upheaval, business models providing online-ordered services and the so called ‘gig’ economy such as couriers where temporary positions are common – may need to re-examine their employment practices.
Already, a group of Deliveroo takeaway couriers has claimed for union recognition and workers’ rights, while four London cycle couriers are bringing cases against CitySprint, Addison Lee, eCourier and Excel.
One courier, who is regarded as an ‘independent contractor’, says she works full time and wants basic rights - describing her arrangements as nine-hour days, four days a week, in company uniform and ID tag, carrying GPS and radio.
The likelihood of actions being launched will be determined by whether people who are treated by their ‘employer’ as self-employed or contractors, genuinely feel they are workers or even employees in the generally accepted sense.
To be successful, claimants will probably work for a single firm, rather than have a number of customers they can pick and choose from - as in the Uber case. This arrangement would suggest that they are wholly dependent on one company for their work and therefore more likely to be classified as ‘workers’.
Also, the more control a firm exerts over its service providers, the higher the probability that they are workers - for example, Uber specifies that its drivers cannot work for anybody else, which denies them access to alternative income sources.
Any awards made by a tribunal could be backdated, but normally only for three months – for example, based on a failure to provide holiday pay during the last three months before a claim is presented. It is worth noting that there is also an absolute two year bar for backdated holiday pay claims.
Organisations in the ‘gig economy’ – or those at the planning or incubator stage - who are concerned about retaining the services of those they regard as contractors, are advised to take professional advice about whether the people they work with are genuinely self-employed or not.
This may well result in increased costs by changing the business model to alter terms and conditions or by shouldering new liabilities. However, acting sooner rather than later will reduce the outlay, disruption and unwelcome publicity of a legal battle, while enhancing a professional reputation by being seen to do the right thing in establishing fair, legal contracts.
About the author: Barry Warne heads the Employment team at hlw Keeble Hawson, of Sheffield, Leeds and Doncaster. Areas of specialism include TUPE, Employment Tribunal advocacy and Executive Severances.