An Employment Tribunal has found that Uber taxi drivers are workers and are entitled to receive the National Minimum Wage and holiday pay.
The ruling in Aslam and others v Uber BV and others 2202550/2015 is important as it will have an immediate impact on the thousands of other Uber drivers who have previously been regarded as self-employed.
In reaching this conclusion, the Employment Tribunal rejected the argument that Uber just enabled the individuals to work for themselves as taxi drivers through the technology it offered. The reality was that it was not a technology company, it was a in the business supplying transportation services.
The Uber drivers rather than being in business in their own right had contributed towards the success of Uber as a transportation service business.
In respect of worker status, it should be emphasised that the ruling today does not mean that the Uber drivers are ‘employees’ with employee rights. They are not going to be able to claim unfair dismissal or redundancy pay. A worker as opposed to an employee has no right to receive work and is under no obligation to carry out the work. However their worker status does mean that they will have certain protections. There is a minimum requirement of 5.6 weeks paid leave per year and the National Living Wage is £7.20 per hour.
The consequences will be far reaching, not just because Uber may face claims in respect of the minimum wage and pay for holidays taken, but also because of the tax consequences as HMRC will now expect PAYE deductions to be made from payments to the drivers.
Looking at this in a wider context the ruling could signal that the employment status of many other ‘self-employed’ contractors will now be looked at more closely.
The decision comes just weeks after HMRC announced that it is creating a specialist team to examine working practices at businesses that use freelance employees in effectively full-time roles without offering any of the associated benefits, to gain a tax advantage by not having to pay employer national insurance contributions.
HMRC have warned that if any companies are found to be in breach of existing laws they could be fined up to 100% of the tax owed.
It is still to be confirmed whether Uber will appeal but considering the huge impact the ruling is likely to have and the cost consequences for the global company this may just be the start of litigation that will continue for years to come.