Businesses across the Midlands must consider whether they are incurring liability worth potentially tens of thousands of pounds following the landmark Supreme Court ruling of the long running saga involving Uber drivers.
The warning has come from employment law specialist Sally Morris who says the Supreme Court judgment against the ride-hailing app service will have far-reaching consequences for businesses who operate within the gig economy.
Ms Morris, partner and head of employment at mfg Solicitors, said Uber was now facing huge potential compensation demands after it was decided their drivers were workers and not genuinely self-employed as claimed by Uber.
The decision is set to significantly impact all businesses operating within the gig economy, both around historical liability and future business models. It means that those people currently engaged by Uber are entitled to certain rights and benefits that someone engaged on a genuinely self-employed basis are not - impacting on back pay claims.
The most significant of these is the right of all drivers to be paid the National Living Wage whilst carrying out their duties for Uber. It is of further significance that such entitlement will not only apply whilst a driver is carrying a fare, it applies for the entirety of the time that the driver is logged into the Uber system and is available for work. Uber will likely look at this with particular concern as it would be open for a driver to log into the system for perhaps 12 hours per day whilst having no intention of accepting any fares under the current Uber business model.
Additionally, Uber drivers will now be entitled to 5.6 weeks paid holiday pay, which they can claim to be backdated for up to two years, as well as entitlement to statutory sick pay and other rights.
Ms Morris said: “The Uber ruling highlights once again the difficulties posed to businesses when taking on members of staff. It is becoming more difficult to prove that someone is genuinely self-employed due to rulings like this – not forgetting forthcoming changes to IR35 legislation that ensures contractors pay the same tax as employees.
“As a result of the Uber ruling, the floodgates may now open for workers across the gig economy, who on paper are considered to be self-employed, to claim they are in fact workers and entitled to additional benefits. It is a worry for thousands of business owners.
“The Supreme Court case has made clear that the starting position is not what is written down in a contract or what the parties themselves deem the relationship to constitute. However, the level of control exercised by the business amongst other factors set out the reality of the situation. Uber would set the drivers’ fares, impose terms and conditions and penalise them with pay reductions and dismissals – all of which led the court to conclude the drivers were not genuinely self-employed with Uber. The court did not however go as far as to consider the drivers to be employees of Uber which brings with it a further set of rights and benefits compared to worker status.”
Ms Morris said other businesses should act immediately to ensure they are operating in line with the law and the ruling.
She added: “Although the court’s decision was based on Uber’s specific business model, it increases the chances of other gig economy companies facing claims around worker status. I’d urge business leaders who are concerned to take advice quickly so they can establish their position.”
HMRC could fine Uber up to £20,000 per worker in relation to breaches of living wage regulations.