Uber Loses Employment Tribunal – Contingent Labour Classification Issues Loom

A UK employment tribunal on Friday decided that two Uber drivers had a valid claim to be employed by the firm.

Uber claimed that the drivers were actually self-employed, which meant they did not have to offer them holiday pay, ensure they received the minimum wage or pay national insurance contributions.

Uber argued however that the drivers are self-employed. They can choose how much work they do, and they are free to work for other employers or customers. Indeed, some Uber drivers expressed disappointment at the decision, as they like the approach and now fear for the firm’s future.

This is by no means the end of the matter however; Uber will challenge this, all the way up to the UK's Supreme Court we suspect if necessary, as it is so fundamental to their business model. There are also wider implications for many individuals, organisations and indeed for procurement professionals. Anyone involved in the contingent labour or even wider "professional services" spend category will need to look at whether this might have implications for staff engaged by their organisation.

As Nigel Mackay (from law firm Leigh Day who represented the drivers) said, "This judgment acknowledges the central contribution that Uber's drivers have made to Uber's success by confirming that its drivers are not self-employed, but that they work for Uber as part of the company's business. This is a ground-breaking decision. It will impact not just on the thousands of Uber drivers working in this country, but on all workers in the so-called gig economy whose employers wrongly classify them as self-employed and deny them the rights to which they are entitled."

The tribunal was pretty scathing about the Uber argument.

“We are entirely satisfied that the drivers are recruited and retained by Uber to enable it to operate its transportation business. The essential bargain between the driver and the organisation is that, for a reward the driver makes himself available to Uber to carry their passengers… the employer is precluded from relying upon its carefully crafted documentation because, we find, it bears no relation to reality,” it said.

Indeed, the judgement was rather entertaining in its sarcasm at times. Try these quotes…

Any organisation ... resorting in its documentation to fictions, twisted language and even brand new terminology, merits, we think, a degree of scepticism.

The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous.

Ms Bertram [Uber’s regional general manager for the UK] spoke of Uber assisting the drivers to “grow” their businesses, but no driver is in a position to do anything of the kind, unless growing his business simply means spending more hours at the wheel.

Reflecting on the [Uber] case, and on the grimly loyal evidence of Ms Bertram in particular, we cannot help being reminded of Queen Gertrude’s most celebrated line: ‘The lady doth protest too much, methinks’.

We’re going to hear a lot more about this and relate issues in coming months. There is a fundamental issue for governments beneath this, as disruptive firms like Uber, Airbnb and others introduce business models that appeal to consumers but may have some negative consciences including a shrinking of the tax base – or at least the “easily taxed” base.

Similarly, we are seeing more focus on large firms like Facebook, Apple and Google paying appropriate taxes in each country. Governments are struggling to balance the need for innovation and growth to maintain economic success, alongside these new approaches which may negatively affect tax revenues.

There are no easy answers, and while procurement is only really involved on the periphery of what is a huge economic and political issue, we need to keep an eye on issues like the classification of contingent workers  - or we might just find our organisation on the wrong side of the argument (or indeed the law).

First Voice

  1. Dan:

    The issue in this case was about how much control Uber had over these supposedly self-employed people: Uber dictates the prices they charge, the routes they had to use, Uber claimed ‘sole discretion’ to approve or decline bookings and would suspend drivers if they cancelled jobs, which kind of undermines the ‘flexibility’ argument. Interestingly (to me) the Tribunal was less interested in the contractual wording and more the actual relationship between Uber and drivers.

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