Well today it happened and after winning an Employment Tribunal (ET) in October 2016 & continuing to pursue it right up to the Supreme Court, it has been ruled today – Friday 19th February 2021 that Uber drivers are workers & not Self Employed.
We have put together some key information within this blog as it can be very confusing when deciding on the type of Contract etc you wish your first or subsequent members of the teams employment status to be. Information within this blog has been obtained from Daniel Barnett – QC & the Government website.
But what does this mean and whats the difference?
There are quite a few major differences between the legal rights of a Worker & an Employee as there are within all different types of employment & we have put at the bottom of this article, the main points. Former Uber drivers James Farrar and Yaseen Aslam began their quest in 2016 having believed that they were entitled to a lot more benefits when working for Uber but Uber rejected this and subsequently the duo had to continual to the highest court in the land.
The BBC today has an excellent report that goes into further detail and with the current Pandemic & Covid-19 the fact that drivers amongst many other employees / workers are struggling.
- a tribunal should examine the reality of the relationship between the parties, and not be bound by what the documentation states. On this analysis, the tribunal was entitled to find that Uber drivers are ‘workers’, not self-employed subcontractors;
- the drivers are ‘workers’ from the moment they switch on their apps, and are available for work in their area, to the time when they switch their apps off at the end of the day (or, presumably, for a break).
This means that Uber drivers are entitled to claim minimum wage (including backpay for minimum wage), with their minimum wage claims being based upon their entire working day, not just when they had a rider in their cabs. Up to two years’ backpay (there is some doubt about this, it could be longer), or £25,000 (whichever is the larger) can be claimed in an employment tribunal, and up to six years’ backpay can be claimed in the county court.
They can also claim 5.6 weeks’ paid annual leave each year, and will have whistleblowing and similar rights. This judgment does not give them ‘employee’ rights, such as the right to a redundancy payment or to claim unfair dismissal.
A person is self-employed if they run their business for themselves and take responsibility for its success or failure.
Self-employed workers aren’t paid through PAYE, and they don’t have the employment rights and responsibilities of employees.
Someone can be both employed and self-employed at the same time, for example if they work for an employer during the day and run their own business in the evenings.
Employment law doesn’t cover self-employed people in most cases because they are their own boss.
However, if a person is self-employed:
- they still have protection for their health and safety and, in some cases, protection against discrimination
- their rights and responsibilities are set out by the terms of the contract they have with their client
Working out if someone is self-employed
HM Revenue and Customs (HMRC) may regard someone as self-employed for tax purposes even if they have a different status in employment law.
Employers should check if a worker is self-employed in:
- tax law – whether they’re exempt from PAYE
- employment law – whether they have an employee’s rights
Individuals and their employers may have to pay unpaid tax and penalties, or lose entitlement to benefits, if their employment status is wrong.
Checking if they’re exempt from PAYE
Someone is probably self-employed and shouldn’t be paid through PAYE if most of the following are true:
- they’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit
- they can decide what work they do and when, where or how to do it
- they can hire someone else to do the work
- they’re responsible for fixing any unsatisfactory work in their own time
- their employer agrees a fixed price for their work – it doesn’t depend on how long the job takes to finish
- they use their own money to buy business assets, cover running costs, and provide tools and equipment for their work
- they can work for more than one client
A person is generally classed as a ‘worker’ if:
- they have a contract or other arrangement to do work or services personally for a reward (your contract doesn’t have to be written)
- their reward is for money or a benefit in kind, for example the promise of a contract or future work
- they only have a limited right to send someone else to do the work (subcontract)
- they have to turn up for work even if they don’t want to
- their employer has to have work for them to do as long as the contract or arrangement lasts
- they aren’t doing the work as part of their own limited company in an arrangement where the ‘employer’ is actually a customer or client
Workers are entitled to certain employment rights, including:
- getting the National Minimum Wage
- protection against unlawful deductions from wages
- the statutory minimum level of paid holiday
- the statutory minimum length of rest breaks
- to not work more than 48 hours on average per week or to opt out of this right if they choose
- protection against unlawful discrimination
- protection for ‘whistleblowing’ – reporting wrongdoing in the workplace
- to not be treated less favourably if they work part-time
They may also be entitled to:
- Statutory Sick Pay
- Statutory Maternity Pay
- Statutory Paternity Pay
- Statutory Adoption Pay
- Shared Parental Pay
Agency workers have specific rights from the first day at work.
Workers usually aren’t entitled to:
A person is generally classed as a ‘employee’ if:
A person may be an employee in employment law but have a different status for tax purposes. Employers must work out each worker’s status in both employment law and tax law.
All employees are workers, but an employee has extra employment rights and responsibilities that don’t apply to workers who aren’t employees.
These rights include all of the rights workers have and:
- Statutory Sick Pay
- statutory maternity, paternity, adoption and shared parental leave and pay (workers only get pay, not leave)
- minimum notice periods if their employment will be ending, for example if an employer is dismissing them
- protection against unfair dismissal
- the right to request flexible working
- time off for emergencies
- Statutory Redundancy Pay
Some of these rights require a minimum length of continuous employment before an employee qualifies for them. An employment contract may state how long this qualification period is.
Working out employment status for an employee
Someone who works for a business is probably an employee if most of the following are true:
- they’re required to work regularly unless they’re on leave, for example holiday, sick leave or maternity leave
- they’re required to do a minimum number of hours and expect to be paid for time worked
- a manager or supervisor is responsible for their workload, saying when a piece of work should be finished and how it should be done
- they can’t send someone else to do their work
- they get paid holiday
- they’re entitled to contractual or Statutory Sick Pay, and maternity or paternity pay
- they can join the business’s pension scheme
- the business’s disciplinary and grievance procedures apply to them
- they work at the business’s premises or at an address specified by the business
- their contract sets out redundancy procedures
- the business provides the materials, tools and equipment for their work
- they only work for the business or if they do have another job, it’s completely different from their work for the business
- their contract, statement of terms and conditions or offer letter (which can be described as an ‘employment contract’) uses terms like ‘employer’ and ‘employee’
If most of these don’t apply, you should work out if the person is self-employed.