What does the Uber ruling mean for future business models?

What does the Uber ruling mean for future business models?

Following the government’s launch of an inquiry into Uber, the ruling declared that drivers have won the case to be classed as workers rather than self-employed.

After a tribunal ruled that two drivers who claimed that they were workers, not independent contractors and are therefore entitled to pursue their claims of unpaid national minimum wage, holiday pay and detrimental treatment on the grounds of whistleblowing against the company - the case has raised questions about worker classification in the gig economy.

Gemma Parker, Employment Lawyer at Linklaters, spoke to us about a future for alternative employment models. She explains: “Uber is appealing the decision, and it may be some time before we get a definitive answer on this issue. Whatever the outcome, it is worth noting both that in the meantime nothing changes for Uber.

“Equally, the Tribunal did not consider that anything in its reasoning ‘should be taken as doubting that the Respondents [i.e. Uber] could have devised a business model not involving them employing drivers’, but that its chosen model does not achieve this.

“As the decision shows, achieving a balance between flexibility, autonomy, and financial risk (indicative of an independent contractor relationship) and maintaining control over working practices and requiring personal service (indicative of a worker or employment relationship) is difficult to strike.

“A network of independent contractors, as established by Uber, is one example of an alternative employment model. Other examples include the use of agency workers, zero-hours contracts, short-term contracts and increased flexible working. Employers may now be asking whether aspects of their own employment models are fit for purpose or expose them to risk.”

She said businesses should consider:

“Is the engagement model the right one for the type of business operation?

“The tribunal found that Uber does not work ‘for’ the drivers but the other way round.

“Is the written documentation a reflection of how relationships work in practice?

“The written agreements between Uber and its drivers suggest that the drivers are operating as independent companies providing ‘Driving Services’ and that Uber is not a Transportation Provider but an agent for ‘Transportation Providers’ (i.e. drivers).

“It was accepted by the drivers and Uber that the vast majority of its drivers are sole operators and the Tribunal considered that the contractual documentation should reflect this.

“Are there factors other than flexibility/absence of obligation that indicate independent contractor status?

“Uber emphasised that drivers are never under any obligation to switch on the App or, when logged on, to accept any journey offered to them. But the tribunal found that this was not enough to prevent the drivers from having ‘worker’ status.

“In what context are contractor and business entering into a relationship?

“The drivers were recruited to provide the core services delivered by Uber as an integral part of its organisation. This was in the nature of a dependent work relationship rather than a contract between two independent businesses.”

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