Uber, a taxi company classified its drivers as either independent contractors or self-employed individuals to support its business model which allows its drivers to work flexibly as and when they wished.
Classification of employment status and the case law surrounding this area goes back many years due to the fact that employment status is not easy to determine. The reason it seems that employment status is back in the lime light again now, is because there has been a growth in the so called ‘gig-economy’ a name given to companies utilising self-employed workers.
As a recap, under section 230 (1) of the Employment Rights Act 1996 (“ERA 1996”), an employee is defined as:-
"an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment".
Under section 230(2) of ERA 1996, a contract of employment means:-
"a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing".
The argument from the two claimants that brought the case against Uber, was that they believed they should be classified as employees. On 20 July 2016, a central London employment tribunal considered the claim from the two individuals (backed by the GMB union), to determine if Uber had acted unlawfully by not providing them with holiday and sick pay and whether they were entitled to receive a guaranteed minimum wage.
On 28 October 2016, the Employment Tribunal has ruled that the two claimants are ‘workers’ within the meaning of the ERA 1996 which means that the drivers will now be entitled to more rights for example but not limited to, the protection of the whistleblowing legislation, 5.6 week’s paid annual leave and the national minimum wage.
Although this case is being communicated as a land mark decision, it must be remembered that the main argument of the claimant’s case centred on ‘mutuality of obligation’ between the claimant(s) and Uber. The meaning of ‘mutuality of obligation’ is the obligation on the employer to provide work and the obligation on the individual to accept that work, an element that Uber did not feel was in place as it had the ability to offer the work to an individual and the individual had the option as to whether to accept the work or not.
Of course, this latest decision is by no means the end of litigation in this area, as Uber have already confirmed they will be appealing against the decision that they have acted unlawfully, no doubt resulting in this area of employment law continuing to rumble on in its complexity.