Big excitement for employment lawyers this week with the Supreme Court’s eagerly anticipated decision in the plight of the Uber drivers.
In a pre-liminary hearing last week, the Supreme Court ruled that Uber drivers are in fact workers, for the purposes of working time regulation and minimum wage calculations to name a few. The Claimant drivers will now have to take their claim back to the Employment Tribunal to argue their case for legislative rights.
Much of the ruling was specific to the individual circumstances of Uber drivers however the Court has set out a useful test employment lawyers can rely on in the previously ambiguous question of employment status.
The Supreme Court ruled that usual contract rules do not apply to contracts of employment. An employment relationship is characterised by subordination and dependency on the part of the employee and an element of control by the employer. This wording has not been used before in the context of determining employment status and should provide much needed clarity for both employers and lawyers going forward.
The Lords went on to say that the true agreement of the parties is relevant but determining employment status goes beyond that. It should be considered whether the relationship in question is of the type that statutory legislation was meant to protect. If it is likely that these protections should be afforded to a contractor/worker then any attempt to contractually prevent worker status being established should be disregarded.
This decision strictly only affects the drivers in the Uber case however it is useful to all contractors and workers. If you are a being classed as a contractor or self-employed and you believe that you may be able to establish worker status (and thus more rights and protection) then you should consider the three ‘buzz words’ to come out of the Uber case – subordination, dependency and control. If all three are present in your employment relationship, then it is definitely worth considering your true status. On the flip side, if you are an employer, and treat your staff as contractors or self-employed, but subordination, dependency and control exist, there is a very real risk that those individuals are infact workers and entitled to back dated holiday pay among other rights.
The decision is less likely to apply to contractors in professional services where the notion of subordination, dependency and control is likely to be lacking.
What should employers do now? Any employer wishing to establish that someone is an independent contractor should ensure that the written agreement properly reflects the true relationship. However, the Uber case reiterates that the written agreement will not trump the reality of the situation. A decision will need to be made – do you want to exercise a significant degree of control over the contractor? If you do then there is a good chance that they will be considered workers and entitled to employment protection. Employers are faced with a tough choice between accepting that their workforce are workers and entitled to additional rights, or relinquishing control, dependency and the need for subordination.
If you require advice on employment status, or any other employment issue, please contact: