Recent cases involving Uber and Deliveroo cast more light on what makes an individual a worker for employment law purposes.
Treating individuals as workers means they have basic rights such as entitlement to the National Living Wage, holiday or statutory pay and protection against unfair dismissal which do not apply to the self-employed.
In two recent contrasting decisions it was found that Uber drivers are workers but Deliveroo riders are not.
Why were the cases decided differently?
The Uber case was brought by current and former drivers in the London area. In a decision dated 10 November 2017 (see here), the Employment Appeal Tribunal (EAT) held that the drivers were workers based on a number of factors, including:
• The size of Uber’s operations – was it likely that 30,000 drivers each operated separate businesses?
• Drivers could not grow their business, had no ability to negotiate terms with passengers and had to accept work on Uber’s terms.
• The requirement for personal service and lack of substitution rights.
• The level of controls introduced by Uber.
All of these pointed to the conclusion that the drivers were working personally for Uber, and not providing services on their own account to individual customers.
Deliveroo was a test case brought by the Independent Workers Union of Great Britain who argued that riders were workers and therefore entitled to union recognition. In a decision dated 14 November (see here), the Central Arbitration Committee (CAC) found the riders were actually self-employed.
In contrast to the Uber case which considered a range of factors, a single factor was deemed to be fatal to the argument that Deliveroo riders were workers – their right to substitution. The CAC found that the riders had the contractual right to ask a substitute to take their place on a job and, critically, that this also occurred in practice. As a result, it could not be said that they undertook to do work personally for Deliveroo.
What does this mean for employment law?
The two cases highlight that, although no one factor is conclusive, an individual’s right to substitute another person in their place can be a key issue in determining employment status.
They also reinforced that it is not just contractual terms that are important, but what happens in practice. Although Uber’s contracts with drivers claimed they only acted as an agent, this was not reflected in reality. By contrast, Deliveroo contracts provided for a right to substitution which the CAC found was also operated in practice.
What about tax?
Whilst employment and tax law consider similar factors when deciding on the status of an individual, it should be noted that the one does not follow the other. In particular, tax law does not recognise the status of ‘worker’, merely distinguishing between employees and the self-employed.
These decisions therefore do not automatically have any bearing on the tax status of Uber drivers or Deliveroo riders.
What happens next?
It is unlikely that we have heard the last on this issue – it is understood that Uber at least are planning to appeal their decision.
More changes are also expected to bring employment and tax law up to date. It was announced in the November Budget that, following the Taylor Review of Modern Working Practices (see here), the Government will issue a discussion paper looking at whether reforms are required to make employment status tests clearer for both employment and tax law.