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Uber and the Gig Economy Challenge

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Uber - the company behind cab-hailing app is currently the subject of an employment tribunal claim by two of its drivers, who claim that they are 'workers' under UK employment law and are therefore entitled to receive certain entitlements such as the national minimum wage, statutory sick pay and holiday pay.

 

Uber in defending the claim is arguing that the drivers are self-employed contractors and not entitled to the protections enjoyed by individuals with worker or employee status. 

 

Background

 

Uber and other business models emerging from the ever-increasing, digitally-driven sharing or ‘gig’ economy have an increasingly loose and creative relationship with their end-users.

 

Uber's position is that it merely facilitates the relationship between taxi drivers and potential customers, with the former being contractors in business on their own account.

 

The drivers in this case contend that personal service and mutuality are both present in this arrangement and that they are therefore ‘workers’

 

How Uber’s business model works:

 

Uber: It requires drivers to show that they meet certain eligibility criteria, following which they may download the Uber app. When switched on, the app will notify the driver of potential jobs nearby and he or she has the option whether to accept them. The driver receives a fee for each job that is accepted and completed, with Uber calculating the fee to be paid by the customer and retaining 25%.

 

Drivers: They provide their own vehicle and are responsible for all insurance and maintenance costs, although the car and the insurance must meet Uber's requirements. They have the option to decline nearby jobs or turn off the app when they do not wish to provide taxi services, although their driver rating (which is visible to Uber customers) and their future use of the app may be affected if they refuse too many consecutive tasks. They are expected to provide a minimum number of hours' service.

 

Likely Tribunal Decision

 

As the drivers do not have the right to provide a substitute or otherwise delegate their responsibilities since they can refuse the job or turn off the app it is likely to find that Uber drivers are providing a personal service.

 

Therefore, the key question for the tribunal is whether there is mutuality of obligation between Uber and its drivers. Uber is likely to argue that the drivers have no obligation to accept jobs and can refuse jobs or turn off the app when they do not wish to work. However, the tribunal may choose to look beyond the driver's ability to accept or decline individual jobs and look at the context of the wider relationship, in which there are adverse consequences for drivers who refuse too many jobs or do not maintain a certain volume of work. It is also possible that the tribunal may place a wide interpretation on mutuality in order to give worker protection to the drivers, given the imbalance in bargaining power between the parties.

 

The tribunal has now retired to consider its decision and is unlikely to deliver its judgment for some time.

 

Comment: Whatever the decision, it seems highly likely that the losing party will appeal, given that the drivers are supported by the GMB trade union. For Uber, the financial consequences if it loses would be likely to make its current business model unviable in the UK - a finding that its drivers are workers could mean making changes to its business model and might put the brakes on its rapid growth.

 

A common feature of those operating in the gig economy is flexibility: their business models rely on the availability of large pools of low-cost labour to deliver affordable, convenient and responsive services. If their people are classed as workers it would almost inevitably lead to increased operating costs and threaten profit margins which could be passed on to consumers through higher prices. It could also affect how flexible or responsive these businesses are able to be in meeting consumer demand, thereby eroding some of the competitive-edge that tech-based service providers have over some of their more traditional competitors.

 

It is worth noting that Uber settled a similar case in the US earlier this year, so that Uber drivers there maintained their status as independent contractors. 

 

Watch this space!

 



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