Uber’s Supreme Court Decision

Uber has filled the headlines for half a decade, becoming the embodiment of everything good, bad, and ugly about the gig economy.

A quick background…

In 2016 two Uber drivers, James Farrar and Yaseen Asleem, on behalf of a group of twenty or so drivers, took the unusual steps of taking Uber to an employment tribunal. They claimed they were workers for Uber and were not self-employed, as Uber claimed.  They were successful, and many thought that was the end of the matter. Uber appealed the tribunal decision, which was dismissed. The appeal was then dismissed at the Court of Appeal, and most recently at the highest court in the land – The Supreme Court. This specific group of Uber drivers are now classified as workers.

The real human issue here is that the real-world problems of working people are brought into the legal realm. This isn’t really, (in my opinion) about the private hire trade but the activity of a ‘disruptive technology’ company has made sure to avoid dealing with their contractual obligations to their sub-contractors, meaning that their working practices were not truly represented in ‘the paperwork’.  For a company ground-breaking like no other, they have dealt with this like no other business we have ever seen, yet.

At first, they seemed not to understand the scale and implications of the trouble that they were in. Far from admitting defeat, Uber’s leadership highlighted that the judgement was based on a small group of drivers that took action in 2016. Technically true, but for most of us watching we knew that this was one battle in a much longer war of attrition.

Then: A couple of weeks ago, Uber did a complete 360-degree turnaround.

Uber boss Dara Khosrowshahi published an article in the Evening Standard. He announced. That.

“Drivers will now receive holiday pay, pension contributions and the National Living Wage”. 

Here is what me and other commentators thinks this really means for Uber, their drivers, and the gig economy at large.

Time Is Money in The Gig Economy

Drivers are now entitled to money whether they pick up a rider or not, (although they may will need to lawyer-up to get it).

Lord Leggatt’s judgment outlined that ‘working time’ wasn’t limited to trips ONLY, as Uber has argued, but any time the driver is logged into the app and ready to accept trips. This, one of the most significant parts of The Supreme Court’s ruling, was absent from Uber’s most recent announcement.

Boss of the TUC union body, Frances O’Grady, accused Uber of “cherry-picking” from the ruling, which said Uber should consider its drivers as workers from the time they logged onto the app.

Markel’s David Harmer suggested that the decision will have ‘wider consequences for the gig economy’. Any time a gig worker waits is time they are entitled to the National Minimum Wage. Apps like Uber and Deliveroo depend on having 1000s of workers unpaid on standby, waiting to pick up jobs.

Harmer pointed to the drivers’ subordination to Uber, which resembles the ‘dependent contractor’ outlined in Matthew Taylor’s 2017 ‘The Taylor Review of Modern Working Practices’. Uber’s structure only allows drivers to increase earnings by working more jobs, which drivers are less likely to do if waiting time were paid. As has happened during the pandemic, drivers waste time and petrol without any financial compensation when there are fewer jobs.

Is The Bank of Uber Really Open

Many believe the welcome wagon is rolling in for Uber driver. However, it may be easier for the government to come and collect. At very least, HMRC should serve their biggest notice of all time. 

Employment lawyer and expert Darren Newman highlighted in his piece ‘End of The Road For Uber’ that ‘every one of Uber’s drivers is now entitled to back-pay of minimum wage for all of the time they were logged on’. Before the recent development of holiday pay, NMW, and pension contributions, Uber’s leadership seemed unconcerned with their legal failings or even the impact on the company’s public image.

Even if, as Newman says, that Uber doesn’t think their drivers have the ‘nerve’ or the ‘resources’, that doesn’t mean that the rideshare giant hasn’t started to sweat.

Straight after the dismissal of The Supreme Court appeal, Uber sent a message to every driver’s screen. It said,

‘Today we learned that our case was not successful and a small number of drivers from 2016 should have been classified as workers, but this judgment does not apply to drivers who earn on the app today’.

A managing partner for law firm Keller Lenkner told tech publication Wired that requests from drivers to begin claims were coming in hourly ever since the ruling. The London firm, which says, it is representing over 9,000 drivers, believes they can realistically get up to £12, 000 for each driver.

Aside from the compensation that drivers are owed, Newman thinks that it is time for HMRC to take on the score of a lifetime.

‘Now that we know for sure that Uber drivers are workers, compliance officers can set about the task of assessing whether or not Uber has complied with their obligations in respect of the minimum wage and set about calculating the amount of arrears that are due. They should then issue what might be their biggest ever Notice of Underpayment – plus a penalty of up to £20,000 per worker.’

If no action is taken, HMRC risks losing all credibility, seen to be focusing on squeezing the little guy instead of going after the real problem. If HMRC can get Uber to cough up, then Uber drivers will have more confidence claiming against the tech behemoth. It would be a double loss for Uber and a double win for workers.

Uber Drivers Still Are Not Entitled to Sick Pay

Statutory Sick Pay (SSP) is an employment right, not a right of workers. As a result, Uber drivers are not entitled to sick pay. 

In their declaration of a ‘willingness to change’, Uber simply gave the bare minimum that comes with their drivers being classed as workers. As mentioned above, this didn’t even include payment for time spent on the app without a ride – something that Lord Leggatt specifically outlined. However, as an accountant, I notice that the age-old argument with the HMRC still comes into play: engaged or unengaged mileage, the issue not adequately dealt with is what constitutes work. Waiting for a passenger or having ‘someone in the back’. Many of my chauffeur clients spend more time waiting for a client than driving them but are paid throughout. Are the apps the new ‘ranking up’ or is it sitting in the driver’s lounge?

Even while classed as workers, Uber drivers are paid still paid gross. Outside of the employed PAYE system, there is no secondary contributor to pay Class 1 National Insurance Contributions. Without a secondary contributor, drivers are not entitled to Statutory Sick Pay or other related payments like Statutory Maternity Pay.

To give sick pay, Uber would have to change not only their driver’s employment law status but also their tax status too. Without this benefit, Uber drivers will have to rely on Maternity Allowance or Employment and Support Allowance from the government.

Unanswered Questions for Drivers Who Use Multiple Apps

Do drivers working for multiple apps provide a get-out clause or an opportunity for Uber?

In Professional Driver Magazine, Industry consultant and expert Dr Mike Galvin, who works with Uber competitor Bolt, had this to say:

‘It’s not mission impossible to work out how to apportion waiting time among companies, but it’s pretty clear that a driver with three or four apps on the go is definitely an entrepreneur, not a dependent contractor.’

It’s a valid and interesting point. Much of Uber’s emphasis in their public statements have been on the ‘flexibility’ that the platform gives drivers. They claimed that after carrying out a survey, only 20% ‘wanted more protection if it meant a loss of flexibility.’ Although that may sound like tech spin – It is either a convenient truth that ignores the thousands of full-time drivers who are treated as expendable and left without employment or workers’ rights, or the reality to many drivers. However, as Dr Galvin points out, things don’t seem as straightforward with the presence of multiple apps.

That being said, drivers registered with multiple apps aren’t necessarily going so to enjoy life as a high-flying businessman. They are looking to pay the bills, and so hedge their bets on several apps to get enough work. The money earned isn’t the income associated with a growth entrepreneur, especially seeing as more money is only achieved by taking on more trips.

After the judgement, co-lead claimant James Farrar, made an emphatic statement about the dream that Uber sells to drivers:

‘Uber drivers are cruelly sold a false dream of endless flexibility and entrepreneurial freedom. The reality has been illegally low pay, dangerously long hours and intense digital surveillance.’

‘Flexibility’, which is a genuine benefit possibly slightly inflated by Uber, is less critical than employment protections for people working full-time in the gig economy. Part-time workers using multiple apps are likely to enjoy the flexibility but are full-time app users are the ‘subordinate’ and ‘dependent’ workers that Lord Leggatt’s judgement is seeking to protect.

The Decision Will Not Really Transform the Gig Economy

Even The Supreme Court cannot change the life of a gig worker. 

Charlie Thompson, employment partner at Stewarts Law, believes that little will actually change.

He says, ‘Other gig economy businesses and workers will take notice, and we may see a spike in claims, but because every employment case is decided on its own facts, we will still see arguments that all business shouldn’t be treated like Uber’. Two gig economy businesses are never the same, with the technology commonly the differentiating factor, even if drivers or users obtain jobs in the same way.

From a legal point of view, the rights of drivers as workers are significant. Uber is no longer allowed to define those that work for them in the way that most benefits them, that cannot be discounted. Uber is forced to admit that their drivers actually work for them, which is significant.

However, in the end, the judgement amounts to the three things we’ve outlined already: holiday pay, pension contributions and National Living Wage. Uber may not even bear the brunt of these added costs, which are likely to be passed on to the customers. When New York City’s minimum wage law came into effect in 2019, Uber simply raised its prices in the city to remain profitable.

Charlie paints a grim picture of the gig economy of Christmas future:

“Today’s decision does not give individuals working in gig economy businesses basic protections such as a guaranteed amount of work, the right to paid sick pay, the right to take maternity leave and return to the same role or the right not to be dismissed without the company having a fair reason and following a fair process. A gig economy business can still, in practice “hire and fire” as it chooses.’

This is certainly disheartening to read if you believed that this decision was an engine for substantive change.

The purpose of the legislation was to.

‘Protect vulnerable workers from being paid too little for what they do, required to work excessive hours or subjected to other forms of unfair treatment’.

Uber commended itself for providing three protections that most employees give as standard. Although Uber will act as a warning for future companies looking to engage workers in the same way, and for those that ignore the relationship with their sub-contractors. In this case I don’t see things improving drastically specifically for Uber drivers, for a while.

However, in conclusion, I genuinely feel from my own dealings, that this still does not represent the reality of many good private hire operators and their drivers, who have been around long before the Apps, and recognises the need to attract and retain their self-employed workforce.

Gary Jacobs

MD
The Eazitax Group

www.eazitax.co.uk