EMPLOYMENT 

Employment Status Can Be Uber Difficult

Many cities across the world including Belfast, have recently welcomed the arrival of Uber, an online taxi company which operates by way of a mobile App. 

Whilst booking an Uber taxi may be somewhat simple and clear cut the employment status surrounding Uber drivers in the UK is somewhat more ambiguous. Uber drivers in the UK are currently contracted on a self employed basis however given that Uber exercise control over the amount its passengers are charged, require drivers to follow specific routes and have in place a rating system to assess driver’s performance, a group of drivers have launched a legal battle at the Central London Employment Tribunal arguing that they should in fact be recognised as Employees.

The difference in status is important as self employed workers enjoy fewer rights and entitlements than employees. Employees receive additional statutory entitlements such as protection against unfair dismissal, national minimum wage, holiday pay, and sick pay rights. These rights are not afforded to those who are self employed. This case and its outcome will be extremely significant throughout the UK due to the increasing use by companies of so called self employed contracts in an effort to avoid liabilities and expense associated with employees.

Even if a contract sets out that an individual is engaged on a self employed basis, this is not the end of the matter. Employment Tribunals have repeatedly demonstrated that they will look beyond any purported contract to the substance of the relationship in order to ascertain whether it is truly that of an employer and employee.

The leading case in this area is the 1968 case of Ready–Mixed Concrete (South East) Ltd –v- Minister of Pensions and National Insurance which highlights the following conditions which must be present for the courts to find that a relationship of employer/employee exists:-

-The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.
-He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master.
-The other provisions of the contract are consistent with its being a contract of service.

Further guidance was provided by the Court of Appeal in the more recent case of Stringfellow Restaurants Limited –v- Quashie. This case concerned Ms Quashie who worked as a lap-dancer between two clubs owned by Peter Stringfellow. Finding that Ms Quashie was not in fact an employee Elias LJ focused on whether a ‘mutuality of obligation’ existed between the parties sufficient to establish a continuing relationship between each separate engagement.

In determining that no such mutuality of obligation existed the Court of Appeal concluded that Stringfellows didn’t employ Ms Quashie to dance but rather she paid Stringfellows a fee to be given the opportunity to earn money. As there was no obligation on Stringfellows to pay Ms Quashie any particular amount of money Elias LJ held that she took the economic risk of potentially earning nothing on a particular night. He concluded by saying "It would, I think, be an unusual case where a contract of service is found to exist when the worker takes the economic risk and is paid exclusively by third parties."

It remains to be seen whether the Employment Tribunal takes a similar approach in the current Uber case. What is clear however is that the outcome will have significant ramifications for many employers using similar practices throughout the UK.

It is imperative that employers clearly define at the outset whether an individual is engaged as an employee, a worker or self employed and that they act in a way which is consistent with that status. An individual’s employment status will not only determine who is responsible for payment of tax, it will also determine whether the relevant individual is required to make National Insurance contributions and whether or not he/ she is entitled to the wider rights afforded to employees.

 

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