Uber loses appeal on payment of national minimum wage to drivers
In a blow to one of the largest operators in the gig economy, Uber has lost its appeal to overturn last year’s Employment Tribunal decision that its drivers should be paid the national minimum wage and holiday pay, which could result in a hike in NICs payments for the company
10 Nov 2017
The ruling on the employment rights of Uber drivers was handed down at the Employment Appeal Tribunal (Appeal No. UKEAT/0056/17/DA) and upholds the original decision on the employment rights of Uber drivers.This means that not only will drivers have the right to national minimum wage and holiday pay but Uber will face higher employment tax bills in the UK if drivers stop being self-employed.
This follows the decision of the Employment Tribunal last October which ruled that Uber taxi drivers were to be treated as permanent staff and were entitled to receive the National Minimum Wage and holiday pay.
Uber appealed, claiming that its estimated 40,000 UK drivers were self employed and simply used the booking app to access fares. The case can still go to the Supreme Court and it will have wide-reaching effects, particularly in terms of tax liability for employers operating in the gig economy.
In a lengthy decision, Judge Eady QC ruled that drivers were entitled to national minimum wage payments and that all parties would have until 2 December to make written representations to the Court about how they would implement the ruling, or apply to take the case to the Court of Appeal.
The ruling highlighted that the written agreements made clear that the drivers provided transportation services to passengers; Uber was simply the agent, which was disputed.
Uber argued that the written agreements made clear that the drivers provided transportation services to passengers, adding that the Employment Tribunal ‘had made internally inconsistent and perverse findings of fact in concluding the Claimants were required to work for Uber.
'It had wrongly held that drivers were required to accept trips and not cancel, when the Employment Tribunal had: (i) found there was no obligation on a driver to switch on the app (ET para 85), and (ii) expressly allowed that a driver might have the app switched on but still not be able and willing to accept assignments.'
Much of the case centred on what should be considered working time. The ruling went into great detail about this, considering whether it was just the time taxi drivers spent on an assignment or did it include the time they were logged on to their Uber app waiting for an assignment was well, as well as use of 'on-duty' and 'off-duty' when drivers were between jobs.
The Employment Appeal Tribunal agreed that this would mean that Uber drivers would be entitled to be paid national minimum wage for all the time they are logged on to the Uber app waiting for an assignment as well as the time they are actually on an assignment, rejecting Uber’s ‘meaasured work’ argument.
Commenting on the decision, Carolyn Brown, employment partner and head of RSM Legal said: ‘The likelihood is that Uber will try to appeal the decision to the Court of Appeal which means their fight may not yet be over.
‘If Uber cannot get this decision overturned though, it will have a significant impact on their business model.
‘With control being a critical factor in the assessment of the taxi drivers’ working status but a key requirement for the service Uber provides, something may have to give.
‘Probably a more pressing concern for Uber though is the possible consequences it may have on their exposure to tax and National Insurance Contribution liabilities.
‘As it stands, Uber would not be obliged to pay employer NIC in respect of their drivers if they are self-employed. If they are workers though, they may be exposed to a significant NIC liability. There may also be a substantial VAT liability.’
The case was brought by a number of drivers, supported by the GMB Union and represented by Nigel Mackay, employment solicitor at law firm Leigh Day. He said: ‘We have always believed that the Employment Tribunal’s decision from last October was entirely correct in saying that our GMB member clients were entitled to workers’ right such as the minimum wage and holiday pay.
‘We now hope that Uber will accept this decision, rather than seeking pursuing appeals, so that we can swiftly return to the Employment Tribunal on behalf of our GMB member clients, for the Tribunal to decide the compensation that they are entitled to.”
Christopher Davies, professional support lawyer at law firm Gateley plc said: ‘In respect of worker status it should be emphasised that this does not mean that the Uber drivers are ‘employees’ with employee rights. They are not going to be able to claim unfair dismissal or redundancy pay.
‘A worker as opposed to an employee has no right to receive work and is under no obligation to carry out the work. However their worker status does mean that they will have certain protections.’
Contractor tax adviser Qdos Contractor is calling for greater clarity in legislation which dictates the employment status of the UK's two million independent contractors.
Despite Uber's appeal, their drivers will continue to receive holiday and sick pay, paid rest breaks and the national minimum wage - sitting somewhere between self-employment and employment.
Seb Maley, CEO of Qdos Contractor said: ‘The ruling emphasises the need for the simplification of employment law, so that workers and employers both know where they stand when it comes to the rights they are entitled to.
‘Uber drivers might well need basic employment rights, so today's ruling should be welcomed. That said, we cannot confuse gig economy workers with self-employed freelancers and contractors who, in the vast majority of cases do not need nor want such benefits.’
Employment Appeal Tribunal ruling on Uber B.V. and Others v Mr Y Aslam and Others: UKEAT/0056/17/DA issued 10 November 2017.
Uber Employment Tribunal ruling - Aslam and Farrar Case Nos: 2202550/2015 & Others [Issued 28 October 2016]