In July, the Central London Employment Tribunal heard evidence concerning the employment status of two Uber drivers in a test case that could have a significant bearing on the rights of the tens of thousands of Uber drivers in the UK, and potentially countless others working in the UK’s growing ‘gig’ or ‘sharing’ economy.
The drivers believe that they are workers, while Uber maintains they are self-employed independent contractors. The distinction matters because workers are entitled to rights such as the right to be paid the national minimum wage, the right not to suffer an unlawful deduction of wages, the right to paid annual leave and rights to rest breaks, none of which are available to independent contractors.
The question of employment status is already a concern for others in the gig economy. Couriers working for Excel, CitySprint, Addison Lee and eCourier, for example, have all launched proceedings regarding their employment status.
For Uber, 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. A finding that their personnel are workers, or even employees (who have an even greater array of employment rights), would almost inevitably lead to increased operating costs, which would threaten margins.
Those higher costs could, in turn, 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.
Akshay Choudhry is an associate in the employment team at UK law firm Burges Salmon