Last Friday’s decision by the Central London Employment Tribunal that online taxi service Uber must recognise its drivers as employees rather than self-employed workers could have significant implications for all freelancers, including highly skilled Umbrella Company Employees and other contracting professionals, an industry expert warns.
Two Uber drivers, supported by the GMB union, had argued that they were not self-employed but were company employees – a stance that they said entitled them to the retrospective and prospective payment of a raft of associated employment benefits.
However, as Telegraph contributor Tom Welsh noted directly after the Tribunal ruling, they are hardly representative of the vast majority of Uber drivers, 76 percent of whom say that they prefer their current freelancing arrangements, which allow them to work when they wish.
The effect on their incomes is likely to be significant: instead of drivers earning £12 per hour after costs as they currently do (a sum considerably higher than the National Minimum Wage), the ruling obliges Uber to pay them a minimum salary, irrespective of whether they pick up passengers.
This will almost certainly restrict the highly flexible way that drivers currently operate. If, as seems likely, Uber is required to fund holiday pay, then drivers are likely to find themselves stuck with higher commission fees.
Uber’s taxis are far cheaper for consumers than black cabs, but the ruling may deter people from becoming drivers for the company, leading to an increase in ‘surge pricing’ – hikes in the price of rides caused by demand exceeding supply. Uber’s famed affordability, convenience and flexibility could all be jeopardised.
Commenting, the CEO of the Association for Independent Professionals and the Self-Employed (IPSE), Chris Bryce, said that the decision gave drivers clarity about their relationship with Uber, subject to the company’s planned appeal. But, he added, self-employment means having control over one’s work commitments, which, for many, is a positive choice.
Companies that want to control precisely when or how workers do their jobs, he said, should not shirk their duty to provide employment protections and pay their workers’ National Insurance Contributions as well. If they wish to hire workers on a freelance basis, however, then they should be business-like about that relationship.
Noting that the ruling may have an impact on the wider gig economy, Bryce added:”However, Government must be careful not to dissuade firms from making use of the highly-skilled, on-demand flexible workforce as a whole. The vast majority of people who work this way made an active choice to do so and cherish their self-employed status. Research shows independent professionals innovate faster than any other group, and brought £109 billion to the UK economy in 2015.”