Uber loses appeal on employment rights of drivers

Uber has lost its appeal against two taxi drivers being held to be workers rather than self-employed contractors. This means they are entitled to worker rights such as holiday pay, sick pay and the National Minimum Wage (NMW). 

The amount of control Uber exerted over the drivers was a critical factor in the initial decision where the drivers were found to be workers rather than self-employed. The Employment Appeal Tribunal saw no issue with this finding. 

Also under consideration was what should be considered working time. Was it 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 as well? Whilst this was a more difficult issue to determine, the Employment Appeal Tribunal agreed that in this particular case it would be the latter. This would mean that Uber drivers would be entitled to be paid NMW 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. 

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.’