Thousands of Uber drivers could be entitled to minimum wage
The Supreme Court’s unanimous decision should come as no surprise given that Uber’s appeal follows an Employment Tribunal ruling against the company in October 2016 which was upheld at an Employment Appeal Tribunal (November 2017) and the Court of Appeal in December 2018.
The decision could mean thousands of Uber drivers are set to be entitled to minimum wage and holiday pay, although Uber said the ruling centred on a small number of drivers and it had made changes to its business since 2016.
The decision may have wider consequences for the gig economy because it suggests that any engagement with waiting time – where the individual must be to take work from their engager – could be deemed as working time which would need to be paid at least the National Minimum Wage.
The Supreme Court unanimously dismissed Uber’s appeal that it was an intermediary providing a platform rather than a service and determined that drivers should be considered to be working not only when driving a fare, but also when logged in to the Uber app.
The court’s reasoning considered the following key factors:
- By setting the fare, Uber controlled how much drivers could earn.
- The drivers had no input into the contractual terms.
- Uber can penalise drivers if they reject too many rides which controls how much work the driver must undertake.
- The driver’s service can be monitored through a star rating which allows Uber to terminate the relationship if the rating does not improve following repeated warnings.
The court determined that drivers were in a position of subordination to Uber – similar to the ‘dependent contractor’ concept contained within the Taylor Report – and a driver could only increase earnings by working longer hours.
The decision demonstrates the need to carefully consider the effect of an engagement’s actual working practices and the fundamental importance of having written contracts which accurately reflect these day-to-day working practices.
Markel Tax advocate prudence in spending time to examine the way in which services are to be provided by subcontractors, ensuring contracts are specifically drafted to reflect reality. Fundamental to this is careful consideration of the contract drafting to ensure all parties can clearly determine the rights and obligations placed on each other.
When it comes to drafting contracts it is important to consider both tax and worker status issues, as the costs of getting either wrong can prove to be expensive, as demonstrated in this particular case.
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