The Tribunal decision on Uber drivers will concern everyone who employs freelancers and treats them as genuinely self-employed. How can you tell whether your freelancers are, in fact, workers and therefore entitled to paid holiday, minimum wage etc.? To what extent is your business at risk? We provide a simple guide for the uninitiated.
While the vast bulk of employment rights are only given to individuals who are regarded as “employees”, there is a further category of staff, namely “workers” who are also entitled to a wider range of rights than fully fledged freelancers.
So, it is important to know whether freelancers are workers and whether they might be entitled, for instance, to:
- Pensions auto enrolment
- Paid holiday
- National minimum wage
- Maximum working hours
- Whistle blowing rights
The definition of worker is contained in a number of Acts. As defined, ‘workers’ include employees, as well as those engaged under any other contract whereby the individual:
- Undertakes to do work personally for the business and
- Is in a client or customer relationship as a professional or business undertaking.
Taking the statutory definition, whether or not there is personal service and whether or not the freelancer is operating as a professional or business undertaking are the central factors to address.
Contracts with freelancers will frequently include a clause under which that freelancer has a right to substitute another person to do the work. A genuine right of substitution will mean, obviously, that there is no personal service and that the individual is not a worker.
However, if it is drafted this way the contract needs to reflect the true agreement between the parties. There therefore needs to be a genuine right of substitution and not just a limited right, for instance a right which is subject to the employer’s express approval etc. The Tribunal would look at factors such as whether substitution is allowed when that individual is unable to work, or when they are simply unwilling or have other work elsewhere.
Profession or business undertaking
Even where the individual is obliged to do work personally, they will not be a worker if they behave as a professional or business undertaking.
There is a paucity of cases on the “professional” side of things, but this could be taken to include obvious professionals, such as doctors and lawyers, but also less obvious professionals, such as television cameramen.
When working out whether or not the individual is a professional or business undertaking the “dominant purpose” of the contract will be looked at by the Tribunal. Is the contract in essence one between two independent business undertakings or not?
Previous cases have suggested that the following factors are relevant:
- The individual markets their services to the world in general (indicating they are not a worker)
- The individual has become integral to the company’s organisation (indicating they are a worker)
- The degree of disparity of bargaining power, or subordination will also be relevant
- Whether the individual operates through a limited company (although this will not necessarily be fatal to worker status)
Worker status should be seen as somewhere on a spectrum or continuum between genuine freelancer operating as a business at one end and employee at the other. Therefore the factors used to decide whether or not an individual is an employee will also be relevant and may indicate worker status if not fully fledged employment status.
When it comes to employment and worker status the Courts are clear that they will look at the situation as a whole, with no one factor being determinative. The object of the exercise is to paint a picture from an accumulation of detail. The following factors will be relevant:
- Degree of control
- Whether payment is regular
- Whether payment is for piecework or time
- Whether there is any profit share or assumption of risk on the part of the individual providing the work
- Whether the individual provides their own tools and equipment
- Whether the individual works for others in a similar field
- Whether they are given any benefits by the engaging company
- Whether they are included with the normal staff in respect of, for instance, gym membership, medical expenses, staff parties, ID passes etc.
Factors relevant to the Uber case
A definition of ‘worker’ and yardsticks can be found on the gov.uk website. The approach in making a decision by an employer will need to be more subtle than this, which contains a list of half a dozen or so factors only. The Employment Tribunal in the Uber case ran through a large number of indicating factors which were relevant to that particular case. Timely advice would therefore be recommended, and our expert solicitors would be delighted to help.
Here are some of the factors which tended to show ‘worker’ status in the Uber case. The Tribunal was influenced by the fact that Uber:
- Can accept or decline rides without reference to drivers
- Interviews drivers and recruits them
- Does not give drivers any personal information about passengers
- Sets routes for drivers
- Requires trips to be accepted by drivers
- Runs a rating system that effectively amounts to a disciplinary procedure
- Takes the risk where fares are not paid or cabs are soiled
- Handles complaints itself
- Has the power to amend or vary the terms of the contracts it has with drivers