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Uber drivers “are not self-employed”, court rules

4th Nov 2016

Uber drivers are not self-employed and should be paid the “national living wage”, a UK employment court has ruled in a landmark case which could affect tens of thousands of workers.

The taxi app could now be open to claims from all of its 40,000 drivers in the UK, who are currently not entitled to holiday pay, pensions, or other workers’ rights.

Employment experts said other firms with large self-employed workforces could now face scrutiny of their working practices and the UK’s biggest union, Unite, announced it was setting up a new unit to pursue cases of bogus self-employment.

Research by Citizens Advice has suggested that as many as 460,000 people could be falsely classified as self-employed, costing up to £314m a year in lost tax and employer national insurance contributions.

The Uber ruling could force a rethink of the gig economy business model, where companies use apps and the internet to match customers with workers. The workers are not employed by the firms, but have commissions taken from their earnings, and many of these firms have become huge global enterprises.

The decision of the employment tribunal comes amid growing concern within government regarding the growing trend towards self-employed workforces. The government has recently announced a six-month review of modern working practices and HMRC is setting up a new unit, the employment status and intermediaries team, to investigate firms.

MPs launched an inquiry last week into pay and working conditions in the UK which will look at the status and rights of agency and casual workers and the self-employed for the purposes of tax, benefits and employment law, and how to protect them.

The ruling is not the end of the process for Uber. The firm will take the case to the employment appeal tribunal, and following its decision there could be further hearings in the court of appeal and then the supreme court. Any payments due to drivers will not be calculated until that process is over.

Other drivers with the firm will not automatically receive payouts, but if the firm accepts the ruling, it will have to change its contracts to avoid more cases being taken by drivers. Lawyers say that its terms and conditions are similar for all of its UK employees.