Uber Trouble for the Gig Economy

The widely publicised decision by Transport for London not to renew Uber’s operating license in London should be seen as a warning shot to gig-economy companies, according to employment rights campaigners.

Frank Field, a Labour MP has said ‘This is a game changer for the gig economy. Uber must now respond to TfL’s decision by totally resetting its business model’.

The gig economy approximately refers to a self-employment, or freelancing, model of working where an individual sells their skills and/or services on an ad-hoc basis. In Britain, according to research by the RSA and Ipsos MORI, 1.1 million people work in the gig economy and by 2020 it could be worth as much as £9 billion to the UK (Office of National Statistics). The gig economy can enable businesses to quickly address skills shortages along with providing workers with, often highly desired, flexibility.

However, the gig economy also presents a challenge for employment law. There is a concern that many companies, such as Uber along with Deliveroo, incorrectly classify gig workers as self-employed, denying them of any employment rights. A working individual’s employment rights are determined by their employment status of which there are three broad categories: employee, worker and self-employed. ‘Worker’ status is a hybrid between employee and self-employed. Workers have greater autonomy than employees but are still
dependent on their employer for work and retain some employment rights such as annual leave and minimum wage rights.

Uber, which is often held up as an example of the negatives of the gig economy, treats its taxi drivers as self-employed, presenting itself as a communication platform that facilitates the running of taxi services, not as the provider of the taxi service itself. It has repeatedly faced criticism from unions, lawmakers and traditional black-cab drivers over working conditions. Just this week the General, Municipal, Boilermakers and Allied Trade Union (GMB) issued sex discrimination proceedings on behalf of a female driver against the company.

In 2016 an employment tribunal ruled that Uber drivers were workers and not self-employed, as the company claimed, for the purposes of the Employment Rights Act 1996. Uber have contested this decision and their appeal will be heard over 27 and 28 October 2017. With TFL’s decision not to renew Uber’s license possibly signalling that the law makers and regulatory bodies are more willing to take action against businesses who use a ‘gig economy’ business model, employers should watch Uber’s legal fortunes closely and seek guidance
around the use of freelance workers.

For further information on this topic, please do not hesitate to contact Millie Kempley or a member of the Employment Team on 0345 070 6000.

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