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Decision on workers’ rights: Bonus or burden?

Matt McDonald, Employment Partner - Shakespeare Martineau

Recently, the Supreme Court put an end to Uber’s landmark employment battle over worker rights. Having failed to overturn the employment tribunal’s original decision and subsequent appeals, Uber’s drivers are now classed as ‘workers’ and must be given the employment rights that come alongside that. While the ruling has given many gig workers peace of mind, some employers are faced with a headache. So, how can companies that operate flexible employment models ensure they avoid coming under fire?

In the UK, the ‘worker’ status was adopted as a middle ground between employment and self-employment, with the aim of giving individuals some – but not all – of the protections that are afforded to employees, i.e., minimum wage, holiday pay, and sick pay. While worker status may carry with it an element of freedom around choosing hours – something which many people might appreciate – it doesn’t allow individuals to benefit from some of the key rights afforded to employees, most notably, the right to claim unfair dismissal. The Uber decision has raised a lot of questions around the ways workers are treated and how companies that engage a lot of (purportedly) self-employed contractors should go about tackling the problem.

In terms of the wider gig economy, the fallout from the Supreme Court’s decision is likely to be huge; it is expected that it will be used as precedent for all workers currently classified as ‘self-employed’ in the gig economy and potentially further afield. Therefore, those employers which operate flexible employment models will need to carefully assess their own working practices, then adapt them if necessary.

Particularly in light of the current economic climate, employers should think pragmatically about how to support their flexible workforce. To identify, assess, and avoid associated risks, all businesses need to check that they’re keeping robust and up-to-date records for all individuals and that such records detail information such as work patterns, work expectations, payment terms and substitution.

As a landmark decision for the sector, Uber’s case alone would’ve been significant, even without the extra publicity that arose when Uber backtracked on its initial standing that the ruling wouldn’t set a precedent for all of its workers. Uber has now sensibly backed down and committed to treating all of its drivers as ‘workers’. There is, however, still a dispute about whether drivers are working whilst waiting to be allocated a job or when responding to a job; expect more litigation on this issue.

Controversially, Jamie Heywood, regional general manager for Uber in Northern Europe, recently confirmed Uber’s stance that the Supreme Court ruling was specific to the private hire vehicle industry and doesn’t necessarily apply elsewhere in the gig economy. This is significant given Uber’s foray into the food delivery sector, with Mr Heywood making it clear that Uber Eats drivers will continue to be treated as self-employed by Uber. The morality of this approach is dubious; however, it is legally credible provided that Uber Eats drivers have an unfettered right to send a substitute in their place, which plainly isn’t the case with private hire drivers. Deliveroo has already successfully argued this point in the high court.

So, even though the impact of the ruling on the food delivery industry may be limited, companies should be reviewing their contracts and practices to ensure that they can justify continuing to treat drivers as self-employed. If they cannot, then the only safe options are to change their operating model or to treat the drivers as workers.

While failure to act may spark a raft of potential employment claims, businesses should avoid any knee-jerk reactions when it comes to changing the way they classify drivers or riders. Companies such as Deliveroo and Just Eat have built their business models around flexibility; should this change overnight, there’s a risk that revenues could disappear too.

Ultimately, business owners have a tricky balancing act to master. Not only has the ruling set a legal precedent for employers, but it is also changing investors’ expectations. Two of the UK’s biggest investors, Aberdeen Standard and Aviva Investors, recently said they will not buy Deliveroo shares because of concerns over workers’ rights, causing share price to plummet. In an uncertain climate, it is more important than ever for businesses to ensure they remain attractive to potential sponsors.

In the coming months, the gig economy is set to see a significant overhaul as companies grapple with the consequences of the Uber decision. So, to safeguard an industry that has flourished in the UK in the past year, business owners operating flexible employment models need to act, to ensure they don’t get left behind.

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