Should you be afraid of the Uber Tribunal?
Uber seems to be causing a great deal of panic amongst many, including many of my clients and colleagues in the private hire industry. I thought I would wait a little until the blogging dust has settled to put my own view of what this means to all of us in trade. So here goes…
Firstly, I must admit to having a dog in this fight, I have been dealing with employment status issues for many years and therefore none of the implications of this are new to me. As I sat and looked at this forty-page document, all I could think was what a nightmare this is to review, and how I didn’t truly understand the defence case.
I am not a solicitor, however as an accountant I am well versed in case law relating to this and to defending HMRC claims, so let’s look at what happened;
Firstly, contrary to the implications certain groups have made over social media, this is not a court case nor is it a class action that will immediately affect thousands of drivers. It is a Firsttier tribunal which although legitimate and relevant, does not create precedent, it merely creates decisions that are considered persuasive in other judgements at the same level and above. Even if it was a formal precedent, there are already opposing cases such as Autoclenz v HMRC. It does mean however, that other drivers who already have the right to do this, may now choose to follow in their colleague’s footsteps and make a similar case with the argument to hand.
Most of the tribunal notes are regarding technical issues, but in general Uber were making a couple of substantive claims specifically to show that they were not liable, specifically for the employment of the drivers. They were a technology company (with an operator’s licence!), providing a link between passengers and drivers, making both parties their customers. Unfortunately for them, you do not have to look too far to see many similar models in the private hire industry, where the operator is in effect a marketing company who for a fee introduces drivers to passengers, that fee being the weekly circuit fee.
Secondly, it was stated that the contracts themselves didn’t support a relationship between the driver and Uber. Any professional involved in status disputes knows that the current thoughts are that contracts cannot be taken in isolation. Tribunals tend to look at how well the contract relates to the actual working practices of the company. There was a third minor issue about whether a Dutch company in a UK tribunal is under the appropriate jurisdiction. As we now know the courts disagreed on all counts.
The tribunal chose to look at what they deemed as the true working practice of the drivers. They used Uber’s own paperwork, called “guidance” against them. They indicated sufficient proof that the drivers in this case were deemed as workers. Now here is the twist, the term worker has a specific legal definition according to tax law and it isn’t “employed”.
In defining an Agency Worker the BIS guidance states:
“The key elements required for someone to be an agency worker are:
• there is a contract (an employment contract or a contract to perform work personally) between the worker and a TWA;
• that worker is temporarily supplied to a hirer by the TWA; and when working on assignment the worker is subject to the supervision and direction of that hirer;
• the individual in question is not in a business on their own account (where they have a business to business relationship with the hirer who is a client or customer)”
There is a nuance here giving some specific employment rights to the drivers, including national minimum wage, holiday and sick pay. https://www.gov.uk/employment-status/worker, good luck to those guys who will get it. It does not mean that the whole industry is now going to be employed drivers only.
At this stage I would also like to dispel some employment status myths and express my own opinion as to why Uber didn’t make a defence based on past cases relating to this field. There is a test which is normally applied to these disputed cases called the ‘badges of trade’.
mutuality of obligation. The driver must come to work and the operator is obligated to give them work. Personal service. The driver can offer another suitably qualified individual to do the job. It is important to note that the judgement did recognise an obligation of sorts regarding personal service and supervision. The judge noted that log-ins to the app could not be shared and Uber could only deal with the registered driver.
The latest incarnation of the testing procedure is the SDC test, supervision direction or control? I have argued many times that an operator gives a driver a job but doesn’t tell them how to get the client from A to B, that is the drivers task. Conversely an Uber driver could potentially choose to use or not use the app and access his passengers from an operator or another app.
The judgement recognised the wide-ranging obligations imposed on the driver as a form of control although It was not seen as an immutable central tenant and could have been argued to a greater degree by the defence. How this relates to Uber’s working practice and why it did not form a part of the defence is personally puzzling. I do however look forward to their basis of appeal.
There is no way that the Uber tribunal will not affect how a business should set out its arrangement with self-employed subcontractors, this matter is far from over. Everyone should start to review the status of their drivers before the HMRC offer to do it for you. It is important to note that this is also very specific to Uber’s working practices. Each future case will be judged on its own merits. To reiterate, the courts will always look at the working relationship rather than the one laid out in the contract, if they don’t look similar. Reality over words, will determine status.
Do you have more questions about employment status? Gary offers industry members free consultations, visit driverserv.co.uk, leave a comment or call 0203 019 7378.