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What the Uber ruling will mean for the contingent workforce

9 Apr 2021 By Eleanor Whitehouse

The Supreme Court’s recent decision is set to send shockwaves through the labour market. People Management’s panel of experts delves into the possible consequences

Meet the expert panel

  • Paida Dube employment solicitor at DavidsonMorris
  • Dr Ursula Huws director of Analytica Social and Economic Research
  • Raoul Parekh partner at GQ Littler
  • Ben Willmott head of public policy at the CIPD

It’s one of the most highly anticipated and closely followed cases of its kind in recent years, but the Supreme Court’s ruling in February that Uber’s 70,000 UK drivers are workers – and as such entitled to receive minimum wage and benefits including holiday pay and pension contributions – promises to shake up employment status and have vast implications across the labour market.

Since Matthew Taylor published his review of modern working practices in 2017, recommending an improved balance between flexibility and employment rights for gig economy workers, as well as better security and certainty, employment status has been a hotly contested topic. And with the Supreme Court ruling in the drivers’ favour, as well as Just Eat announcing in December it would pay its workers hourly rather than per job and offer benefits, plus a top investment firm reportedly refusing to invest in competitor Deliveroo when it floats on the stock market in early April because of concerns over its treatment of workers, it seems the direction of travel is set. People Management asked a panel of employment law and labour market specialists what ramifications the court’s judgment could have for other businesses, and what they should be doing to prepare.

Why is the Supreme Court’s decision significant? 

Ben Willmott: It shows the ongoing confusion about the issue of employment status. The fact it took more than four years and escalation to the Supreme Court shows what a grey legal area this is, and the fine distinctions that exist in decision making about employment status. It shows this area is in need of further clarification because, although it’s clarified the matter for Uber and its drivers, it doesn’t help anyone else, as each case will be decided on its own merits.

Paida Dube: It’s been significant in terms of the element of control, which is always generally a stumbling block and, in this case, Uber had a lot of control around what drivers could and couldn’t do and what they had access to, even down to levels of remuneration, which is dictated by Uber despite drivers choosing how much time they spend working. It was clear they were battling a lot of obstacles around the basics of trying to establish what particular employment status applied to their drivers from the get-go.

Ursula Huws: By far the most significant element to me is that Uber seems to be trying to wriggle out of complying with the bit of the judgment that says the clock starts ticking on minimum wage from the moment they’re logged on until the moment they’re logged off. The ruling made it very clear that waiting time should be included in the hours for calculating minimum wage.

Raoul Parekh: The term ‘landmark ruling’ gets thrown around a lot, but this genuinely is one that deserves the moniker. First, the sheer scale of the Uber driver population makes it a significant issue for a lot of people across the country, particularly in London. Second, Uber has a very strong brand and an iconic place as the heart of the gig economy, so everyone’s been watching its battles very keenly. And the way the Supreme Court delivered its judgment was much more far reaching and radical than I think a lot of commentators were expecting. For Uber, it won’t quite mean ripping up its business model and starting again, but it will mean rethinking it and reconsidering its model and approach in the UK. We’ve never seen an operator like Uber make this kind of change.

How will this ruling affect other companies? 

BW: The ruling certainly reminds businesses to consider carefully how they classify the people that provide work for them and is likely to prompt some organisations, particularly those operating similar business models to Uber, to make changes to how they categorise employment status.

PD: The judgment itself will have a huge impact on other gig economy platforms, such as Deliveroo, which has riders in a similar situation in relation to subordination and control. Where it can be established that there is a significant level of subordination and control, a lot of gig economy platforms will struggle to carry on as normal. I’m sure there are a number of firms frantically looking to review the current agreements they have in place and assess their level of exposure to potential claims. Some platforms may be thinking it’s time to restructure if they want to keep going.

RP: Because the judgment was so radical, any company that operates in a broadly similar way to Uber is going to need to do the same reconsideration of model work that Uber’s been undertaking. That’s a good thing – it ensures a level playing field and competitiveness between different services. It wouldn’t help anyone for the people who are working for these companies to have to continually win the same battles against different companies.

If we look at firms that don’t have anything to do with the gig economy but use non-employed workers in some way, they’re facing a kind of pincer movement. On the one hand the Uber ruling is causing them to reassess directly engaged contractors, and on the other they’ve got the government’s changes to off-payroll working coming in that are potentially narrowing that method of engaging people. So the window of permissible, safe ways to engage people other than as employees is narrowing. What this judgment will do, and should cause people to do, is take stock of their use of non-employees, because too many companies are casual about that, and are carrying a lot of risk they don’t know they’re carrying. 

UH: The area of the judgment around waiting time has enormous implications, not just for other platforms like food delivery services, but for any company that employs people in ‘on call’ contracts, like zero-hours. There is currently a large number of firms that have a business model that depends on having workers basically on demand. And if they all have to start doing their calculations on the basis they’re paying for all the time those workers are logged on, that implies a massive change in the business model. That has both upsides and downsides for workers.

How will the decision affect the gig economy and the wider employment spectrum? 

BW: It depends on how you define the gig economy. We’ve had a gig economy of some description for as long as people have done paid work and it’s not something that’s going to go away, but I think bits of it will become more formalised and will probably see more people classified as workers. However, there are of course millions of people who are genuinely self-employed and will continue to operate in that way.

UH: I think it will mean companies having fewer workers who will have to be worked much more intensively, which implies moving from a very free, flexible system to more like a shift system. Some platforms already effectively operate shift systems. It will mean that kind of work is available to fewer people because, at the moment, part of the reason conditions are so awful in these online platform labour markets is there are lots of people who are signed up with the platforms who actually only work occasionally.

Research from Analytica suggests a high proportion of people who work for online platforms are doing it as well as another job for top-up income, but these people are less likely to be able to find work through these platforms except during peak demand. It will become much closer to a regular job with people working particular shifts. I suspect there will still be a lot of flexibility in terms of what shifts people choose and how long they are, but during the shifts workers can expect to be fed one job after another to avoid periods of downtime when they’re being paid the minimum wage, but not actually doing anything. I think it will be a deterrent to ‘multi apping’, where workers are signed in to more than one platform at the same time. 

PD: Change is probably inevitable in this whole process. The government keeps saying it wants to create this level of protection for those who are employees or workers, so I think it’s going to be a trend, and I foresee a need to get more clarity, not just in the gig economy itself but across the board. After the Taylor report was published, the government indicated it would be bringing in proposals to make the framework a lot simpler and clearer, and that it had intentions to legislate and provide that level of clarity, but to date that hasn’t been brought about. But the Uber decision is a step in the right direction towards bringing about that change.

RP: The clear direction of travel of most of the decisions in this area has been they’re finding in favour of the individuals. One upcoming fork in the road is about employment status, and whether people are workers or employees, and it seems likely that will be the next battleground. The unions have tried to argue for employment rights, not just worker rights, for gig economy and other non-traditional workers and generally haven’t succeeded. I wonder whether the Supreme Court judgment will be used in a way that tries to reopen that battleground.

What action would you like to see from the government in this area? 

PD: It’s hopefully a reminder for the government to move it from the back burner, and it becoming more of a front-loaded conversation around how they’re going to do this, because potentially the case will open up a lot of floodgates. It might be better to legislate on the matter rather than leaving it to the courts to work on a case-by-case basis.

RP: There’s a question around the government’s approach and whether it will think ‘this is confusing for both individuals trying to know their rights and companies trying to do the right thing’ and therefore it will simplify things. That would be a good thing, in my view, but it’s probably unlikely. I think it’s more likely it won’t find the parliamentary time or the will to do much in this area. This is such a fast-changing area, the recommendations in the Taylor review are now almost stale and probably need to be reassessed in light of what is happening now. It’s a shame the government seems to have created the opportunity for action, but then missed its own opportunity.

BW: This ruling highlights the importance of the government following through with its pledge to legislate to improve the clarity of the employment status tests. The CIPD’s research suggests an effective way to do this would be to abolish worker status altogether. It wouldn’t be a panacea, but it would certainly provide more clarity around employment status, and crucially would align it for employment rights and taxation purposes. 

What should businesses be doing in the wake of the Supreme Court’s decision? 

UH: At the very least they should do a risk assessment and look at anybody they’re employing who isn’t on a regular employment contract, and take a good look at what basis they’re employing them on. If they don’t have clearly specified hours in that contract, then they should be looking at changing the model to make it clearer when those workers start work and when they finish work, and check they are getting minimum wage. And if there’s a big gap between when they log on and when they stop working, the businesses should look at changing that model. If there are long periods of waiting time that they’re not being paid for, there’s a risk that the business might be doing something unlawful.

BW: They should be reviewing the employment status of people that provide work for them in light of the ruling and check that the contract accurately reflects the reality of the employment relationship. The CIPD recommends regularly reviewing the working arrangements of atypical workers at least once a year to check that there have not been changes that might have implications for their employment status.

PD: There are some simple, practical steps, like reviewing current agreements and contracts they have in place, and ensuring – if they’re going to be looking at trying to assess employment status and argue that someone is genuinely self-employed – that they’ve got the relevant evidence to support that position. Having an open-door policy and having a rapport with individuals can also mean the difference between someone rushing to lodge a claim and being able to resolve the issue internally.

I think all businesses should be taking on board what this means in terms of getting a bit more clarity around your employees, your workers and your self-employed individuals, where they sit and what that definition means. Clearly it’s a fine line, so it’s important that companies across the board review their current practices and see where they might be falling short.  

Read the CIPD’s employers’ factsheet on employment status

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