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Uber decision: the end of the gig economy?

View profile for Phil Cookson
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The Employment Tribunal’s decision in proceedings against Uber, released last week, has provided a potential hurdle to businesses seeking to utilise a network of self-employed individual contractors to provide services to customers, or “users” as they might be more likely referred to. 

The Tribunal determined what was a preliminary issue in the proceedings brought as test cases by two Uber drivers; specifically what “status” Uber drivers have under UK employment law.  The Tribunal concluded that the drivers were “workers” rather than employees or, as the company contends, self-employed contractors.  The immediate significance of the decision is that, as workers, the drivers will be entitled to basic employment rights such as holiday pay and the National Minimum Wage.

The Tribunal’s decision was undoubtedly of great importance to businesses and individuals alike who operate and work in what has come to be known as the “gig economy” but does it put an end to a business model based upon use of “gig labour”?

The immediate answer is maybe.  The parties on both sides vowed, prior to the Tribunal’s determination, that whatever the outcome an appeal was likely and this remains a possibility given the importance of the issue to Uber.  However, the written reasons of the Tribunal provide some clear findings which may prove difficult to overturn. 

What is clear is that each case will be determined on the particular facts; scrutiny will be applied to the terms of any contract with individuals, the methods of working, the determination of remuneration and risk and reward taken by the parties in respect of the particular enterprise pursued.

The concept of a “self-employed contractor” is nothing new and previous cases have been taken to the Employment Tribunal to determine the very same issue that was determined in the Uber case.  What is perhaps different is that past cases involved businesses which might have made use of self-employed contractors (or workers or employees as they were determined by the Tribunal to be) but not to anything like the scale of Uber or other businesses such as Hermes and Deliveroo which make large scale or exclusive use of that form of labour.

Whilst it may be early in the context of litigation concerning the gig economy, I think it is possible to argue that, as with zero hours contracts, there will be a place for the gig economy in some form.  The message for new players to the market might be to consider very strongly how stable your business model might be if the savings offered by self-employed contractors are essential to its success.