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Uber faces court battle with drivers over employment status

Uber is facing a legal challenge from drivers who say that they should be recognised officially as workers at the company, as calls grow for new rights for the UK’s burgeoning army of self-employed individuals.

In a tribunal hearing described as “the case of the year in UK employment law”, lawyers working for a group of Uber drivers will argue that the terms and conditions of their work with the company mean that they are not technically self-employed and should be entitled to a range of benefits that they currently do not receive.

The case, which begins on Wednesday, underlines the growth of the so-called “gig economy”, where companies use self-employed workers rather than keeping people on their books. On Monday, the Guardian highlighted the case of Hermes, where the 10,500 couriers working for the parcel delivery company are self-employed. This perfectly legal arrangement means that they are not entitled to the “national living wage”, pension contributions, or holiday or sick pay.

In the case of Hermes, one employee told the Guardian that they had earned as little as £5.50 an hour over some periods, although the company said its network of couriers received the equivalent of £9.80 an hour on average. “We believe all Hermes couriers will receive parcel delivery and collection rates that will give them the ability to earn at a level that is at least equal to the national living wage,” the company said.

The case against Uber is being taken by 19 drivers, with two test cases starting on 20 July. The ride-hailing app has about 30,000 drivers in London, all of whom are designated as self-employed.

Annie Powell, a solicitor at law firm Leigh Day who will represent the drivers, said the case hinged on two things: the nature of Uber’s business and the control it had over drivers. “Uber is arguing that it is a technology company and that it does not provide a transport service to customers, it just puts them in touch with drivers,” she said.

Powell said the hearing would seek to prove that this was not the case, and that because drivers were subject to ratings and were not told where customers needed to be dropped off, they were not operating as self-employed businesses. “We are arguing that they are workers … Workers have fewer rights than employees, but are entitled to the national minimum wage, holiday pay, the right not to be discriminated against and the right not to have deductions made from their salary,” she said.

Uber, which has its European headquarters in the Netherlands, was seeking to argue that drivers in the UK can only seek a remedy in the Dutch courts, Powell said.

If the drivers were successful, she said, other businesses might face similar claims. There was a “creeping erosion of employment rights as companies misclassify their workers as self-employed”, Powell said, adding that new technology was making it easier for companies to have more remote relationships with workers. “This has changed how work looks and might give rise to the argument that people are not employees.”

Jo Bertram, the regional general manager for Uber UK, said more than 30,000 drivers in London used the app “and this case only involves a very small number”.

“The main reason people choose to partner with Uber is so they can become their own boss, pick their own hours and work completely flexibly. Many partner-drivers have left other lines of work and chosen to partner with Uber for this very reason.”

Sean Nesbitt, a partner in the employment team at law firm Taylor Wessing, said the scheduled five-day hearing was “the case of the year in UK employment law” for three reasons.

“First, Uber is battling a wave of litigation around the world. A US class action settlement worth $84m-$100m (£64m-£76m) is having trouble getting judicial approval, with criticism that it is too cheap a price. The UK case will further fuel litigation in other industries, and other countries,” he said.

Nesbitt said the UK had a useful “third way between costly employee status and low rights self-employment status”. The label of “worker” gives basic protections on working time and pay, and includes the right to litigate, which Uber tries to avoid with arbitration clauses.

Thirdly, he said, the case, which is being supported by the GMB union, highlighted the opportunities for unions to regroup and represent workers in the gig economy.

Similar cases due to begin from later this year will see four cycle couriers taking separate tribunal cases against Excel, City Sprint, Addison Lee and eCourier, arguing that they are not truly self-employed, as the companies currently describe them. They work up to 50 hours a week for a single companies, receiving £2 or £3 for each parcel that they deliver. The first case will be heard in November and the other three will follow at the start of 2017.

“The real battleground is the extent to which they are really in business on their own account,” said the couriers’ barrister, Jason Galbraith-Marten. “The law says that if you are an employee, you have to deliver a personal service; you have to turn up and do the work yourself. If you’re running a business, you can send someone else … The idea that a courier would have other people to send is fanciful.”

Galbraith-Marten said the cases would explore whether the companies were obliged to provide the couriers with work and whether they could work for someone else at the same time – the couriers will argue that they are not able to do deliveries for more than one company.

In one case, he said, the company had argued that a courier had been able to take time off, proving that he was not obliged to work, but it had emerged that this was the result of an accident, which meant that he could not ride his bike. During that time, he was not entitled to sick pay from the company.

While the hearings were measuring individual cases against existing law, if the couriers and the Uber drivers were successful, the rules around employment law may have to evolve, he said. “As more and more of these cases come to the fore, it has a cumulative effect in terms of changing people’s attitude to the nature of employment,” Galbraith-Marten said. “We may well want things, including services, to be cheap, but how is this funded? Does it come out of the companies’ profits or from having people on these types of contracts where it’s the couriers who are suffering to keep the service cheap?”

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