Drivers for Uber Switzerland lose self-employed status

A ruling by a top Swiss court that drivers for Uber, the ride-hailing app, are employees – not self-employed, is “a situation UK businesses should keep an eye on.”

Status advisory Qdos issued this verdict in response to what cantonal officials in Geneva said was a “historical decision” – the Swiss federal court finding that they were right all along.

That’s because in 2019, the canton handed down a judgment classifying Uber as an employer, triggering obligations for the US firm to their drivers under social security legislation.

'Worker status set to remain for UK Uber drivers'

But in the UK, in the very same year, drivers for the firm which Uber similarly engaged on a freelance basis were likewise officially categorised as not self-employed.

Contract reviewer Seb Maley confirmed yesterday that in the UK, the 2019 verdict that Uber drivers are ‘workers’ (a verdict upheld by the Supreme Court in 2021), “looks set to remain”.

At least “for the time being,” he caveated, as the reviewer said it “remains to be seen” whether the outcome in Switzerland may relight the issue of the status of Uber’s UK drivers.

'Drivers don't want to be employed'

As ‘workers,’ those drivers are entitled to holiday pay, the national living wage and, where eligible, pensions, Uber has said in a video following the Supreme Court ruling.

But more combative-sounding, the California headquartered company reportedly said that in Switzerland at least, “drivers do not want to be employed.”

Also speaking after the Swiss federal court deemed the company to be an employer, Uber said it had to suspend its services in Geneva.

'This could mount up'

But it is the potential implications of the court’s ruling for Uber drivers in the UK – and others engaged on a freelance basis -- which is concerning Mr Maley, Qdos’s CEO.

“If the same were to happen in the UK – not just at Uber – but any firm engaging sole traders, the business engaging them would likely be liable for missing employment tax, perhaps for the entire duration that the workers have been engaged. 

“Needless to say, this could mount up,” he said. “With this in mind, businesses should make well-informed employment status decisions from the word ‘go.’”

'Employment status scrutiny is the next natural step for HMRC'

Employment experts talking of ‘missing tax’ is likely to turn the head of HM Revenue & Customs.

But actually, sole traders and their engagers may already be on the taxman’s radar.

“After IR35 reform, focusing on employment status [compliance] is the next natural step for HMRC,” Mr Maley told FreelanceUK.

“The tax office can now pursue hundreds – perhaps thousands – of contractors by targeting just one business [thanks to the reform]. This is opposed to previously needing to investigate contractors individually.

'Sole traders represent a bigger pond for the taxman to fish in'

“The result of this,” he continued, “means the processes for IR35 and wider employment status are now aligned. As a result, HMRC won’t need to differentiate.”

And the Revenue won’t need to look very hard either, because sole traders run into the “millions,” making employment status -- as an area of enforcement – “a bigger pond in which HMRC can fish.”

The only saving grace for freelancers, Mr Maley hinted, is that under HMRC’s false self-employment legislation, it is “the business engaging the worker which would be liable for missing employment taxes in the event of non-compliance, not the individual.”

 

10th June 2022

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