Uber and unions clash over 'freelancers are staff' ruling

A war of words has broken out about how Uber must reflect an employment tribunal’s ruling that drivers using the firm’s ride-haling app are in fact its employees, not freelancers.

Firing the first shot on Friday after the ruling was released, Uber emailed its 40,000 UK drivers to claim the judgement would only affect the two drivers who brought the case.

Further shrugging off its importance, the firm characterised the ruling as just a preliminary hearing which spells “no change” for some 39,998 drivers. It also said that it plans to appeal

The GMB union, which lodged the case, leaked the email on Twitter, blasted it as “misleading” and said the ruling applies to all 40,000 UK drivers, not just the two claimants.

‘Laughable’

If the union is correct, and employment rights are retrospectively awarded to Uber drivers and potentially other ‘gig economy’ workers, it would be ludicrous to the extent of amusing.

The Institute of Economic Affairs (IEA) explained its view: “Uber is no different from the dozens of other sharing platforms, such as Airbnb and eBay. It would be laughable to suppose that those who run their business through eBay should expect sick pay and holiday leave from the tech firm.”

But the GMB has since directed its fire towards Uber’s UK manager Jo Bertram, telling her in a terse Tweet: “Judge said your evidence lacked credibility. Wise to reflect before issuing any more statements.”

‘Ridiculous’

The union’s put-down seems to be a reference to comments made by judge Anthony Snelson, who led the three-person employment tribunal.

He dismissed Uber’s defence that its London operation is merely a platform that links tens of thousands of self-employed drivers together as “ridiculous.”

The judge also said that any outfit that resorted in “its documentation to fictions, twisted language and even brand new terminology, merits, we think, a degree of scepticism.”

‘New forms of contracting’

But it is the working practices that will always be the key determinant of genuine self-employment, “more so” than any contract’s written words, reminds the Freelancer and Contractor Services Association.

And a leading academic implies that the new terminology the judge cited may reflect the emergence of “new forms of contracting work and activities that do not fit into the traditional categories of work.”

Professor Guglielmo Meardi of Warwick Business School also said: “While these [new forms of contracting] are redefined, the safer default option may be to consider these forms of work as employment rather than self-employment.

“In the Uber case, the additional difficulty was that the most direct comparators, i.e. taxi drivers, are themselves mostly self-employed. However, they have considerable collective resources in terms of licencing, regulations, associations and access to industrial action.”

‘Employers on notice’

One champion of industrial action, Unite, will shortly set up a ‘bogus self-employment’ unit to target employers it suspects of “shamelessly dodging” their responsibilities by classifying ‘workers’ as self-employed.

Threatening a similar response in light of its victory, the GMB said: “[We are] putting employers on notice that we are reviewing similar contracts [to Ubers’] masquerading as bogus self-employment, particularly prevalent in the so called ‘gig economy’.

“This is old-fashioned exploitation under new-fangled jargon, but the law will force you to pay GMB members what they are rightfully due.”

‘Be careful’

Regardless of any new labels that they try to foist on personnel they use, employers have a simple choice, believes Chris Bryce, a former freelance professional who chairs the Association of Independent Professionals and the Self-Employed.

“If companies want to control exactly how or when their workers do the actual work, they must not shirk their responsibility to provide employment protections and pay their employer’s NICs too. If they want to engage workers on a freelance basis, then they must be business-like in that relationship.”

However, Mr Bryce also said that the government must “be careful” not to dissuade firms from making use of the “highly-skilled, on-demand flexible workforce as a whole.”

“The vast majority of people who work this way made an active choice to do so and cherish their self-employed status,” he said.

‘Misleading’

Uber drivers appear to be no exception. In fact, despite the judgement ruling that drivers of the ride-hailing firm are the firm’s employees, Uber has since released a poll reportedly showing 9 in 10 of them to prefer their self-employed status.

Reflecting to yesterday’s Mail on Sunday, which obtained the poll’s results, the GMB condemned the apparently independently-run research as “misleading” and putting forward a “false set of facts.”

“Uber drivers and other directed workers do have legal rights at work. The question for them now is how those rights are enforced in practice,” said GMB’s legal director Maria Ludkin.

“Uber drivers and thousands of others caught in the bogus self-employment trap will now enjoy the same rights as employees. This outcome will be good for passengers too.”

‘Higher prices’

The Adam Smith Institute disagrees. It says that as direct result of the ruling, Uber customers will see “prices rise and a less stable, predictable service.”

“And this doesn't just hit Uber,” warned the institute’s Sam Dumitriu. “It threatens other new business models like Deliveroo and Amazon Prime Now.”

The IEA confirmed: “Forcing regulations such as the minimum wage and the Working Time Directive onto sharing platforms will invariably increase their operating costs and force them to scale down. Drivers and consumers will pay the price through a limited number of ‘jobs’ with Uber and higher prices for customers.”

However, Uber was unable to convince the tribunal that it is solely a technology company, not a taxiprovider, and that Uber drivers do not work for the Uber business but rather are in business on their own account.

As a result, and despite wrangling over how the decision will be implemented (if it is not overturned on appeal), the ruling indicates that Uber drivers are entitled to holiday pay, paid rest breaks, and the national minimum wage.

‘Incentives’

More consensus among affected parties revolves around the government’s review of modern employment practices, and how the Uber judgement has attached greater importance to it.

The Social Market Foundation, a think-tank, reflected: “The government must recognise that differences in tax policy and regulation across employee and self-employed create artificial incentives for firms to move towards a self-employed or contractor relationship.

“Given the lack of clarity on the boundary between self-employed and employee it’s unsurprising that we’re seeing cases like Uber’s having to be resolved by an employment tribunal.”

But rather than blame the government, the IEA seemed to point its finger at the tribunal: “The nature of the labour market is changing, with more people self-employed than ever before,” it said. “Sharing platforms such as Uber have had a huge part to play in this change that allows people greater flexibility in their work. They should be applauded for enabling these positive changes to peoples’ working lives, not restricted by senseless rulings such as this.”

 

30th October 2016

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