Uber and the gig economy

Vulnerable workers must be protected

The decision handed down on Friday 19 February 2021 has confirmed that courts will intervene to protect those engaged in the gig economy in order to safeguard workers who are not genuinely self-employed. The Uber case identified some key characteristics in order to help recognise when worker status should be inferred such as when workers were providing a personal service which was dependent, subordinate and controlled. These factors indicated that the drivers were obliged to perform work in a certain way and therefore mutuality of obligations existed.

It was found that the Uber drivers had no ability to negotiate their own terms, pay or working conditions and they were controlled by Uber. This did not genuinely reflect a self-employed relationship as there was no bargaining power or commercial relationship in existence between Uber and the drivers. As a result of the subordinate relationship, the courts concluded that these workers ought to be protected

with basic employment rights including national minimum wage and holiday pay.

What about the contract?

It was confirmed by the courts that the usual rules regarding contracts do not apply. What this means is (similar to the IR35 position) the courts will disregard the written contract and carefully analyse what happens in practice. In terms of the contractual provisions, the court went a step further and said that any clause which was deemed to be "contracting out" of the law, could not be relied upon. This means that any clause seeking to limit the relationship to a self-employed relationship and a clause indemnifying the company regarding any claims brought by the worker would not be enforceable on public policy grounds.

Is there a requirement to be vulnerable?

Whilst vulnerability is not written into the statute, the court did recognise the fact that there will be some circumstances where worker status would not be inferred even when a personal service was being provided. Examples would be experienced consultants who were able to negotiate their own terms and not be controlled in the same way. That being said, it is possible for senior people to be workers if they are sufficiently controlled.

What next?

We are often asked to produce a contract to ensure that the relationship is genuinely self-employed. The Uber case has confirmed that it is not possible to create such a contract in isolation as the courts will consider what happens in practice. We therefore recommend that working arrangements are carefully considered and anyone engaged on a self-employed basis is properly assessed using the control, personal service and mutuality of obligations test.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.