The “gig economy” business model sees companies like Uber and Deliveroo claim their drivers do not work for them but are rather independent contractors running their own businesses. In essence, Uber and Deliveroo own the app and anyone who choose to work for them is to do so on a self-employed basis (while paying the company a commission based on their earnings).
While self-employed workers may have the benefit of being their own boss and working their preferred hours, they often find themselves without basic working rights such as the right to the national minimum wage, holiday pay and pension contributions.
Last month saw a fundamental win for Uber drivers across the UK after a London Employment Tribunal ruled that they were to be classed as ‘workers’ rather than self-employed. Despite Uber arguing that it was a technology firm, rather than a transport business, the Tribunal Judges concluded that “the notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous”.
The ‘worker’ status awarded to the drivers in the case does not mean the drivers are now employees of Uber, but this recognition does allow them certain rights such as the right to national minimum wage and paid holiday. Although the ruling will not result in other Uber drivers receiving these rights automatically, Uber are likely going to have to change their employment contracts moving forward to prevent further Tribunal action being taken against them. The change in rights stands to cost Uber millions in ensuring its drivers are being paid the “national minimum wage” and receiving rights such as paid holiday.
Research carried out by Citizens Advice suggests there are as many as 460,000 people in the UK who could be falsely classified as self-employed and it is perhaps no surprise that the Uber ruling has caused other large self-employed workforces to challenge their employment rights.
It has been announced this week that a group of takeaway delivery drivers working for Deliveroo are now taking steps to gain union recognition on the way to negotiating better working rights for those drivers who cover the Camden area, in North London. If half the drivers in the area sign up, the company will be forced to recognise the union and it will be the first collective bargaining agreement in the “gig economy”. The action, if successful, will then be rolled out nationwide.
Currently, Deliveroo drivers have no right to paid holiday or the right to the national minimum wage (much like Uber drivers). This leaves their riders earning just £3.75 per delivery. It appears that the Independent Workers Union of Great Britain are to step in and act on behalf of the group in negotiating better rights. As with Uber, if such action leads to a recognition that these riders are workers rather than self-employed, this could stand to cost Deliveroo millions in rolling out new contracts for its 8000 UK-based riders to provide rights that they had previously not been entitled to due to their employment status.
The growing nature of this modern business model has seen many workers across the UK lose out on basic working rights due to their employment status. As with the much criticised zero-hour contracts, this business model is arguably exploiting its workers and leaving them returning home with less than the minimum wage.
With Unite having already announced they are setting up a new unit to pursue cases of bogus self-employment, it is likely that Uber and Deliveroo are the first of many companies to come under scrutiny for their working practices. It is arguable that the Employment Tribunal have now opened the “floodgates” and we are likely to see many similar claims in the not so distant future.
Article written by Charlotte Harman, Trainee Solicitor for the Road Traffic/ Employment Department at Oakwood Solicitors.
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