I am delighted that it has today been ruled that Uber's drivers are employees of the company and not self employed contractors.
The decision is good for the employees in question. They will now enjoy the minimum wage, holiday and sick leave entitlements, maternity and paternity rights, and employment protection. I also hope they will be fairly reimbursed for their costs of providing a car.
The decision is also vital for the development of the economy: we cannot build it on the basis of exploitation which looked to be likely.
There is, however one very important question to ask. That is is why it took two employees to bring the case when I believe it was HMRC's job to do so? HMRC are entrusted with enforcing tax law and they are entrusted with enforcing the minimum wage and that it took two employees to bring this case suggests they have neglected their duties. They did not try to impose the correct employment structure on these contracts (which have always looked to be employments to me) and as a result failed these (and hundreds of thousands of others) employees get payments to which they were entitled.
Could it be HMRC contrived on government instruction in failung to enforce the law in this area to make it look as though employment was rising whatever the social, legal and economic cost? I think it possible. If so heads should roll.
It's a question for the Treasury or Public Accounts Committee I think.
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I would hazard a guess, with so much at stake, there will be an appeal. Lots of peoples business model has been predicated on this “self employment”.
And it’s tme HMRC were made to enforce the law
And it appears that there will be an appeal. This is a decision by the lowest tier. I wouldn’t be calling for heads to roll just yet.
And I am confused as to why you would think there was a conspiracy by HMRC to deem someone self-employed in order to increase employment numbers. Makes no sense.
The Uber contract actually looks nothing like an employment contract. I’m amazed you could think it does. But then, as you confused worker and employee I assume you do not have much experience in this field. No shame. It is rather complex.
I suspect HMRC did look at the contract and conclude that it was one of self-employment. The appeals process will determine if they were right and if I were a betting man my £5 would go on Uber winning its appeal.
I have written extensively on the subject in the past
And if you read the decision you would realise precisely that this does look, despite the wording about which the Tribunal were suitably rude, exactly like the substance of an employment contract
If a Tribunal can see the glaringly obvious why couldn’t HMRC?
If you had written extensively and with knowledge on the subject you would know that maternity and paternity rights do not accrue to workers. you would know that there is only very limited protection – a worker cannot claim unfair dismissal nor a notice period.
It may be that the first tier decision was made by someone with as limited knowledge on the subject as you. As I said, let us await the appeals process.
In the meantime I can supply a link to HMRC’s website which is a useful primer on the difference between workers and employees
So, I used the term worker colloquially
They were ruled to be employees
And so in the right circumstances they will get such rights
Plus person entitlements
It is you who is being the pedant
You used the term employee.
If you think differentiating between a worker and an employee is being pedantic then you clearly know little about the subject. The rights are very different between the two.
P.s. they were ruled to be workers.
Read this https://www.gov.uk/employment-status/worker
Workers have most of the rights of employees and can have or graduate to them all
What I wrote was correct in the context in which it was written
Don’t bother to reply: you’re making a fool of yourself
And typically you utterly ignored the issues
I don’t need to read HMRC’s website, Richard. I’ve argued in real world situations. From both sides. You clearly have not.
The Uber case was fought over NMW holiday pay and whistle blower rights. Nothing else. That’s workers’ rights not employee. You talk in your blog of parental leave. This does not apply to workers. You quite clearly had not a clue. A few minutes frantic googling by you doesn’t make up for the display of ignorance.
Except HMRC don’t agree with you
But what the heck?
You know you’re right
https://www.judiciary.gov.uk/wp-content/uploads/2016/10/aslam-and-farrar-v-uber-reasons-20161028.pdf
Let me point-out that HMRC have no problem defining self-employment in the construction/fast-food industries….where they have frequent raids to “catch” fiddles.
And, given the courts reasons above, an appeal is not a cert win for UBER..
Agreed
I am sure this was policy
I understand that things may hot-up after brexit…because at the moment EU law caused them problems:
“Uber had argued that the agreement between it and its UK drivers was governed by Dutch law, but the EU’s Rome I Regulations 2008 — still in force in the UK until at least 2019 — allowed the drivers to successfully argue that British law should be applied instead.
Judge Snelson handed down his verdict in the preliminary hearing of Aslam, Farrar and others v Uber BV, Uber London Ltd and Uber Britannia Ltd this afternoon. He was utterly scathing as he summed up Uber’s operations and attempts to avoid liability for paying its drivers the minimum wage.
Any organisation (a) running an enterprise at the heart of which is the function of carrying people in motor cars from where they are to where they want to be and (b) operating in part through a company discharging the regulated responsibilities of a [private hire vehicle] operator, but (c) requiring drivers and passengers to agree, as a matter of contract, that it does not provide transportation services (through UBV [Uber’s Dutch holding company] or Uber London Limited, and (d) resorting in its documentation to fictions, twisted language and even brand new terminology, merits, we think, a degree of scepticism… We cannot help being reminded of Queen Gertrude’s most celebrated line: The lady doth protest too much, methinks”
Unfortunately, this will result in the loss of employment. Uber will cease to operate in the uk under these conditions, it completely destroys the whole point of Uber. I wonder what/who’s support was given to the claimants.
If money can only be made by law breaking and exploitation we really do not need such businesses
Quite.
And also if Black Cabs or many local authority cabs had the same (lack of) rules as Uber, Uber would not be able to compete. Basically Uber are price driven and although there are other (Black) taxi apps they are not as cheap as Uber.
So the customer is paying for the rules. In the end the rules appply to either all or none.
Uber has exploited their exceptionalism as well as a virtually unlimited pot of money. But interestingly it has been banned from the great capitalist country of South Korea!
And the fact that we have a society with rules to protect workers(employees), consumers and the general public is what it must be about. A business activity that endeavours to circumvent such controls must be rejected – it is not a question of freedom to trade or restricting someones rights to provide services at a lower cost – it is about suppliers meeting standards set by the legislature.
Richard. The GMB funded the case. They have many London black cab drivers as members.
With other unions looking on….UNITE for one….with similar problems for its members.
HMRC are getting increasingly active over both NMW and employment status, but their enforcement is patchy. They don’t make many challenges, but the ones they do are pushed forward extremely aggressively.
This causes a lot of problems: people see their peers going unchallenged, but their own affairs seems to get unfairly harsh treatment.
From my position in the front lines, it looks exactly as if HMRC have a lot of will to tackle this area but not enough resources. They need more enquiry teams (and, in my view, a softening of their extremely narrow views in some areas that lead to apparent problems that no reasonable person would expect to be an issue).
I agree with JT Smith. There are lots of gradations of worker between the completely self-employed and the classic employee. Entitlement to NMW, holiday pay, SSP/SMP, PAYE obligations, NI obligations, deductbility of expenses, right not to be unfairly dismissed – they’re all separate regimes which take account of similar factors but don’t necessarily come to the same answers.
You can for example be self-employed, paid outside PAYE and liable to pay class 2 and 4 NI rather than class 1, but still be entitled to NMW.
Richard, in the context of this blog it’s worth reading this by my colleague, Prof John Naughton. As John says: ‘Uber isn’t a tech company any more than John Lewis is an electricity company. Theranos is/was not a tech company but a corporation supposedly providing medical services. Airbnb isn’t a tech company, but an organisation that’s in the hotel business. And so on. All these outfits should be regulated in ways appropriate to the businesses they are actually in, rather than being allowed to sail under a flag of convenience called “tech”. Which is why the fall of Theranos is actually a hopeful sign.’
The article is here:
https://www.theguardian.com/commentisfree/2016/sep/11/tech-label-obscures-old-fashioned-sharp-business-practice
I agree
Partly because all companies are tech in some way now and so the description makes little sense unless you only sell tech
But even then rules on retailing, contracting, etc apply
Your comments on the Uber drivers’ tax status puzzles me too.
First, the ET case was only about their status as workers. The 39 pages of the ET judgment makes this clear – starting with the statement of the issue:
“The core issue remains as to whether the Cs are “workers” for the purposes of the various definitions under the domestic legislation”.
That legislation is equally clearly identified as the WTR, ERA and NMWA.
Second, the cases cited are those about workers, not about employment vs self-employment.
Third, it is trite but true that the issue of employment vs self-employment (both in tax and general employment law) is separate and distinct from the statutory definitions of “worker” – a concept which has come to us from EU law. The distinction may not matter in many areas because of the legislation for taxation of agency workers, PSCs etc. But the lack of identity between “employee” for tax and “worker” for NMW etc is patently still there – eg when an equity partner in an LLP entitled to a share of profits rather than a salary can be a “worker” under the ERA[2].
[1] https://www.judiciary.gov.uk/wp-content/uploads/2016/10/aslam-and-farrar-v-uber-reasons-20161028.pdf
[2] https://www.supremecourt.uk/decided-cases/docs/UKSC_2012_0229_Judgment.pdf
If you’re confused read HMRC on the issue
As you’ll see the distinction is not clear, and in any case quite narrow
In a non-technical commentary (which this very obviously was) the points I made were entirely appropriate as to the possibilities arising from reclassification.
Unless, of course, you’re a pedant
I have yet to see any evidence that *I* am confused on this matter. I have after all cited 2 authorities in support of my views. That is how I was taught to proceed when instructing Counsel on tax cases. In response so far as I can see you have offered only a rather vague “read HMRC”. I take it from that you mean HMRC’s manuals – of which there are of course very many pages on status decisions. So I’d welcome further and better particulars.
In the meantime I’ll also offer you the Pimlico Plumbers case[1] where the Employment Appeal Tribunal found that Smith, a plumber (a) was not an employee of the plumbing and maintenance company but (b) was a worker. NB Smith was registered as self-employed with HMRC and within the Construction Industry Scheme. In that case the EAT noted the modern form of self-employment recognised by the Supreme Court in Bates van Winkelhof v Clyde & Co LLP[2]:
“Second, within the latter class, the law now draws a distinction between two different kinds of self-employed people. One kind are people who carry on a profession or a business undertaking on their own account and enter into contracts with clients or customers to provide work or services for them. …The other kind are self-employed people who provide their services as part of a profession or business undertaking carried on by some-one else.”
I have yet to see authority that Ubder drivers are of latter kind.
[1] http://www.bailii.org/uk/cases/UKEAT/2014/0495_12_2111.html
[2] https://www.supremecourt.uk/decided-cases/docs/UKSC_2012_0229_Judgment.pdf
You are totally confused
I wrote a piece celebrating a win and suggesting where this could lead – all of which I contend could be correct. I am happy to accept the conditionality in ‘could’: we do not know as yet
But rather than take the points I raised in the piece – which was about why HMRC had not taken this case – or take the point that this is of major economic and social significance – you play the pedant
Now if you are saying that everyone who has celebrated this case because they think it says Uber drivers are employees are wrong and in fact they are just self employed workers (but frankly given what I have read I do not see how you could think so, but maybe you do) then you have a point.
If not, frankly you’re proving yourself to be the vey worst type of lawyer
And I have never had the time of day for them
So very politely, go and play on Tim Worstall’s web site where I am sure you will be welcomed with open arms. This site is for people who have a deeper understanding of life than you clearly possess, and maybe that’s why you’re confused
Since our government glories in telling how many new jobs are created, but recently quite openly admitted that about 1.4 million of these new “jobs” were in fact new “self-employments”, would it be unrealistic to suppose that HMRC might have been instructed to go easy on employment status reviews?
In my experience, in this age of self-declaration, HMRC treats whatever is declared as true without questioning it, only rarely conducts status checks and then, if it concludes that the self-declaration was incorrect, clobbers the offending parties. The reality, I suggest, is that there would be a great deal for HMRC to attack if only it had both the will and the resources so to do.
I am entirely sure HMRC have been relaxed as a matter of policy
That is one reason why, I am sure, it is run by non-tax trained civil servants
Does this ruling trigger a VAT issue also?
Previously Uber’s drivers were “independent small businesses” and their turnover was too low to register for VAT.
If Uber becomes an employer, is VAT due?
Interested if someone more knowledgeable than me could comment.
Me too
I had presumed Uber was paying VAT on the whole price they charge
Does anyone know?