Contracts alone won’t save companies like Uber from claims

Latham Parry
February 19, 2021

An employment law specialist at a leading Cheshire law firm has said simply having a contract in place that states a person is self-employed is not enough to protect companies like Uber from claims being brought in employment tribunals, and potentially substantial liabilities which may arise from such claims.

Uber lost its legal battle in the Supreme Court, reaching the same conclusion as earlier courts, that its drivers are classed as workers.

The company could now be liable to pay compensation of tens of millions of pounds for failures to pay the national minimum wage or to provide paid annual leave and for whistleblowing detriment. The company’s workers could claim up to two years’ back pay for minimum wages (or £25,000, whichever is higher) in the Employment Tribunal, or up to six years’ back pay in the County Court.

Latham Parry, employment law specialist at Watsons Solicitors in Warrington says the Court confirmed and clarified the correct test for determination of ‘worker’ status under relevant legislation.

Latham said: “This highlights the importance of looking at the status of the people that work for you: are they workers, in which case they will enjoy various rights afforded to workers such as those being pursued by the Uber workers (or are they even employees, such that they would benefit from far more rights under employment law?)  Or are they truly self-employed independent contractors, in which case they don’t have any of those rights?

“As the Uber judgment makes clear, it’s not a case of just reviewing the contract between the parties to see what that states. Any such written agreement should not be the starting point. The courts will have regard to various factors which are relevant to analysis of the statutory interpretation of ‘worker’.

“The Court focussed on the statutory interpretation, the purposes of which was ‘to give protection to vulnerable individuals who have little or no say over their pay and working conditions because they are in a subordinate and dependent position in relation to a person or organisation who exercises control over their work.’

“Having written contracts is one thing and that can be very helpful, but companies will need to carefully consider the working arrangements and the reality of the relationship to properly assess whether that gives rise to a worker or even an employee status.”

The implications of this decision will be very costly for Uber; it is estimated that Uber engaged around 40,000 drivers at the time of the initial Employment Tribunal decision and some commentators have estimated that the Supreme Court ruling could cost Uber around £100m.

And while each case should be judged on its own facts, this decision could lead to an influx of similar claims from those working in the ‘gig economy.’

Latham continued: “Now is certainly a good time for companies to review their business models, particularly the working arrangements with anyone they engage or contract with to carry out work, and make changes if necessary.”

Watsons Solicitors, which has been established for more than 60 years, specialises in family law, employment law, wills and probate, personal injury and conveyancing.

The team of experienced solicitors each hold various accreditations and memberships of professional bodies relevant to their expertise, while the firm’s partners oversee all areas of work.

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