Will Uber decision change driver status forever?

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Published: 19 April 2021
Categories: News Article

WILL UBER DECISION CHANGE DRIVER STATUS FOREVER?

As the Uber decision to accept the Supreme Court’s ruling that their taxi drivers are ‘workers’ rather than ‘self employed’ reverberates around the world, we are asking what this means for driver status throughout the rest of the industry?

The noose has been tightening for many hauliers who enjoy the flexibility of self employed drivers for the last 3 years as HMRC have taken an increasing interest in ‘agency’ and ‘self employed’ driver status.

Statutory document 5, was updated in 2018 and again in September 2020 by the Senior Traffic Commissioner to clarify the position on self-employed drivers (para 39-40). It says of employees as follows:

The First-Tier Tribunal (Tax) has considered the employment status of drivers. Her Majesty’s Revenue & Customs (‘HMRC’) is concerned that haulage operators are wrongly treating workers as self-employed or are hiring workers through their own companies in ways that are not compliant with tax laws and therefore fair competition amongst other operators. Their position is that in road haulage it is rare for someone to be genuinely self-employed unless they are an owner-driver.

HMRC has issued detailed guidance on employment status. HMRC is aware that some companies wrongly, believe that anti-avoidance legislation does not apply and that HMRC cannot pursue workers, agents and their companies. This is comparable to the Employment Appeal Tribunal’s finding that drivers working for a taxi app were not self-employed but were instead workers.

Ultimately the legal test for self-employment was set out in the case of Ready Mix Concrete with three key hurdles:

i) the worker has to be subject to a right of control. If there is no right of control of any kind then you will not have a contract of service. However, it was also made clear in the judgment that, although a right of control is an important factor in determining employment status, it is not necessarily a determining factor;

ii) Personal service must be given. However, the court did highlight that a limited right of delegation was not inconsistent with a contract of service;

iii) The other factors present are consistent with a contract of service. Factors such as ownership of significant assets, financial risk and the opportunity to profit are not consistent with a contract of service.

In general, someone is self-employed if they are in business on their own account and bear the responsibility for the success or failure of that business. Conversely, they will be employed if they personally work under the control of their engager and do not run the risks of having a business themselves.

The RHA also released Guidance following the clarification in the law in February 2018:

https://www.rha.uk.net/getmedia/441e6565-e1aa-4a6d-8529-c564ff818eb7/RHA-Self-Employment-Factsheet.pdf.aspx

The issue of claiming that drivers are ‘self employed’ when they are clearly ‘employees’ is a matter which goes to the good repute of the operator.

The decision by Uber, to accept the decision of the Supreme Court to change driver status must bring an acceptance in the industry of the hybrid category of ‘workers’ in the UK. Although workers have fewer rights than employees, they are still entitled to holiday pay and access to a pension scheme, as well as earning at least the minimum wage.

This is likely to bring major change to the industry over the next 12 months by diminishing further the number of drivers who are able to genuinely claim ‘self employed’ status.

Is it time to review the status of your drivers?

Written and published by CE Transport Law. Keep up to date with the latest transport news with the CE Transport Law blog

Photo credit: Austin Distel on Unsplash

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