04 August 2015
Uber Under Fire Again in the Contractor vs. Employee Debate
Uber has found itself in the spotlight once again, but this time in the UK as the GMB union argues that Uber is breaching its duty on pay, holidays, and health and safety of its drivers.
But as Uber states the drivers are partners rather than employees, we have to ask: what’s the difference and what do businesses need to do to ensure they don’t get it wrong?
Uber says that their drivers are self-employed and therefore can set their own hours and be their own boss. But, if this is correct, it also means that the drivers aren’t entitled to any sort of rights that they would be entitled to if they were employees. This includes no sick pay, no paid leave, no fixed hourly wage, and no other statutory rights that employees are entitled to in the UK.
GMB union claims that the way Uber operates means that it owes the same responsibilities towards its drivers as any other employer does to their workers. Uber is involved in most aspects of their drivers’ operation, including holding the power of termination if driver ratings fall below 4.6 stars out of 5 and controls the app the drivers must use.
Some companies, in a similar way to Uber, engage ‘consultants’ to provide services under their company rather than recruit employees, with a view to avoiding employment law obligations. This can cut down on overheads, but businesses must make sure that the distinction between freelancer and employee is clear.
As a business owner there are a few questions you can ask yourself to work out whether someone is or should be a contractor or an employee:
- Is the worker controlled by you? For example, do you tell the person what to do and when and how to do it? The greater your control, the greater the indication that they are an employee as opposed to a contractor.
- Does the worker only work for you or is there an expectation that they will be engaged on other contracts at the same time? Contractors can of course work on one project at a time, but the key here is the flexibility. The more tied to you the worker is, the more likely they are to be an employee.
- Does the worker have to do the work themselves or can they give it to someone else to do? You might have engaged a particular consultant to work due to their expertise, but if there is a restriction on who performs the services, this might indicate that they are more of an employee than a contractor. Contractors can negotiate the ability to outsource some of their work whereas employees generally cannot.
There are a number of factors to consider in assessing whether employment regulations will apply or not. But no matter what, it’s important to make sure that contracts with consultants are drawn up clearly and legally, so get proper advice from a business solicitor before you commit to anything.
If you are considering engaging contractors or consultants and need legal advice, call Slater and Gordon’s Employment Law team. Call us on freephone 0800 916 9060 or contact us online and we will call you.