Do you use self-employed contractors in your business? If you do, then you need to know about the Uber judgment given today.
Uber has long claimed that its drivers are self-employed. This allows it to pay for services at a rate below the National Living Wage, and avoid deducting Income Tax and National Insurance Contributions. This arrangement is how it keeps its fares low, and its market share increasing. However, in November 2016 two drivers won a case against Uber asserting their worker status. The company immediately appealed, and that appeal’s judgment was given today.
The appeal by Uber
Uber’s appeal claimed that they were acting as agents for the drivers when passengers booked trips using the app. This would mean that the drivers could be self-employed contractors, but would allow Uber to control the terms of their contracts with passengers. They also claimed that the initial Tribunal judgment’s findings were inconsistent and perverse.
The appeal judgment was given today by Her Honour Judge Eady QC. Her judgment stated that despite Uber’s written documentation, the reality of the situation and the ‘true nature of the parties’ bargain’ was that the drivers were:
‘incorporated into the Uber business of providing transportation services, subject to arrangements and controls that pointed away from their working in business on their own account.’
The judgment also upheld the initial Tribunal’s findings as not inconsistent or perverse.
The link to the judgment is available here.
What does this mean for businesses?
The Uber judgment means that the risk of contractors using the courts to assert worker status is now real. For businesses using self-employed contractors or engaging service companies, it means that they should review their arrangements to ensure that the commercial risk profile stays within the tolerances of the business. To do this, businesses need to take specialist tax and employment advice in tandem.
It’ll also mean that Uber’s fares will probably go up.
Uber’s driver arrangements were designed to skim as close to the IR35 line as possible. IR35, or the Intermediaries Regulations, are the rules that HMRC apply to determine whether someone is truly self-employed, a worker, or an employee. These rules aren’t conclusive: there are a series of factors that can point either way. Through our links with EY, we’ve had sight of the new 42-question test that HMRC is developing and we’re keeping up with the Government on the changes.
The Employment team at Bishop & Sewell LLP are frequent advisors on employee status issues, and regularly assist employment businesses and start-up services in staying profitable and on the right side of the law. Never assume – check. If you think your business is at risk email firstname.lastname@example.org.