Gig economy .. Opinion ... Uber’s defeat shows it doesn’t have to be a rigged economy

Burgess COMMENTARY

Peter Burgess

Gig economy .. Opinion ... Uber’s defeat shows it doesn’t have to be a rigged economy

The gains from new technology must be fairly shared. To that end, unions will continue to hold the likes of Uber and Deliveroo to account Employment lawyer Nigel MacKay speaks to the media Rigged economy: employment lawyer Nigel MacKay speaks to the media after Uber lost its tribunal case Photograph: Victoria Jones/PA

The case brought against Uber by a group of its drivers has exposed the dark side of the gig economy. For many workers this is a rigged economy, where bosses can weasel out of paying the minimum wage or providing basics such as holiday pay and rest breaks.

Uber loses right to classify UK drivers as self-employed Read more

Technological change should be a force for good. But increasingly employers are using it to duck their responsibilities. If you are a “self-employed” driver at Uber you can become a virtual a slave to the app. Miss a job alert and you can be “deactivated” without appeal. Fail to keep up your rating and you can be cast aside at any moment.

Being kept on a leash is not my definition of self-employment. Genuinely self-employed contractors can refuse jobs, set their own hours and subcontract work to others. That freedom to work when and how you want is why some self-employed people choose to give up the security that comes with a regular job. The security of knowing that if you fall sick, or just want to take a holiday, you don’t have to jeopardise your livelihood.

But if you work at firms like Uber or Deliveroo you enjoy none of those freedoms, and none of that security either. It is small surprise that many feel powerless and unable to speak out.

Today rosters are increasingly devised by computer and announced to workers with little or no notice. For many, working in the gig economy the only contact they have with their employer is through an app on their phone. This new model of working has led to a more atomised workforce. One where co-workers don’t regularly meet or share facilities. If you work for the likes of Uber you are very much a lone agent competing against others for jobs.

This has created a severe imbalance of power. It makes collective bargaining for fair pay and decent conditions far harder and gives companies more scope to reward executives and shareholders, while keeping pay down for their workers. Unions are not luddites. We recognise that the world of work is changing. But advances in technology should be used to make work better, not to return to the type of working practices we thought we’d seen the back of decades ago, and which trade unions were formed to fight against.

Deliveroo worker Deliveroo: next on the list for unions? Photograph: Neil Hall/Reuters

So what needs to change?

Precarious working has rightly shot up the political agenda, thanks in large part to the work of unions. GMB and Unite deserve huge credit for shining a light on working conditions at companies such as Uber, Asos and Sports Direct. The government announced this month a new independent review into employment regulations for the new economy, led by the RSA’s Matthew Taylor.

We want this to be a no-holds barred investigation into employment practices at the sharp of the end of the labour market. And, crucially, one that recognises the important role unions can play in dealing with the problem of insecure employment.

The TUC has long called for the introduction of modern wage councils. They’d work in specific sectors, like private hire, to set minimum pay and conditions. This would help stop some of the worst exploitation and increase transparency. We also want rules on “employment status” – including the definition of self-employment – to be tightened up. This is far too much of a grey area, which has allowed unscrupulous bosses to cut corners.

All working people should benefit from the same basic rights at work, including paid holiday, maternity/paternity leave, and protection from unfair dismissal. The law should presume that an individual is an employee, unless the employer can demonstrate they are genuinely self-employed and running a business of their own.

“Bogus” self-employment doesn’t just affect workers. It hurts the public purse too, as it allows companies to avoid paying national insurance contributions for their workforce. That can be worth millions.

We need to think more broadly about how technology can empower workers rather than enslave them. Cast your minds back to the 1960s and 70s. Then, people speculated that new technology would create in its wake a more leisured society. The reality has been anything but. It’s not just Uber drivers who are affected by this. Try telling the Amazon worker monitored every minute by GPS or the young professional checking their emails at 2am that they have been liberated. We’ve got to get the pendulum swinging the other way.

Part of that thinking must include how trade unions can take advantage of new technologies to organise workers. So that even those on the margins can have a collective voice. Whether it’s Deliveroo workers, Uber drivers or freelancers in the US, we’re already seeing what this might look like. Digital has huge potential for workers just as it does for employers.

That we are in the midst of a technological revolution every bit as transformative as the industrial revolution is not in doubt. The lives, life chances and livelihoods of millions of workers are in a state of flux. Our role isn’t to try to stop this progress, it’s to make sure that technology is used to make working people’s lives better, and to make sure the gains from new technology are fairly shared. The battle around Uber is far from over, and unions will be staying with it for Uber workers today and for the rest of us tomorrow.

Uber loses right to classify UK drivers as self-employed Landmark employment tribunal ruling states firm must also pay drivers national living wage and holiday pay with huge implications for gig economy An Uber app and a red London double-decker bus Uber’s more than 40,000 UK drivers could be affected by the ruling. Photograph: Aleksey Boldin/Alamy Hilary Osborne Friday 28 October 2016 13.55 EDT Last modified on Friday 28 October 2016 14.06 EDT

Uber drivers are not self-employed and should be paid the “national living wage”, a UK employment court has ruled in a landmark case which could affect tens of thousands of workers in the gig economy.

The ride-hailing app could now be open to claims from all of its 40,000 drivers in the UK, who are currently not entitled to holiday pay, pensions or other workers’ rights. Uber immediately said it would appeal against the ruling.

Employment experts said other firms with large self-employed workforces could now face scrutiny of their working practices and the UK’s biggest union, Unite, announced it was setting up a new unit to pursue cases of bogus self-employment. Research by Citizens Advice has suggested that as many as 460,000 people could be falsely classified as self-employed, costing up to £314m a year in lost tax and employer national insurance contributions. Four courier firms are already facing legal action from cyclists who want similar recognition as staff employees and the rights that go with that status, while delivery firm Hermes is under investigation by HM Revenue & Customs. The Uber ruling could force a rethink of the gig economy business model, where companies use apps and the internet to match customers with workers. The firms do not employ the workers, but take commission from their earnings, and many have become huge global enterprises. Uber now operates around the world, with the company valued at more than £50bn. Self-employed earn less than in 2001 – and will be hit by welfare cuts Read more The decision of the employment tribunal comes amid mounting concern within government about the growing trend towards self-employed workforces. The government has recently announced a six-month review of modern working practices and HMRC is setting up a new unit, the employment status and intermediaries team, to investigate firms.

MPs launched an inquiry last week into pay and working conditions in the UK which will look at the status and rights of agency and casual workers and the self-employed for the purposes of tax, benefits and employment law, and how to protect them.

Friday’s ruling by a London employment tribunal involves a case taken by two drivers, James Farrar and Yaseen Aslam, on behalf of a group 19 Uber workers who argued that they were employed by the San Francisco-based firm, rather than working for themselves.

At a hearing in July, Farrar told how he was put under “tremendous pressure” to work long hours and accept jobs and said that there were “repercussions” from the company if he cancelled a pickup. He said some months he earned as little as £5 an hour – far below the £7.20 that employers are obliged to pay workers aged over 25.

Uber argued that it was a technology firm not a transport business and that its drivers were independent self-employed contractors who could choose where and when they worked.

The judges were scathing about Uber’s arguments, however, accusing the firm of “resorting in its documentation to fictions, twisted language and even brand new terminology” and even quoting Hamlet to suggest that the group’s UK boss was protesting too much about its position.

“The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous,” the judges said. “Drivers do not and cannot negotiate with passengers … They are offered and accept trips strictly on Uber’s terms.”

Nigel Mackay from the employment team at law firm Leigh Day, which represented the drivers, said: “We are pleased that the employment tribunal has agreed with our arguments that drivers are entitled to the most basic workers’ rights, including to be paid the [national living wage] and to receive paid holiday, which were previously denied to them.

“This is a ground-breaking decision. It will impact not just on the thousands of Uber drivers working in this country, but on all workers in the so-called gig economy whose employers wrongly classify them as self-employed and deny them the rights to which they are entitled.”

The GMB union, which took up the case for the drivers, said that it was a “monumental victory” which would have an impact on thousands of workers in other industries “where bogus self-employment is rife”.

Maria Ludkin, GMB’s legal director, said: “Uber drivers and thousands of others caught in the bogus self-employment trap will now enjoy the same rights as employees. This outcome will be good for passengers, too. Properly rewarded drivers are the same side of the coin as drivers who are properly licensed and driving well-maintained and insured vehicles.”

Farrar said he was thrilled with the “emphatic” ruling. He said his industry had seen the deterioration in workers’ rights since Uber entered the market. “We’ve brought that to a halt,” he said.

Employment experts said that other firms with large self-employed workforces could now face similar action. “This judgment is likely to have massive implications, as we see an increasing number of start-up businesses effectively adopting Uber’s model,” said Tim Goodwin of law firm Winckworth Sherwood. “The effect of this judgment is that those kinds of business may owe a lot more to their workers, such as paid holiday and minimum wage, than they had bargained for.”

Uber ruling ‘an enormous decision’ says employment lawyer – video

The ruling should be regarded as “ a salutary lesson by businesses who try to arbitrarily ‘classify’ workers as contractors to avoid affording them their full rights as workers,” Goodwin said.

The GMB’s Ludkin said employers should be “on notice” that it was reviewing similar contracts. “This is old-fashioned exploitation under new-fangled jargon, but the law will force you to pay GMB members what they are rightfully due,” she said.

There were calls for more clarity over employment status, with Citizens Advice pointing out that many people were locked out of employment tribunals by fees of up to £1,200.

“The fact it takes an employment tribunal to decide whether these drivers are self-employed shows that proving employment status is an extremely complicated and costly process,” said its chief executive, Gillian Guy. “For many people struggling at the sharp end of insecure work, such as in false self-employment, taking such a case is simply not an option.”

The ruling is not the end of the process for Uber. The firm will take the case to the employment appeal tribunal, and following its decision there could be further hearings in the court of appeal and then the supreme court. Any payments due to drivers will not be calculated until that process is over.

Jo Bertram. Photograph: Felix Clay for the Guardian

Other drivers with the firm will not automatically receive payouts but, if the firm accepts the ruling, it will have to change its contracts to avoid more cases being taken by drivers. Lawyers say that its terms and conditions are similar for all of its UK employees.

Jo Bertram, the regional general manager of Uber in the UK, said many of the firm’s drivers did not want to be classified as workers: “Tens of thousands of people in London drive with Uber precisely because they want to be self-employed and their own boss.

“The overwhelming majority of drivers who use the Uber app want to keep the freedom and flexibility of being able to drive when and where they want.”

Uber in numbers

40,000 The number of Uber drivers in the UK

£5 The hourly wage received in some months by one of the drivers who took the case.

$62.5bn Uber’s valuation based on its last round of funding.

Seven The years that Uber has been in operation.

460,000 The number of people who could be falsely classified as self-employed in the UK

£314m The yearly estimated cost in lost tax and employer national insurance contributions from falsely classified employees, according to Citizens Advice

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