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The status of Uber drivers – has the UK got it wrong?

20/06/2019

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Germany, Ireland, United Kingdom

The status of Uber drivers – has the UK got it wrong?

Following a two year investigation, Australia's workplace regulator has found that Uber Australia drivers are not employees and accordingly are not entitled to minimum wages or working conditions – a decision somewhat contrary to the position of the UK.

Australia's Fair Work Ombudsman said that "for [an employment] relationship to exist, the courts have determined that there must be, at a minimum, an obligation for an employee to perform work when it is demanded by the employer" and that since "drivers are not subject to any formal or operational obligation to perform work" they are not employees.

The ruling is a big win for Uber Australia as it means that no compliance action will be taken against it by the Australian regulator.  However, it seems to be inconsistent with the decision reached in a number of other jurisdictions and in particular the UK.  The UK Court of Appeal ruled last year that Uber drivers are workers and therefore entitled to minimum wage and paid holidays, a decision Uber continues to insist is incorrect and intends to appeal to the UK's highest court.

So who got it wrong - Australia or the UK?  Maybe neither.

Although the business model of Uber in Australia and the UK is essentially the same, the workplace laws are not.  A major difference is that Australian workplace laws do not have "worker" status, which means you are either classified as an employee or an independent contractor, with no in between.

While UK Courts have consistently ruled that Uber drivers are workers, it is important to recognise that they have never gone so far as to rule that Uber drivers are employees, which would give them a plethora of additional rights as compared to workers.  Given the choice of only employee or independent contractor status, it may be that Uber drivers are in fact more akin to independent contractors rather than employees both in Australia and the UK.

The existence of the option of "worker" status in the UK means that Uber is operating in quite a different landscape to its Australian counterpart and the position is unlikely to be influential in the UK.  Additionally, the Australian gig economy has not seen the surge of litigation faced by the UK, so this is unlikely to be the last word on workers' rights in the gig economy in Australia.

As for wider Europe, the rules are again different.  For example, the legal position in Ireland and Germany on employment status is closer to Australia, in that there is no "worker" status and someone can only be classified as either an employee or an independent contractor.  Uber also operate very differently in Ireland and Germany.  In Ireland Uber drives are fulfilled by ordinary taxi drivers so the underlying issues do not really exist to the same extent.  As for Germany, Uber has struggled to get a foothold as the German courts have successfully prevented Uber from establishing their business there due to specific legal restrictions for passenger transportation in Germany.  German authorities are, however, very aggressive in investigating the correct classification of employees.    

What is clear from this case is that, with the emergence of the gig economy, every jurisdiction is grappling with the 'status' question and the conclusions reached in one jurisdiction (based on their legal framework and jurisprudence) may not necessarily apply to another.  New entrants into any market should therefore take advice on their model and its potential 'status' implications – whether they are looking to expand into the UK, mainland Europe or any other jurisdiction.  This is particularly important in the UK with forthcoming changes to tax legislation (known as IR35) which could have significant cost implications for many 'off-payroll' operating models.

For advice on 'status' issues in Europe, or the forthcoming changes to IR35 in the UK, please do not hesitate to contact any member of the Employment, Pensions, Immigration and Compliance (EPIC) team.  

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Areas of Expertise

Employment