As an ex-owner of a recruitment company that often ‘employed’ over 125 freelance IT contractors I fully appreciate I’m on thin-ice with regards to the recent landmark decision made in respect of gig-economy’s golden-boy, Uber. By ruling in favour of the individual drivers, the employment tribunal is quite rightly questioning Uber’s protestations that their drivers are not grafting directly for the firm, but thriving entrepreneurs in their own right and consequently, working for themselves. Complete twaddle. The judges steadfastly refused to accept Uber’s claim that its drivers are in fact its ‘customers’ who pay to access an app that, in turn, links them with their own customers, to whom they then provide the taxi service. Stating, in the most black & white terms possible, one judge commented “Uber does not sell software, it sells rides”.
Thinking back to the implementation of IR35 restrictions in the late 90s/early noughties, the key elements of independence were centred upon management, direction & control, flexibility of billing, power-of-substitution and freedom to operate at various locations, and the vast majority of IT contractors met the necessary criteria and truly were operating on a distinct limited company basis. Most likely, I did support a level of tax-avoidance, but genuinely believe their rates reflected the fact that they were expected to subsequently take account of their own holidays, equipment, training, time-off through sickness, replacement, any paternity/maternity leave and pension contributions. Those that didn’t, operated under an ‘umbrella company’ and received none of the tax benefits associated with limited companies.
Uber’s argument that their ‘customers’ acted completely under their own control & direction was shown to be particularly spurious as the company exerted massive pressure to force drivers to accept jobs, work exceptionally long hours, follow close guidelines in terms of appearance & operation, and expect to suffer ‘severe repercussions’ if/when they failed to do so. Furthermore, how did Uber expect their ‘customers’ to make provision for all other employee benefits from an hourly rate, often as little as £5/hour? Thankfully, the judges’ failed miserably in hiding their scorn of the ‘twisted language & terminology’ used by the firm, currently valued at $62,500,000,000.00, to bamboozle believers, referring to it as “faintly ridiculous”. New clothes for the emperor me-thinks.
Worldwide, the numbers of those working within the gig-economy continue to rise, and now accounts for one in seven of the workforce. However, in stark contrast, their incomes dramatically shrink to a relative level less than that in 1995. The Uber ruling, which compels organisations to treat their employees decently, and opens them up to the rightful levy of (in the UK) 13.8% employee national insurance, will force a complete rethink of the business model supporting app & internet ‘customers’. And not before time.