Our sister blog, Talking HR, has published a post explaining some of the potential consequences of a recent Employment Tribunal victory for Uber taxi drivers.[1] The Employment Tribunal decided that drivers working for the company Uber were not self-employed, but should be classified as ‘workers’.

The definition of worker is one which has emerged in recent years and is a statutory concept.  It does not entitle individuals to the full extent of employment protection available to employees, but workers are entitled to a number of protections not available to the self-employed. Such protections include entitlements to holiday pay and to the national minimum wage. They also include the right to be automatically enrolled in a pension scheme, subject to various tests being met by the individual.

The financial consequences for Uber and other similar companies are likely to be significant and it would not be surprising if Uber were to appeal the Tribunal’s decision; it has indicated that it will.

What are the potential pensions implications of the decision?

Steve Webb, former Pensions Minister and currently Director of Policy at Royal London, has estimated the potential cost to Uber of compliance with the auto enrolment obligations:

“Under current rules this could easily cost the firm around £3m a year, and will rise to around £12m a year by 2019/20 as the living wage rate increases and as employers are asked to put more money into workplace pensions.”

Of course it is difficult to give a precise estimate; the number of drivers working for Uber will fluctuate and their levels of pay will vary, so that they may not qualify to be enrolled in a workplace pension.  However it is not unreasonable to conclude that the cost will be high and the impact on the company will be significant.

In the absence of a successful appeal, we could now see many other individuals who work in similar circumstances, currently viewed as self-employed, bringing claims to ensure that they benefit from the full suite of employment and pensions protections to which workers are entitled. In addition, HMRC has recently announced that it will be examining the working practices of businesses which use freelance workers, effectively on a full time basis, without offering any of the associated employment protection and benefits. In particular, HMRC are looking at whether such businesses are gaining a tax advantage by not paying National Insurance Contributions. Depending on HMRC’s findings, a change in the law could follow.

This post was written by Jill Walters. For more information, email blogs@gateleyplc.com

[1] Aslam and others v Uber BV and others 2202550/2015

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.