Workers' rights – what's in a contract?

Worker rights have, once again, been the focus of some high-profile reporting over the past month.  This time taxi giant Uber and popular delivery service Deliveroo have been criticised for not recognising rights of their workers. Uber has been taken to a London employment tribunal by two drivers who claim to have employment rights as workers, rather than being considered as self-employed as Uber argues. Similarly, Deliveroo have been challenged in its classification of delivery drivers as self-employed, meaning there is no guarantee of the National Minimum/Living Wage being paid.

In light of these challenges what are the reasons for these criticisms, and is the criticism fair?

Status under employment law

There are essentially four main statuses in employment law: volunteer (no employment rights); self-employed (no employment rights); worker (limited employment rights including protection from discrimination and right to minimum wage/paid holidays); and employee (all rights accorded to workers, and additional rights such as protection from unfair dismissal).

Uber and Deliveroo believe the individuals providing services on their behalf are self-employed.  Both companies will have standard contracts for services (rather than contracts of service, which are employment contracts), which will provide for self-employed status and will be signed up to by the individuals concerned before being engaged to provide their services.

Contracts such as these will traditionally make it clear that parties do not regard each other as employer and employee, and may offer the individual a significant degree of autonomy as to how, when and if they provide the services.

This differs from contracts of employment, which stem from the traditional “master and servant” relationship, with a key factor being mutuality of obligations, being that one party must supply work, and the other party must undertake the work.

Workers are afforded limited rights, and this status is a slightly uneasy halfway marker (stemming mainly from European legislation) between the full protection given to employees and the freedom of self-employed individuals to contract as they see fit.

Employment or worker relationships traditionally put a greater burden on the engaging company, given the rights, in particular, to the National Minimum/Living Wage (as applicable), paid sick leave, paid holiday entitlement and protection from discrimination.

Why employment contract terms are not the end of the matter

It is being claimed that Uber and Deliveroo have, in reality, relationships with these people more befitting the definition of worker or employee, rather than self-employed contractor. It is alleged that they choose not to classify as such contractually in order to avoid, for example, having to pay a fixed, statutory compliant hourly rate.

But if these contracts have been agreed to by the company and the individuals, how can they now claim workers’ rights? This is because what is written in the contract – whilst important and the starting place for considerations – is not definitive.  In some circumstances, tribunals are prepared to look beyond the contract and consider the reality of the situation – for example, is there, in reality, an expectation of regular work being done under the control of, and at the behest of, the company?

If the whole factual situation is reflective of an employment or worker relationship, then, notwithstanding the written terms of the contract, a tribunal has the power to determine what it believes, on the balance of probabilities, to be the true nature of the relationship.

Uber and Deliveroo are being criticised because individuals believe they are being deprived of rights that they should have, on the basis of how they perceive their working relationship to be.  Counter to this is the position that these individuals have chosen to enter into these agreements, which can undoubtedly be beneficial to both parties, and with their status clearly defined.

In certain business models, there is an inevitable tension between employment rights and freedom to contract (particularly given the global nature of some companies, who may try to impose a standard operating model notwithstanding the differing protection of workers between countries), and these cases and controversy are a result of this.  It will be interesting to see which way the pendulum will swing if claims are pursued to the fullest extent.

The small print: This blog is for information purposes only and should not be construed in any way as providing legal advice.