19th February 2021
The Supreme Court has announced on 19 February 2021 that drivers operating for Uber can be defined as a worker for employment law purposes.
This decision, which has been a long time coming, will have a significant impact on the ‘gig-economy’. It does mean that as the drivers are now classified as workers, they will be entitled to a wide range of benefits, including the entitlement to:
- Holiday pay
- Minimum wage, which is increasing to £8.91 per hour for those aged over 23 years of age
- Sick pay
- Rest breaks
- Pension contributions
The decision will no doubt lead to further changes within the labour-supply chain, with many agencies revisiting their business model.
The Supreme Court ruling will not impact on the tax treatment of the drivers, as the term ‘worker’ is not recognised, an individual is either an employee or self-employed. However, many will recall a comment made by Rishi Sunak, the Chancellor of the Exchequer, last year when announcing the COVID-19 support packages for employees and the self-employed that consideration will need to be given to reducing the differences between the employed and self-employed. Maybe the Supreme Court’s decision plus the Government’s need to raise more revenue could create the backdrop for further consultation on the tax and employment law issues as they relate to the employed, self-employed and workers.
We also need to be mindful that medium and large businesses will be required to comply with the ‘new’ IR35 legislation which is due to come into effect from 6 April 2021.
The question of labour-supply has never been so challenging for UK business.