News & Updates
Could Uber Ruling Drive Big Changes in Construction Industry?
WJM construction law specialist Ross Taylor has warned that the recent UK Supreme Court ruling that Uber drivers should be treated as workers with employment rights rather than self-employed could have ramifications for the construction sector.
The U.K. Supreme Court has decided that Uber drivers are “workers” with employment rights. That means that they are entitled to, for example, a minimum wage, paid annual leave and protection from whistleblowing.
The particular arrangements under which Uber drivers work are complex and do not match the Construction sector (yet). Nevertheless, the reasons for the Uber decision may ramify upon the sector. A sub-contractor may also be a “worker”.
Employment law distinguishes between three types of people:
1 Those employed under contracts of employment.
2 Those self-employed people who are in business on their own accounts and undertake work for clients and customers.
3 An intermediate class, who are self-employed, but who provide their services as part of a profession or business undertaking carried out by someone else.
Uber drivers fall into the third category. So too may construction sub-contractors.
Determination of whether a sub-contractor is a “worker” on any particular project, will involve considering all of the circumstances – not just the contract. Factors to be considered are:
a the control exercised over working conditions and remuneration; and
b the corresponding dependency on the part of the person concerned.
Uber drivers are workers because:
1. they are required to accept Uber’s terms of contract.
2. Uber controls the driver’s choice to accept a particular fare.
3. Uber exercises a significant degree of control over the way in which drivers deliver their service. For example, Uber sets requirements for the type of car that may be used. Drivers must conduct themselves in a particular way. Drivers must accept a high percentage of fares and will be penalised for cancellation and removed from the platform if they have poor ratings.
4. they are not allowed to contact the passenger after the trip ends, except to return lost property.
5. their remuneration is fixed by Uber.
Comparing those factors to the operation of the usual construction sub-contract; it may be argued that sub-contractors are “workers”:
1. Construction is dominated by the big players. The further down the chain one sits, the less scope there is for negotiation of the contract. Sub-contractors are scared to seek change to the terms given to them, and these terms can be fairly exploitative.
2. Once contracted, the sub-contractor usually requires to work to the programme of the main contract works, and must accept variations to the works. In order to receive remuneration for these changes he may be required to provide notice, the requirements for which can be stringent.
3. Sub-contractors regularly require to comply with site access stipulations, methods of working and standards of behaviour.
4. Contract price is usually determined through a tendering process. In that way, the sub-contractor can decide what price he’ll accept for his work. However, margins are tight in Construction. Stepping above the market rate risks losing the work. Framework Agreements give the prospect of repeat work. However, the ‘employer’ can dictate the price from job to job, by reference to the Framework Agreement.
On the other hand, there may be good reason for the industry’s ways of working:
1. Standard terms are needed so that liability is shared appropriately.
2. Sub-contractors need to be flexible for the benefit of the project as a whole.
3. Control over working practices is needed to protect health and safety.
4. Sub-contractors must work around each other, to allow pace to be maintained, and of course the behaviour of sub-contractors reflects on the reputation of the project.
5. All industries have a degree of market expectation in respect of price.
A factor which persuaded the Supreme Court that Uber drivers are “workers” was that they are individuals – real people. Higher up the chain in Construction, contracts will be between legal entities, which are not individuals. In that situation, it is unlikely that the personnel of the sub-contractor will be “workers” of the employer.
The situation may be different down the chain, however. For example, self-employed labourers may be the “workers” of their sub-contractor employer. Incorporation offers commercial protection. On the other hand, remaining a self-employed individual may give the protection of “worker” status. Perhaps the status of “worker” of the employing counterpart may extend to the personnel of small companies with one or two shareholders. It is unlikely to go further.
For employers, the insistence upon biased terms and control over sub-contractors may swing them into “workers”, with additional rights.
In 2016, there were about 40,000 Uber drivers in the U.K. Some two million people were registered to use the Uber app. The Uber group of companies had a large and growing market share. The people most likely to be affected by the Supreme Court’s decision in the construction sector are the small businesses up and down the country, who actually do the work.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at March 2021. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.