Given we’ve had a lot of questions about it since the news broke, I thought I’d take the time to write up my position on Uber’s recent tribunal ruling. It’s an issue that cuts to the very heart of our business and which will come into even greater focus once the verdict of the upcoming CitySprint employment tribunal comes around, with more of the big London courier company employment tribunals taken to court by the IWGB to follow.
Given we have feet in the ‘on-demand’ tech as well as the courier industry camps I feel we’re in a pretty good position to comment on this, and should hopefully be able to provide some insight into what’s going on, and where there’s room for improvement.
One area that seems to be getting overlooked in the discussion around the exploitation of the so-called tech-driven ‘gig-economy’ is that couriers are the original “gig economy” workers, and have been working to the “Uber” model long before Uber ever came along. It’s somewhat interesting that the courts have ruled against Uber now when the courier industry has been perpetrating far greater infractions against the status of the ‘self-employed’ workers for decades, without any form of punishment.
I thought it might be a useful exercise to break down what determines ‘self-employed’ status according to HMRC, and where Uber and the current courier industry (specifically same-day) could seen to be falling foul of this. I’ve outlined what Gophr’s position has been since our inception, and how that’s played out when faced with the realities of the industry we are working in another post.
The following guidelines on self-employment have been taken directly from HMRC’s website. My comments on how Uber and the courier industry may or may not fall foul of these are in brackets. This is not meant to be seen as an outright attack on Uber or the courier industry, but a balanced account of the realities of working with these companies.
If anything I’ve outlined here is considered erroneous please respond in the comments below, however please allow for the fact that I’m talking in general terms. There are always exceptions that will run counter to what I’m saying but I think I’m being fair when it comes to the reality of what a the average courier or Uber driver experiences when in the field.
Also, I don’t profess to be a legal expert in employment rules but merely sharing a point of view based on knowledge gained working in this industry for the last two-and-a-bit years. And I’m still learning.
For the sake of clarity I’ve implemented a points system giving either courier companies or Uber a point if they are meeting HMRC’s guidelines, and a zero if they are not.
Here we go:
Someone is probably self-employed and shouldn’t be paid through PAYE if most of the following are true
(use of the words ‘probably’ and ‘most’ in this introductory sentence is a bit wooly but let’s give them the benefit of the doubt)
they’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit
In the strictest sense, Uber could argue that they are sitting within the bounds of the rules here because the drivers success or failure depends on how much work they want to do. The simple fact of the matter is that neither a driver working for Uber nor a courier working for a courier company has much control when it comes to drumming up new business for their respective companies, much less get directly rewarded for doing so. Neither company has a clear path to progression that could allow for greater fiduciary rewards, which could be another (admittedly very loose) interpretation of the definition ‘success or failure of their business’.
So on this one: Uber – 0, Courier companies – 0
they can decide what work they do and when, where or how to do it
Okay, this is a big one. Let’s break it down to its constituent parts and give a point for each
What work they do and when
On a pure ‘paid-per-job’ model courier companies tell couriers what time to show up for work and what jobs they need to take. If a courier refuses a job they are very likely to have further work held back from them. Uber don’t tell drivers what time to show up. They can log in and out of the app whenever they want, but they do apply a similar mechanic: if an Uber driver rejects too many jobs they will get ‘sin-binned’, meaning they also get work held back from them.
Things start to get more complicated when ‘guarantees’ are brought into play. This is a per-hour charge that courier companies and even Uber pay to ‘guarantee’ the rider or driver can make a minimum amount of money to cover certain shifts, which are generally broken down by the hour. If the total of all the jobs they’ve done within that shift constitutes more than the agreed ‘guaranteed-per-hour’ rate then they are paid the additional money made. Although guarantees had nothing to do with the Uber ruling it does beg the question as to whether they should be considered a wage, and therefore treated as an employment contract?
There are lots of self-employed that bill by the hour but can also receive bonuses for delivering projects on budget or ahead of time. This however relates directly to point 1; being “responsible for the success or failure of their business”.
Putting guarantees aside for the minute as they are not the subject of either tribunal:
Uber – 0.5, Courier companies – 0
Where they do the work
Courier companies split their couriers into areas so they can arrange pick ups before moving to make their deliveries. Where the courier does the work is generally not dictated by them. Uber gives the rider or driver an indicator on a map within their app of where the action is, its entirely up to them to decide whether they want to go there.
Uber – 1, Courier companies – 0
How to do the work
Couriers are generally told to wear the company uniform, which they sometimes have to pay for. They are also charged for the the radios and XDA’s (big, chunky handheld computers) needed to work. We’ve even heard of one company who wanted to charge couriers £8 a week for the use of their mobile app!
Uber has had guidelines on what to wear (Reservoir Dogs style white shirt and black tie) that appear to have fallen by the wayside for anyone below Uber Exec (at least in my experience). Their drivers also had the freedom to get from A to B however they chose to. These days my understanding is they are being scored on whether they follow the road according to their SatNav, possibly because of well publicised stories around drivers taking advantage of sleeping customers. Uber Eats riders don’t even know what their final destination is and simply have to follow the road outlined on their phone screen (which needs to be placed directly in front of them) until they get to their destination. Although controllers at courier companies don’t give turn by turn directions they do have a lot of control over how couriers do their work.
Uber 0.5, Courier companies – 0
They can hire someone else to do the work
This one is pretty straightforward. No courier or Uber driver is able to have multiple other riders or drivers earning money for them through Uber, or one of the big established courier companies. There are examples of drivers getting to a point where they are able to buy fleets of vehicles for other drivers and make money that way, but they do not collect the money that other drivers make directly into their own bank accounts.
Uber – 0, Courier companies – 0
They’re responsible for fixing any unsatisfactory work in their own time
Not quite sure how this would apply to Uber. For couriers this sometimes manifests itself in packages that have not been delivered properly or get lost. Packages tend to get lost at delivery and is normally down to bad internal processes or communication at the time of delivery. 99% they eventually get found.
Uber – 1, Courier companies – 1
Their employer agrees a fixed price for their work – it doesn’t depend on how long the job takes to finish
Both Uber and courier companies don’t strictly fall foul of this. The price tends to be fixed for all jobs, the issue is that both can, and have changed fixed rates overnight without consultation with those it affects first. Without the types of repercussions that would be felt by a full-time employer if they were to do the same. As for the bit about not ‘depend[ing] on how long the job takes to finish’ …anyone who’s employed a dodgy builder is likely to be wincing reading that particular sentence. One man’s meat…
Uber 0.5, Courier companies – 0.5
They use their own money to buy business assets, cover running costs, and provide tools and equipment for their work
Although this is ultimately seen as a massive stick to beat the gig economy with, this is where Uber and courier companies are only too happy stick to the letter of the law.
Uber – 1, Courier companies – 1
They can work for more than one client
The ‘client’ here should be defined as Uber or the courier company, not the consumer that uses those services. Examples of courier companies letting couriers work for other courier companies at the same time are few and far between and certainly not rubber-stamped unless there’s a formal arrangement between those two companies which would have nothing to do with the courier. Competition is pretty thin on the ground for Uber over here, however they have plenty of competitors in other markets and they seem to okay with drivers riding for other companies. Although the aforementioned ‘sin-binning’ doesn’t make it as easy as easy for riders as it should be for a self-employed person.
Uber – 0.5, Courier companies – 0
So out my totally subjective, entirely unscientific scoring system the Courier industry has scored 2.5 out of 9 points, with Uber scoring 4 out of 9. A 4 out of 9 score still doesn’t meet HMRC’s fairly wooly criteria of “Someone [being] probably self-employed […] if most of the following are true” so it’s no surprise that the courts have ruled against them. It remains to be seen whether their incredibly deep pockets manage to limit any damages to their business model or whether they will be somehow forced to change it, at least in the UK.
Either way, this ruling does not bode well for CitySprints tribunal verdict which is due on the 22nd of November, or for the rest of the ‘big four’ same-day courier companies (made up of Addison Lee, CitySprint, eCourier and Excel) who’s verdicts are due shortly after. Courier companies should be thinking very carefully about how to accommodate any changes that are likely to come about as a result.
So what’s our position in all this? How would we score ourselves against HMRC’s self-employment guidelines? And what are the challenges we’ve faced since launch and the industry faces as a whole going forward? I cover all this in Part 2.
[EDIT – We’ve had to reduce Uber’s score from 5 points to 4. It was pointed out to us by a courier that the court found that Uber were going against the guideline of drivers ‘fixing any unsatisfactory work in their own time’ as Uber settles disputes and pays reimbursements to customers without the driver ever knowing or losing money from reimbursement. So somewhat perversely they are not following the guidelines here despite the fact that it’s an overall positive for the driver. This affected the conclusion of the article as 5 out of 9 would’ve meet HMRC’s criteria of ‘most’ of the guidelines.]