Uber ruling ‘serves as wake-up call’ to organisations

A UK Supreme Court ruling last week that found Uber drivers were workers and not self-employed “throws ‘inside IR35’ into chaos”.

The ruling should also serve as “a wake-up call” to all organisations engaging with gig-economy workers, contractors and other independent professionals, according to compliance and contracting experts.

The landmark ruling underscores the need for both businesses and contractors to make sure their contractual agreement is correct and “a true reflection of the engagement”, said Dave Chaplin, CEO of contracting authority ContractorCalculator and IR35 Shield. “Then there should be no issues.”

He went on to say: “Firms should not be misclassifying workers in contrived ways to avoid their duties as employers and give workers their due rights. The drivers were not carrying on their own business undertaking… and were heavily controlled by the Uber app.”

The ruling made it clear that firms attempting to misclassify workers “make this a very high-risk strategy”, said Crawford Temple, CEO of Professional Passport, on the basis of existing legislation in the sector, together with reporting requirements.

James Poyser is founder of offpayroll.org.uk, a website used by contractors and independent professionals to find fair clients, and CEO of inniAccounts. “This throws IR35 into chaos. Currently ‘inside IR35’ means you’re treated as a worker for tax purposes but without any rights that workers are afforded,” he explained.

As a result of the trial, Poyser said: “It’s likely that those deemed inside IR35 are, in fact, workers and thus afford protections under the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998. 

“This should serve as a wake-up call to any organisation engaging with gig-economy workers, contractors and other independent professionals,” Poyser said. “The position is now very clear: you must either engage them as workers, and provide them with the protections the Supreme Court has confirmed they are entitled to, or engage them as self-employed professionals, thus falling outside the scope of IR35.”

Poyser also said it was clear that the ruling should prompt action by Parliament. However, he said, “we have very little confidence that the government will take action to protect the rights of workers who are vulnerable to abuse”. 

Finally, Poyser said: “I believe there is a way for HMRC to protect revenue, keep British business firing on all cylinders and give every worker the flexibility to choose how and when they work with rights, but it will take a fundamental review in policy.”

Seb Maley, CEO of employment status advisory Qdos, noted: “But while many gig economy workers want greater protection and employment benefits, we shouldn’t assume that all self-employed people need them. There are hundreds of thousands, if not millions, of people working for themselves who want to remain entirely independent.”

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