“Does he look like a worker and work like a worker?” – Neil Esslemont today
The Uber judgement delivered by the Supreme Court today means that Uber drivers are considered workers of Uber. “Worker” has a specific meaning to pension people, it means (among many other things) that these self employed people are eligible workers for auto-enrolment, provided of course they earn above the AE limit and are in the AE age bands.
What this means for Uber
This is not good for Uber, who at the time of their float in the US in 2019,included a section on risks to its business.
Uber then said that if it had to classify drivers as workers, it would “incur significant additional expenses” in compensating the drivers for things such as the minimum wage and overtime.
“Further, any such reclassification would require us to fundamentally change our business model, and consequently have an adverse effect on our business and financial condition,” it added.
What this means for the gig economy
It’s not just Uber who will be having to revise their plans. Although the Supreme Court’s ruling was specific to Uber, it looks as many other companies operating in the gig economy will be caught in Uber’s net.
What this means for payroll and reward
Many in payroll will remember the kindly Neil Esslemont warning about the dangers of excluding workers from auto-enrolment. Though happily in retirement now, Neil’s prediction as firms like Uber staged auto-enrolment was that back-dating contributions into Uber workplace pensions would be hard work. But no doubt it would be lucrative work for agile pension providers with the capacity to provide contribution support for payrolls having to review files going back a number of years. Neil’s words echo in my head as does the image of “Flo the florist”, Neil’s iconic employer who always found herself the subject of Neil’s talks.
Just how many of the pseudo self-employed will be recharacterised as “workers” as a result of the Supreme Court’s decision, only time will tell. But the judgement will send a shudder down the spines of many reward departments whose contractors operated on the margins of employment. “If he looks like a worker and works like a worker, he’s probably a worker” was Neil’s advice back in the day – how many employers took it?
How workers once looked!
Couldn’t agree more Henry do you remember the work that the CAB did back in the early days of auto enrolment when they reckoned 1 million workers were being excluded? but how on earth this is handled practically when these people are not on payroll systems because they are self-employed for tax purposes is anybody’s guess. I’ve just been delivering an auto enrolment course this morning to some employers and included the Uber ruling (as it came out during the coffee break) as a salutary warning that getting employment status wrong can get very expensive
Glad that we are of one mind Kate- hope that no one choked on their tea and biscuits (or coffee)