The tribunal found that an estimated 40,000 cab drivers, that access work via the taxi firm Uber, had rights under the Employment Rights Act 1996. These include basic employment rights such as holiday pay, minimum wage – and a workplace pension.
The ruling has implications for others that operate a similar arrangement with their workers within the so-called gig economy, such as Deliveroo, which uses cyclists to deliver take-away food from top restaurants, or parcel delivery firms such as Hermes, Yodel and UK Mail – as well as smaller employers using contractors.
The ruling tallies with existing advice on The Pensions Regulator (TPR) website around whether employers using self-employed contractors on a regular basis must offer them a pension.
Will Wynne, MD and co-founder of workplace pension provider Smart Pension, said: “The ruling has profound implications, particularly for small and micro firms that use regular contractors and believed that made them exempt.
“TPR’s own guidance advises that despite the fact that the worker is self-employed, the test is that if there is a ‘personal contract’ to perform work, then there may well be a requirement to offer a pension.
“There are already 1.4m small and micro firms that are currently in the process of enrolling their staff in an auto enrolment pension.
“An extra 60,000 is probably a conservative estimate of the additional workers to be offered employee rights if they are found to have a ‘personal’ or ‘limb’ contract, something highlighted by the Uber ruling, and probably never properly understood by smaller employers.”
The Uber ruling found that the drivers were not ‘employees’, but rather ‘workers’ with an undertaking to perform work personally, not undertaking the work as part of their business.
According to TPR, the test for whether someone should be offered a workplace pension, is very similar. It includes asking whether the employer:
- Has control of the hours the individual works
- Provides any employee benefits
- Bears all significant financial risk in carrying out the work
- Provides what is required for the individual to carry out the work
- Considers the individual to be part of the company
Smart Pension is one of the few workplace pension providers that remains free to enrol for employers and which guarantees to accept every employer and employee, a critical feature for the hundreds of thousands of smaller British firms that will need to offer a workplace pension to their employees over the next 18 months.
Since it launched last year it has enrolled 100,000 new members.
