Pension, employment and benefit rules are set to be rearranged across the UK in the coming months following a Supreme Court ruling against Uber. The company was appealing a case against two employees who in recent years argued they should be treated as employees and yesterday, the Supreme Court unanimously dismissed Uber’s appeal.
The ruling is expected to set an important precedent for employment law at large as Katie Macquire, an employment partner at Devonshires, explained: “This landmark ruling has huge implications for those who work for Uber, but also the gig economy generally.
“It will help improve the lives of around five million people who work within the UK gig economy by granting them workers’ rights.
“The ruling will come as a blow to Uber and other companies using gig economy workers and they will now need to alter their business models.
“This may well result in an increase in costs that they face as a result of this judgment being passed on to the consumer.”
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Andy Chamberlain, Director of Policy at the Association of Independent Professionals and the Self-Employed (IPSE), was more critical of the state in his response, which covered how self-employed workers may be affected: “The very fact this case has come to the UK’s Supreme Court shows the UK’s employment law is not working.
“There is a glaring need for clarity in this area, to clear the confusion in the gig economy.
“The gig economy is enormously complex, including many people who are legitimately self-employed and many others who really, based on their working circumstances, should be classed as workers. It is a patchwork of grey areas between employment and self-employment: the only way to resolve this tangle is to clarify employment status in UK law.
“With the pandemic still raging and its financial impact ever more visible, it is more urgent than ever that struggling people who should technically be classed as workers get the rights they deserve. To bring this about – and protect the freedom of legitimately self-employed people – we urge the Government to write a definition of self-employment into law.”
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One of the biggest changes that may befall the “gig economy” is the alteration of pension rules.
Rosie Hooper, a chartered financial planner, detailed what could be on the horizon: “This is a significant decision from the Supreme Court and reaffirms that Uber drivers are in fact workers for the company, giving them access to a number of benefits, including pensions.
“Many of these drivers will now be captured by auto-enrolment, depending on their age and earnings, meaning they can begin to set aside money for the future with the help of an employer contribution.
“This will result in a significant cost to Uber and the numerous other gig economy employers who will be impacted by this ruling.
“The burgeoning sector is going to be faced with higher costs and may need to rethink business models to address things such as pension costs.
“But ultimately, this ruling helps showcase the success auto-enrolment has been to date and there will be a new swathe of workers having access to a workplace pension, potentially for the first time.
“There needs to be concerted effort to continue to boost engagement in pensions and ensure that those being enrolled for the first time know what they are contributing to and where it is going.”
Under the current rules on automatic enrolment, employers must enrol eligible workers into a workplace pension scheme and make contributions to it.
Employers must enrol staff into a pension scheme if they’re:
- Aged between 22 and state pension age
- Earn at least £10,000 per year
- Usually based and work in the UK
- Classed as a “worker”
Under the current guidelines, which could be targeted for alteration as a result of the Uber ruling, people are classed as “workers” if:
- They have a contract or other arrangement to do work or services personally for a reward (a contract doesn’t have to be written)
- Their reward is for money or a benefit in kind, for example the promise of a contract or future work
- They only have a limited right to send someone else to do the work (subcontract)
- They have to turn up for work even if they don’t want to
- Their employer has to have work for them to do as long as the contract or arrangement lasts
- They aren’t doing the work as part of their own limited company in an arrangement where the “employer” is actually a customer or client
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