A Scottish construction law specialist has warned that the recent UK Supreme Court ruling that Uber drivers should be treated as workers with employment rights rather than self-employed could have ramifications for the construction sector.
The court ruling means Uber drivers are, for example, entitled to a minimum wage, paid annual leave and protection from whistleblowing.
Ross Taylor, from Wright, Johnston & Mackenzie LLP, told Project Scotland that the particular arrangements under which Uber drivers work are ‘complex’ and do not yet match the construction sector. However, the reasons for the Uber decision may ramify upon the sector as a subcontractor may also be a ‘worker’.
He explained, “Employment law distinguishes between three types of people: those employed under contracts of employment; those self-employed people who are in business on their own accounts and undertake work for clients and customers; (and) an intermediate class, who are self-employed, but who provide their services as part of a profession or business undertaking carried out by someone else.
“Uber drivers fall into the third category. So too may construction subcontractors. Determination of whether a subcontractor is a ‘worker’ on any particular project, will involve considering all of the circumstances – not just the contract.”
Taylor said factors to be considered are the control exercised over working conditions and remuneration; and the corresponding dependency on the part of the person concerned.
Uber drivers are workers because they are required to accept Uber’s terms of contract and Uber controls the driver’s choice to accept a particular fare. Uber also exercises a ‘significant degree of control’ over the way in which drivers deliver their service – for example the type of car that can be used – and they are also not permitted to contact passengers after the trip ends (except to return lost property) and their remuneration is fixed by Uber.
Taylor said, “Comparing those factors to the operation of the usual construction subcontract; it may be argued that subcontractors are ‘workers’:
- Construction is dominated by the big players. The further down the chain one sits, the less scope there is for negotiation of the contract. Subcontractors are scared to seek change to the terms given to them, and these terms can be fairly exploitative.
2. Once contracted, the subcontractor usually requires to work to the programme of the main contract works, and must accept variations to the works. In order to receive remuneration for these changes he may be required to provide notice, the requirements for which can be stringent.
3. Subcontractors regularly require to comply with site access stipulations, methods of working and standards of behaviour.
4. Contract price is usually determined through a tendering process. In that way, the subcontractor can decide what price he’ll accept for his work. However, margins are tight in construction. Stepping above the market rate risks losing the work. Framework agreements give the prospect of repeat work. However, the ‘employer’ can dictate the price from job to job, by reference to the framework agreement.”
Taylor added that there may be ‘good reasons’ for the industry’s ways of working, such as the fact that standard terms are needed so that liability is shared appropriately; subcontractors need to be flexible for the benefit of the project as a whole; control over working practices is needed to protect health and safety; subcontractors must work around each other to allow pace to be maintained; and all industries have a degree of market expectation in respect of price.
“A factor which persuaded the Supreme Court that Uber drivers are ‘workers’ was that they are individuals – real people,” Taylor added. “Higher up the chain in construction, contracts will be between legal entities, which are not individuals. In that situation, it is unlikely that the personnel of the subcontractor will be ‘workers’ of the employer.
“The situation may be different down the chain, however. For example, self-employed labourers may be the ‘workers’ of their subcontractor employer. Incorporation offers commercial protection. On the other hand, remaining a self-employed individual may give the protection of ‘worker’ status. Perhaps the status of ‘worker’ of the employing counterpart may extend to the personnel of small companies with one or two shareholders. It is unlikely to go further.
“For employers, the insistence upon biased terms and control over subcontractors may swing them into ‘workers’, with additional rights.”
Taylor concluded by saying that the people most likely to be affected by the Supreme Court’s decision in the construction sector are the small businesses up and down the country, who actually do the work.