Will tribunal judgment force Uber to auto-enrol its drivers?

Logistically, it would not be straightforward to plug in an auto-enrolment framework, but it is feasible

Chris Deeson, System Sync Solutions

The two men, one of whom no longer drives on the app, were selected as test claimants to decide whether they should be paid a minimum wage or paid leave.

While the preliminary hearing only affected the two claimants, the precedent set could change the way workers are paid benefits throughout the gig economy, if upheld. Uber said it would be appealing the decision. 

Self-employed or ‘workers’?

Currently, Uber drivers are considered self-employed, meaning there is no requirement for them to be auto-enrolled.

But the new decision establishes the two drivers as “workers”, a standard of employment defined under the Employment Rights Act 1996 which affords fewer rights than those of a normal employee.

A spokesman from the Pensions Regulator said the regulator would be looking closely at the judgment and was “considering” whether Uber would be obliged to auto-enrol drivers.

In a statement, Uber said that the more rigid conditions associated with being a worker might be unsuitable for their drivers.

Jo Bertram, regional general manager of Uber in the UK, said: “Tens of thousands of people in London drive with Uber precisely because they want to be self-employed and their own boss. The overwhelming majority of drivers who use the Uber app want to keep the freedom and flexibility of being able to drive when and where they want.”

Expect similar claims

Penny Cogher, pensions partner at law firm Irwin Mitchell, said the appeal process would probably see the case end up in the Supreme Court, but agreed with the direction taken by Judge Anthony Snelson.

“It is consistent with the direction of travel the law and the new May government is going. Uber has sufficient control of its partners and provides sufficient service facilities to have to also assume higher employment obligations,” she said.

She said the decision would “open the floodgates” to claims brought by workers in similar gig economy enterprises.

Experts suggested auto-enrolling drivers could require significant systems change for a company like Uber. Meanwhile, Uber has said it will not begin implementing any changes to its pay structure until the end of the appeal process.

“Logistically, it would not be straightforward to plug in an [auto-enrolment] framework, but it is feasible,” said Chris Deeson, chief marketing officer at System Sync Solutions, which owns auto-enrolment data integration platform Pensionsync.

Uber might already process and record payments centrally, he said, drawing comparisons between its structure and that of some companies which employ zero-hour contract workers.

“Payroll systems have the functionality to run multiple individual pay runs within a week, and therefore drivers could be paid daily with deductions accruing at the point when they reach certain limits,” said Deeson.

Will drivers opt out of pensions?

Of course, for every pension contribution made to Uber drivers, the amount they receive from their fares will be reduced, perhaps even to the extent that drivers pay indirectly for their employer’s contributions.

“Ultimately [Uber] will have a commercial model that will drive the margin they’re looking to receive,” said Mark Pemberthy, director and head of defined contribution consulting at JLT Employee Benefits. “You’d expect that over time they would need to revisit that model.”

With regards to pension provision, this might mean that drivers will not welcome the loss of autonomy and take-home pay brought about by auto-enrolment like Uber suggested, but Pemberthy questioned the application of this logic to pensions, citing consistently low opt-out rates.

”We’ve seen across [auto-enrolment] so far that workers across all sectors and all demographics do stay members of pension schemes,” he said.