The decision of the Employment Tribunal that Uber drivers are entitled to the protections afforded under the Employment Rights Act is interesting. But don’t be misled into thinking that it has any tax implications. For, despite what you might think from what you read in the press, the Employment Tribunal did not find that the drivers were employees: it merely found that they had rights under the Employment Rights Act 1996 and associated legislation.

Pardon? Employment rights but not employees? How come?

The point is that the rights in question are afforded to “workers”: and the term “worker” encompasses two categories of person. The first is someone engaged under a contract of employment (that is, an employee); the second is someone engaged under a contract whereby he or she “undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual” – a so-called “limb (b) contract”. Understandably, the courts have puzzled over what exactly is covered by a “limb (b) contract” and have concluded that it covers, broadly, people who are in law self-employed but whose degree of dependence upon the work-provider is essentially the same as that of an employee and who are therefore deserving of the same protections as employees.

Hence, the question before the Tribunal was not whether the claimants were employees, but whether they were “workers” within the extended definition. And the Tribunal expressly found that they were not employees but “limb (b) workers”. The significance for tax purposes is of course that although such workers do have employment rights, payments made to them are not subject to PAYE and NIC obligations.

Cases of this kind are quintessentially fact-dependent. But the tax take-away from the case is that although (unless the case is reversed on appeal) businesses engaging workers on the terms of the Uber claimants will find themselves obliged to afford employment rights such as minimum wage and holiday pay, they will not suffer the additional cost of having to treat the workers as employees for tax purposes. It also, conversely, reminds us that even though you may have succeeded in procuring that a particular group of people are not your employees, they may nonetheless have rights under employment legislation.

Update, 2021: In February 2021, the Supreme Court announced its decision. We’ve written about it here.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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