Now the dust has settled on the recent court case against Uber, which found it must treat a group of taxi drivers as ‘workers’ and not self-employed contractors, there must be many in our sector who are wondering if the ruling could have implications for them.
Although this case only applies in law to the group who brought the case and not all Uber drivers, Uber has announced it will treat all 70,000 drivers the same and will provide a guaranteed minimum wage, along with holiday pay and pensions.
The central question in the case was whether the drivers were workers or self-employed, with the court determining they were workers because Uber had a written agreement that drivers couldn’t amend; they controlled how much the drivers were paid, how they delivered their services and whether they accepted a journey; and they restricted communication between the drivers and passengers to stop them from building a relationship.
So I can’t help but wonder how long will it take before estate agents on self-employed contracts, relying largely on commission, will seek to argue through the courts that they, too, are workers and entitled to the same rights?
Over the last few years, we have seen increasing number of estate agencies looking to adopt similar business models to Uber as a way of being innovative and seeking to expand. But what is clear from the Supreme Court’s judgment is the potential for confusion and uncertainty regarding employment status in such models.
For example, what degree of control does the agency exert over the agent, do they lay down guidelines about how a client is dealt with, or do they insist on a specific marketing style? Do they say their agents always have to be available at certain times for the customers, do they give them freedom to agree their own fees or do they say there has to be a minimum fee, and what control do they have over the way services are delivered, including the substitution of others to do an agent’s job?
Clearly the possibility of a similar case in the estate agency sector exists although whether any group of estate agents wants to take on the company that provides their living remains to be seen.
The case will inevitably have ramifications for the wider gig economy, including the parcel couriers and food delivery companies that have proliferated during the pandemic, but I can’t help but wonder whether self-employed agents are looking at the ruling and wondering whether they, too, feel they would like the security that comes with being employed, along with paid leave and sickness benefits?
Agencies must be looking at this ruling with some trepidation and reviewing their agreements with their associates, given the financial outlay they would incur if the same thing happened to them. Uber is now facing a massive pay-out and a larger cost base, which may well lead to a price rise for passengers using their service.
Paul Smith is chief executive officer of Spicerhaart.
Comments (10)
There are a variety of “self employed” models out there, some are better than others and its important to understand what you’re getting involved in. From what I understand a number of them are going to have to change, not particularly in relation to the Uber ruling but in relation to IR35.
However in my view there are some critical things which mark the difference between cheap labour and genuine self employment.
1) Who owns the data?
2) Who provides the instructions?
3) Is there a notice period?
4) Are there any restrictive covenants on exit?
5) Who takes the lion’s share of the commission?
6) Who invoices the customers?
The gig economy has been revealed for what it is. A methodology of employing people without paying all the costs of normal employees. HMRC has scuppered that little ruse. Personally I’d rather have full proper employment than all these scam companies like Amazon and Uber not paying the costs of proper employment. Having people in proper jobs is good for the overall economy. If it costs a few quid more for this then so be it If all employers have the same costs then competition would be fair. You can’t have self-employment if you are under the control of one organisation. Hopefully the days of the gig economy will soon be destroyed by HMRC.
Are you really self employed or is it just a commission only job?
True. Commission only wrapped in the ‘self employed’ shell suit. They say, if it quacks it’s still a duck…..
I think HMRC rules are quite clear – if you work for only 1 employer then you are classed as employed by them and cannot be deemed self employed. You therefore need to have all the normal benefits of being an employee.
Not sure why HMRC does not follow up it rules more with “self employed” folk from companies like PB for example. Do all their PB agents work for someone else as well? or sole “employees” for PB
I would suggest this, straight from the PB website, answers your question –
“Dedicated Local Experts (and only the best). Our Local Property Experts all know their patch inside out. They aren’t based in branches, which mean they can be on hand 7 days a week; to help at every step.”
It’s taken a while but in the early debates about disruption it was pointed out that listing reps working for a single agency, invoicing one client had to be considered as employees. It was a scheme that avoided national insurance, employment protection regulations and working time directives.
It almost doesn’t matter any more; disruption has run its course and the Ewemove model which was put forward as the workable way to do not traditional agency is becoming more established as the way to do it. Two of more vocal early champions of disruption are ether running or a tag along to similar models.
The problem still exists, 3500 activity centres with average 6 established agencies on each #local patch means a hybrid agent has to be exceptional to get themselves established and to do well. Where individuals are exceptional it works, where they aren’t, as HillofWad points out, the experience is brutal and expensive.
Most people are not equipped to be self employed and employing some like that with zero experience is silly. It’s a mindset most don’t possess but the allure of the higher comms is like a fly to a light.
Good article. The success of these self employed agency models is very limited and only likely a few doing really well. With some offering splits up to 80% in favour of agent it’s a race to the bottom and the client ultimately suffers as it becomes a churn n burn, both the properties they sell and the agents themselves. Shame but the majority of vendors have been conditioned to accept low quality for low fees.
Some really good points here. There are firms in every sector who use self-employment as a cheaper alternative to employment. It’s a type of abuse.