1. As a contractor I negotiate my rates with the companies I work with. Uber drivers cannot do this.
2. I also negotiate contract terms. Uber drivers cannot do this.
3. Uber drivers are penalized for not taking rides, which is more akin to refusing a paid opportunity than building a feature. Again as a contractor I do negotiate the work I can and want to do.
4. For this point I agree with you. I can also terminate the contract on my end.
The main difference I see is the imbalance of power. As a self-employed software engineer I can decide who I work with and negotiate almost everything with them. I have my business, they have theirs, and we discuss to try to reach agreements or not. Uber drivers are not in this position. Uber can dictate everything they want, drivers can only decide to stay or leave.
I don't get why you're so focused on the negotiation part. I'm guessing your services happen to be very in demand, which is great and gives you the ability to successfully negotiate. There are lots of other contractors that fail to negotiate and end up accepting a client's first offer. Are they not actually contractors?
For #3, drivers may be penalized for being logged in and rejecting rides (though even that may have changed recently). But that is more akin to missing a deadline or not being available at an agreed upon time, something which any contractor might be penalized for. Uber drivers are always free to just decide not to log in and work at all and aren't penalized for that.
In the USA I can ignore rides at will without penalty, which is a recent development (last year or two IIRC). I only drive when it's busy and the rates are up. Uber offer's me a rate, and I choose whether to accept it or not. Even before this, though, I could just go offline when it wasn't busy enough or the rates were too low.
I still have no power to negotiate contract terms though, as the only other company I could contract with is Lyft, and their terms are basically the same.
Nevertheless, driving for Uber is much much more profitable than it was in the early days. Increase in ride demand is the main reason. Tips can also put you to $30/hour pure profit if you know how to be entertaining.
I agree with you, but if the drivers set their own rate, some might go too low to get more rides and compromise on safety or use illegal workers and such to make up for it.
1. They kind of can. They could just only accept long rides or maybe higher paying rides like 2x at the end of a sporting event.
2. Eh kind of. You could also look at it as Uber simply doesn’t negotiate their contract. It’s like a company hiring a freeelancer and just not negotiating.
3. If a company called you up and you said yes once and then no the next 10 times I bet they’d stop calling and you’d be penalized. They might not even have an Excel sheet with notes or a rating.
In the UK, IR35 legislation (introduction delayed because of covid) would probably designated you as a 'disguised’ employee - ie contracting only to get the tax benefits of working via an intermediary company (less tax, paying yourself as dividends etc).
It seems more likely to come down to setting your own hours, can you pay other people to do work for you, can you have other clients, are you using your own equipment, etc.
> setting your own hours, can you pay other people to do work for you, can you have other clients, are you using your own equipment
This sounds much more like what I would think the definition of contractor is, except for maybe you can subcontract the work. That would be something I would think could go either way in a contract.
But they would be being 'paid' perhaps double the employee rate. Paying yourself and spouse with dividends (20% tax) rather than a salary, taking lots of business expenses, and withholding income until needed.
A few years ago this was common in many London investment banking dev jobs - it appealed to both the companies and certain developers. Often those who had other business interests.
I had a colleague whose contracting company was paying his wife in gold via an offshore company to further reduce tax paid (I only remember that from a drunken discussion so can't swear to its truthfulness)
Dangerous now, HMRC have the power to retroactively declare schemes like that illegal and go after back-taxes and penalties. The space used to be rife with those sorts of schemes, I used to get phone calls - "We found your CV on a recruitment site, we understand you're a contractor. How would you like to keep 95% of your gross earnings?"
> But they would be being 'paid' perhaps double the employee rate. Paying yourself and spouse with dividends (20% tax) rather than a salary, taking lots of business expenses, and withholding income until needed.
Dividends only save NI rather than tax as only first 2K is tax free, then its' 7.5% to the end of the lower rate band, and then something else in the higher one (andahdn as they come from profits corporation tax has already been paid on them)
Real savings come from avoiding NI, and having partners as co-employees / directors / shareholders so the 'income' can be split between two people rather than one
Offshore companies and gold bars is ripe for HMRC taking a closer look
Depends on country. Here in Czechia due to tax advantages for self-employed the net worker income may be more than 50% bigger for self-employed than for regular emplyees with the same level of company expenses.
For sure, but it's always higher risk/higher reward. If you're young and healthy you can probably earn more working that way, but if you're older, have a mortgage, have health issues, need maternity leave, have children in a nearby school and you don't want to move etc... The security and benefits of a salaried position can be worth more in the long run.
>> 1. The company set the hourly rate which meant they dictated how much I could earn
This rate would have been negotiated by you. You then agreed to a specific rate.
The price of Uber rides varies based on demand so the driver doesn't know the price in advance + even if they did they are not allowed to refuse the ride.
Variable pricing based on demand is definitely an unusual feature of Uber's contract, but it would also be nearly unheard of in a full time employee's pay structure. So I don't see how it could be used as a determining factor that defines this contract as an employee/employer relationship.
The issue here is that Uber pretends the driver is contracted by the passenger. In which case the driver should be free to negotiate with the passenger.
That Uber exercises control of the relationship is what is indicating that Uber is an employer here.
The case didn't determine an employee relationship - it determined a worker relationship. These are very different things legally. In terms of flexibility + rights it goes self-employed > worker > employee.
When I've done contracting (in the UK), my clients were always very careful to 1) actually negotiate, including the rate, 2) set a defined end, 3) stress that I controlled when and where the work was carried out (as long as I met agreed delivery times) and a number of other factors exactly because if it looks too much like employment, they'd run the risk that I could in fact take them to a tribunal and claim they should be forced to treat me as an employee and/or we'd both need to deal with IR35 in terms of tax treatment.
I contract/consult all the time. I don't see these the same -
1. I negotiate a rate. Sometimes I negotiate a higher rate after a few months.
2. I have frequently asked for changes to contract terms, usually after a legal review, and had those changes put in place.
3.... kinda agree with you, not sure it's exactly the same as the uber situation
4. The client company can't evaluate my performance in any way they want, at least officially, they get no say over how or when I do the work, how much I am available to work etc.
Practically speaking, point 4 is usually something of a compromise, as the client needs me to deliver the work in a timely fashion, and me signing a contract then disappearing for a month wouldn't go down well! But neither would it be good business practice for me.
Your example is not as logically meaningful however. An example of something not being done (i.e., negotiation) can serve as a proof it is not necessary, assuming it was legal. The converse doesn't work. Maybe your experience is with companies who like to do legally-unnecessary things.
Large companies obviously don't negotiate as much as small companies. In the US, contracting for engineering has been outlawed to a large degree, so large companies avoid doing it because the penalties are retroactive taxes and fines. And perhaps class action suits from former contractors as well. So it's mainly small companies without "by the book" behavior doing it in software. In other fields, it is completely common however.
I'm not sure why it's not logically meaningful... the parent said that their experience as a contractor was similar to that of an Uber driver, I'm giving a counter-example in myself.
> The converse doesn't work. Maybe your experience is with companies who like to do legally-unnecessary things.
It's not legally necessary to negotiate a pay rate, but it is something that often happens, usually informally. The point is not that it is necessary but that it is possible - an uber driver cannot negotiate. I can and do.
> In the US, contracting for engineering has been outlawed to a large degree
An Uber driver has no opportunity to negotiate the rate with the customer. If in the app you said "I want to go to the airport" and then each driver interested replied with a quote, that would be rate negotiation.
Negotiating with Uber, not working for Uber. Uber is a middleman/platform connecting customers with providers, guaranteeing terms of contract to both parties. It works just the same with most IT contracting firms (and the same is true in other sectors too - construction, medical, etc).
A lot of IT contracting firms in the UK have in recent years had to drastically change their practices exactly because ensuring a contract does not create a relationship that would be deemed to be an employment relationship has gotten progressively harder, exactly because it was being massively abused, so this is a very poor argument in the UK.
The lack of ability to negotiate prices - be it with a middleman or the actual customer - is one of several tests to that points strongly towards an employee relationship, whether you're a driver or an IT contractor.
I'll note that I see you say elsewhere you're an IT contractor. If you're an IT contractor in the UK, I presume you've had to answer questions about IR35. If you haven't, then you really should have a discussion about IR35 with your accountant, because get that wrong and you risk facing a massive tax bill.
I don't understand what do you mean. Does the middleman have to accept whatever I say, or how does this negotiation work? Either we agree, or we don't, I don't see any difference between my IT contracting negotiation and using Uber. One would say that employment is hourly/daily/monthly/yearly based payment - so IT contracting would fall into that, but I don't see how Uber's per-ride rating would fit there. That the price is set by the middleman doesn't mean there isn't negotiation - the contractor can simply disagree, as opposed to an employee who has to do the assigned work and isn't paid based on its completion.
I'm an IT contractor in the UK, but not an UK resident nor citizen; my accountant said IR35 doesn't apply to me then.
There needs to be an actual ability to negotiate. If they say no, so be it, but Uber does not provide a mechanism for drivers to give a counter-offer, so there is no negotiation.
For your comparison to contracting, I've contracted quite a lot, and I have always had the ability to state my rate, and the client have had the ability to state theirs, and we arrive at something that may be mine, or theirs or something in between, but there has always been actual discussion.
With Uber you're presented with a price, and you take it or leave it, and if you leave it Uber never comes back with a higher price - on the contrary, if you keep leaving it they may penalise you.
That alone would not necessarily have caused it to be deemed employment, but combined with the other element that all points to drivers having very little control demonstrates that this is not a contract entered into by equals, but one were drivers are subservient, and that points very strongly to an employee relationship under UK law.
That there may be similar elements in your IT contracting does not mean Uber drivers are not employees, but that you might be.
E.g. when I did contracting:
* I always negotiated a rate, whether or not there was a middleman in the process.
* There was always a defined end to the contract (but it could be extended)
* I had marketing costs.
* I paid for my own equipment, and the costs were amortised over my contracts.
* I had more than one client at a time a lot of the time, but certainly more than one per year.
* I decided when I worked, and how to do the work, and where to work and it was not ordinarily in their offices.
Each one of those pointed towards me being a genuine contractor outside of IR35. Each one of them going the other way would not individually mean I was suddenly inside IR35 or in a deemed employment, but each additional one would increase the likelihood the relationship is an employment relationship.
EDIT: To make it clear, IR35 is the tax treatment only, but it's often a useful proxy to indicate whether or not you have a claim to be an employee, because the tests that indicate if you're within IR35 are much the same things a court or tribunal would consider if you were to ask them to rule on whether or not you're an employee.
EDIT2: Also, if you're a contractor in the UK but not resident that points to a short term contract. That does suggest you'd not be considered an employee, certainly.
Consider that employee can't negotiate at all - you do what your boss tells you or you are fired, even in Europe - not performing assigned work is specifically written in the law as fireable offense. Accepting or declining terms certainly is negotiation, even if it seems limited.
It's not true that you can't refuse to ride! I have driven many Uber rides as driver (and about 100x more as a passenger) - what will get you kicked out is marking yourself available and then declining rides - because it makes the customer experience much worse. You know the minimal rate per mile beforehand and it can only get better for you, never worse. You're free to turn it off at any time and for as long as you wish and you won't be kicked out - that's absolutely impossible for employees.
The IT contracting firm I work with would kick me out the first time I said I am available and then declined.
> Accepting or declining terms certainly is negotiation, even if it seems limited [...] what will get you kicked out is marking yourself available and then declining rides
There is a contradiction here... Keep in mind that Uber have always explicitly stated that they are just a platform to connect drivers with passengers. So the negotiation (even if it is just accepting or declining terms) must happen between the driver and the customer - i.e. every new passenger.
Except that, as you point out, Uber punishes drivers who negotiate in this way! The driver isn't even allowed to refuse customers. It's as if you told your agent "ok I'm open to work", they reply "there's a job 150 miles away, you need to be there at 6am every morning", and you weren't allowed to decline!
So we started with very little negotiation power (the "contractor" can say yes or no to the terms predefined by the platform), and then saw this reduced even more when the platform prevents "contractors" from negotiating in this way with each customer - clearly they are a contractor no more
> The driver isn't even allowed to refuse customers.
As I said, you are allowed to refuse customers - simply turn off your availability. You are not allowed to decline rides when you've marked yourself available, just as IT contractors aren't allowed to decline jobs after they announce availability.
It's not true that platforms must allow direct provider-customer negotiation or it's employment. Be careful with this, because most of B2B world is running on middlemen similar to Uber (just without an app) - you might suddenly make everyone an employee!
> "there's a job 150 miles away, you need to be there at 6am every morning", and you weren't allowed to decline!
This is totally false in case of Uber. You can be anywhere in a city-wide zone, you're free to turn on your availability at any time you wish, and you can turn it off at any time you wish, and you can stay offline for as long as you wish - all of this is impossible for employees.
> clearly they are a contractor no more
How so? Are they using their own equipment? Yes. Are they defining their own working hours and place of work? Yes. Are they able to work or not work whenever they choose? Yes. Are they paid per job and not per hour/month/year? Yes.
Please tell me, who is a contractor in your world? Seems like absolutely no one would fall into your criteria. Negotiation never was the defining feature of a contractor, only one of many criteria, and many contractors don't have any ability to negotiate at all (due to long term contracts based on e.g. volume)! And still, in case of Uber there is negotiation, you can decline to work if you don't like the terms, unlike employees.
> IT contractors aren't allowed to decline jobs after they announce availability
I don't get this - I've done a bit of consulting and it didn't work like you describe. A client reaches out to you (either directly or through an agency), they describe the mission, you say yes or no, negotiate the rate and bingo. Exactly like a plumber.
What system are you describing?
> who is a contractor in your world?
Plumbers, independent building contractors, software contractors, corporate trainers - there are lots of contractors out there. The general rule is that they accept no job security in exchange for higher rates than the equivalent salaried position (e.g. an independent plumber makes 2x what a salaried plumber does, however if they get ill or break a leg they are in trouble..). This for me is the main test that shows Uber isn't contracting - Uber drivers make the same or less than salaried taxi drivers!
The company you contracted for wasn't claiming to be a platform that let you hire your services out to other people, was it? If Upwork or a recruitment agency simply assigned you to a client at a rate they chose without telling you what it or the project was until after you had accepted and expected you to accept at least 80% of those projects unless you had previously signalled you were unavailable, they would also face issues.
For your contract to be legal it would have to pass other tests, but for you it was an objectively much stronger position (your agreed a rate you thought your time was worth when you signed the contract, not whatever your client thought they could hire you out to their next customer for)
Your argument assumes that Uber is hiring contractors and customers interact with Uber... If that were the case, Uber would have to take responsibility for the full transaction towards both drivers and riders (Eg guaranteed payment vs time, rather than possibility of rides). Uber is instead trying to represent itself as a marketplace matching drivers & riders, with riders hiring divers as contractors. And Uber doesn’t allow drivers to negotiate terms with riders, which breaks that thesis.
It's very possible that you would have been declared employed if you took it to a tribunal or if it was otherwise challenged. This happens plenty often.
It's hard to tell from the information you have given us, but it sounds like it could be an employer-employee type relationship.
You're confusing the situation. Uber acts as an intermediary party between the contractor and the client (the passenger), so you should compare it to platforms for contract work, such as Upwork, or fiverr, or something like that. The point of Uber is that they're only an intermediate party that puts clients and drivers together. Drivers are not providing a service to Uber.
So following that chain of thought freelancers through Upwork and Fiverr need to be qualified as workers too?
That would be absurd and probably hurt the self-employed more than it helps.
Not at all. They don't control your rates, they don't stop you from getting jobs if you reject a lot, they don't set any quality minimums for your job, and they don't remove you if someone doesn't give you five stars.
In other words, you're not working for these platforms, it's just a marketplace. With Uber, drivers are working for Uber, not for the passengers. However, Uber is pretending to be a marketplace, and it isn't. This sentence just proves that.
I get the feeling the real issue is not these four points, which are legalistic and vague.
The issue is whether you can pay someone way less than what they'd otherwise be paid for the same work, just by saying they're contractors. A lot of software contractors get paid quite a lot more than comparable salaried employees, so they don't complain.
Getting an hourly rate and then being given tasks to accomplish is very different. Imagine if they had decided how much each complete task was worth, you had to spend a significant part of your time waiting unpaid to get tasks assigned to you, and they would terminate you if you avoided tasks where the pay vs workload was unreasonable.
1. You negotiate the hourly rate, or take another contract with one of the many other clients if that is not agreed. Not an option with Uber.
2. As above.
3. Not equivalent with plenty of other drivers in the area to take the call - if the driver was dropping the passenger off halfway it would be equivalent.
4. This is fair - and the only argument in the judgement I thought weak.
The difference is yours would of been a short defined period, Uber is open ended. You would be entitled to sick pay, holiday etc if you are a worker in effect (if the contract is too long).
Sounds very likely it could have been deemed employment if it had lasted long enough and been taken to a tribunal (or if HMRC found out, this significantly increases the likelihood they'd find it to be within IR35). That it only lasted "several months" would reduce the chance, but if you'd e.g. stayed longer than a year, odds would increase accordingly.
1. The company set the hourly rate which meant they dictated how much I could earn
2. The company set the contract terms
3. The company told me what features to build and could penalize me if I decided not to build some
4. The company could evaluate my performance any way they wanted and terminate the contract at any time for no cause
If this company could do all of these things, which I think are pretty standard, why can't Uber?