Supreme Court Uber ruling a step towards ‘opening the doors’ to AE for gig workers

The Supreme Court ruling that Uber drivers are not self-employed could have “ripple effects” for all gig workers and move them towards being eligible for auto-enrolment (AE) pensions, according to Aegon.

Following the ruling, Uber must classify its drivers as workers, rather than self-employed, which could give them the right to be auto-enrolled in a workplace pension scheme, depending on their earnings.

“Today’s Supreme Court judgment that Uber drivers are ‘workers’ rather than self-employed could have ripple effects for all gig workers, giving them not only rights to holiday pay, but potentially other workplace benefits such as employer pension contributions,” commented Aegon head of pensions, Kate Smith.  
 
“In the UK, pension provision is largely delivered through the workplace, and the self-employed, including gig workers, are excluded from the government’s flagship AE policy.

“This reclassification is another step towards opening the doors to AE for all gig workers, giving them the opportunity to save for retirement, with the important boost of the right to a 3 per cent employer pension contribution.“  

Under current AE rules, an employer must enrol any employee between the ages of 22 and state pension age earning at least £10,000 a year, or £833 per month if paid monthly, into a workplace pension scheme.

Also commenting on the ruling, Broadstone technical director, David Brooks, noted that Uber drivers' AE pension rights will "need to be addressed and potentially retrospectively".

"This will be a massive administrative headache as drivers hours are not static and determined by how much they work, and likewise earnings will fluctuate," he continued.

"This late adoption by Uber will also require the highest level of contributions to be paid across, 5 per cent of banded earnings, which may well result in more than normal opt-outs that could still leave their employees without pension provision in later life.

"This could also have repercussions for people in similar 'gig' occupations which could be huge."

Following the ruling, Uber drivers will also be entitled to minimum wage and holiday pay.

The case has been running since former Uber drivers James Farrar and Yaseen Aslam won an employment tribunal against the firm in October 2016.

Since then, Uber has lost appeals in the Employment Appeal Tribunal, the High Court and now the Supreme Court.

"Today's Uber decision has legal consequences for the pensions and benefits entitlements for these workers – the most important of which is AE for a minimum pension provision," said Gowling WLG partner, Richard Lee.

"This decision is the final confirmation that individuals working for Uber (and other businesses using this working model) are to be treated as workers and depending on the level of earnings they will now be entitled to be enrolled into an appropriate pension arrangement with minimum contributions of 3 per cent from their employer.

"This will also bring a challenge for occupational pension providers including master trusts who have generally (NEST aside) not previously accepted the 'self-employed' into pension arrangements. Millions of Uber workers may now need to be enrolled into pension arrangements, triggering earnings threshold tests, appropriate tax treatment and more 'small pot' problems."

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