THIS ARTICLE HAS BEEN UPDATED ON 19.09.23
FREENOW, the taxi app, is getting mixed messages from taxi drivers and union members about giving drivers the freedom to choose if they want to be employees or self-employed. Could there be wider implications for all workers if such models became the norm and would HMRC allow them? The taxi-app provides more background to this compelling development
- FREENOW data reveals 31% of minicab drivers prefer worker status, while the majority want to remain independent contractors
- Status choice to be in place from October 2023
- Drivers on the FREENOW app will be able to freely choose their employment status. Those who
choose worker status will be entitled to:
● National Living Wage guarantee – each week FREENOW will ensure all driver
earnings are equal to or greater than the National Living Wage
● Holiday pay – total earnings will be topped up by 12.07%, while drivers will retain
the freedom to decide when and where to work without any restrictions
● Access to FREENOW’s pension scheme – FREENOW will contribute 3% towards
the driver’s pension, based on drivers making a 5% contribution, and drivers will
have the option to opt-out - Meanwhile, drivers who decide to remain independent contractors will see “high earnings per trip
to compensate for the lack of other benefits (National Living Wage, holiday pay and pension),” said the taxi-hailing app. “They will also have the right of substitution (to become a company owner employing other drivers) and will be able to select their dispatch radius.”
Drivers want more options
A partnership agreement with the union for Taxi and Private Hire drivers, GMB and FREENOW – a taxi-hailing app, has been taken off the table, according to GMB’s National Secretary Andy Prendergast.
The Germany-based company is backed by the BMW Group and Mercedes-Benz Mobility. In total, it employs around 1,000 employees in more than 26 offices and is led by CEO Thomas Zimmermann.
Earlier this month, FREENOW said it would be giving minicab drivers (Private Hire Vehicle drivers) in the UK the option to choose between worker status, gaining access to certain benefits, or remain
independent contractors (self-employed from an employment law perspective) when it comes to
their employment status.
The option is to become available from October, and the decision was informed by an internal survey
conducted this year among FREENOW minicab drivers (PHV). The survey revealed that while the
majority would like to remain independent contractors (59%), almost a third (31%) would prefer to
have worker status, while 10% are undecided. The survey also revealed that holiday pay (71%) is
the most sought-after benefit for minicab drivers.
Mariusz Zabrocki, UK General Manager at FREENOW said, “It’s now clear that minicab drivers in London want to have more than one option regarding their employment status. Therefore, we are taking an
industry-first approach empowering the 20,000 minicab drivers on our platform to make the best
choice for them. We’re also proud to be the first company to offer trade union protections to both
workers and independent contractors.”
Union members do not represent all drivers
However, things have changed quickly. On the 13th of September GMB’s Prendergast said in a release: “This cutting-edge deal between GMB and FREENOW is a step towards a fair world of work for all app-based workers. A proper trade union agreement with a modern tech private hire company is a blueprint for others to follow. GMB calls on other operators in the capital – and beyond – to follow suit.”
For an employer or engager, it is essential to understand that the status of an individual they employ or engage is not simply a matter of choice. The status is determined by the real nature of the working relationship, not what an employer or engager chooses to call it.
Dave Chaplin, CEO, ContractorCalcuator
Just two days later, following a review from GMB members, the deal was off. Prendergast said the agreement the reunion had with FREENOW was designed to improve representation in the industry and raise standards. “However, while this was the intention, the parts about giving drivers the right opt-in or out of worker status have rightly been questioned by members working within the industry,” he said.
He said since the agreement was released, GMB members have been clear that “this deal isn’t acceptable”.
He continued in a statement on the union’s website: “Drivers told us they value flexibility combined with workers rights and worker status gives drivers the best of both worlds. As a result, and having reflected on the views of our members, we have been given no choice but to inform Freenow that the deal is suspended unless they can agree to provide all drivers with worker status. We will always work with any operator willing to provide drivers the rights they are entitled to.”
FREENOW provides the FI more background to the story
“It’s important to note that Uber members who pressed the Union do not represent FREENOW’s drivers, and the announcement made by GMB was made in the Uber Noticeboard and not to FREENOW drivers,” according to Mariusz Zabrocki, General Manager at FREENOW UK.
“GMB and other unions have agreements with other UK businesses engaging with independent contractors, and we are giving minicab drivers the freedom to choose their employment status instead of forcing them into one. Denying freedom of choice isn’t in drivers’ interests.
Mariusz Zabrocki, General Manager at FREENOW UK
In an email, Zabrocki told The Freelance Informer, “We are surprised by GMB suspending our agreement until all private hire drivers are offered worker status. Actually, every private hire driver operating on FREENOW is being offered worker status. As envisaged in the partnership agreement FREENOW has signed with GMB, we launched a new distinct model, which gives private hire drivers the option to choose their relationship with us.”
He added, “GMB and other unions have agreements with other UK businesses engaging with independent contractors, and we are giving minicab drivers the freedom to choose their employment status instead of forcing them into one. Denying freedom of choice isn’t in drivers’ interests.
“We will continue to put drivers at the forefront of how we operate regardless of GMB’s decision to suspend this agreement. Despite the external pressure to do so, we will not deny minicab drivers the choice to remain independent contractors, which, according to our data, is an option preferred by 59% of our private hire drivers.”
“Unorthodox approach”
According to HMRC a worker’s status is determined by the “real nature of the working relationship.” Therefore, if the nature of the relationship changes sufficiently (e.g., right of substitution, more control over work), the status should also change.
Dave Chaplin, CEO of ContractorCalculator sees FREENOW’s hiring approach as “unorthodox”:
“This approach by Freenow, which apparently gives drivers a choice over their employment status, is somewhat unorthodox, given that HMRC makes it clear that status is not something people can choose.”
He continued, “For an employer or engager, it is essential to understand that the status of an individual they employ or engage is not simply a matter of choice. The status is determined by the real nature of the working relationship, not what an employer or engager chooses to call it.”
Therefore, it is in a freelancer’s interest to ensure the contract and the relationship match the type of working relationship the freelancer wants right from the start. If the relationship changes, the freelancers must choose to stay or go and have the contract be updated according to the new working relationship.
Certainty over worker status could create economic growth
“The category of Worker status has caused problems for many years,” said Chaplin. “The Labour Party recently announced that they would remove it and revert to the simpler status terms of self-employed or employee. I agree with that idea.”
Chaplin explained that, provided the working conditions offered are different, then for individuals to choose the one that suits them best seems fair and should also “help to thwart any future legal claims that workers have been misclassified.”
Chaplin says it is rather telling that 10% of black cab drivers who use the Freenow platform have no desire to be Workers and are happy to remain self-employed.
“It turns out they aren’t vulnerable workers who need protection. The only protection they need is protecting their right to be their own boss,” said Chaplin.
“Being able to choose status, without interference by the state, would deliver considerable certainty for businesses and assist in the UK’s much-needed economic growth. Additional legislation and enforcement would also be required where individuals without bargaining power are coerced into misclassification. These vulnerable workers need protection,” he said.