Commercial Awareness Update – W/C 22nd February 2021

The round-up of the stories that a budding Student Lawyer should be aware of this week. Sign up here to get these updates in your inbox every week.

Reshaping the Gig Economy: Uber BV v Aslam

Article by Andrew Dewey (2nd yr LLB student at Reading University) 

After four years of litigation, on Friday 19^th February 2021 the Supreme Court held that private hire vehicle drivers who provide their services through Uber fell within the definition of a “worker” in the Employment Rights Act 1996. Following this ruling, Uber drivers will be entitled to holiday pay, sick pay, the minimum wage and other benefits. Despite this being a positive result for the drivers, it is thought by many that this decision does not sit well with the business model of the company and the Gig Economy in general.

Reasoning of the Court

On a unanimous decision and agreeing with the court at first instance and the Court of Appeal, the Supreme Court found in favour of Uber based on level of control they exercised over the contract terms under which the drivers worked – covering key points such as their pay, the level of choice a driver has when deciding whether to accept requests for rides and the way in which they deliver their services with passengers.

With this level of control, the court recognised that Uber drivers were precluded from increasing their income using ‘professional or entrepreneurial skills’ which ultimately meant that the drivers worked for Uber and not themselves.

What is the Gig Economy and how does this decision affect its future? 

The gig economy is made up of independent workers who operate as freelance workers under short-term contracts – ‘gigs’ for different companies. Although it is seen as a flexible way of working, a worker in the gig economy is not entitled to the same levels of protections as a worker who comes within the scope of the Employment Rights Act 1996.

Following the Uber case, the dispute will now be referred back to the Employment Tribunal where the compensation levels will now be assessed for the drivers and it is estimated that Uber Drivers are set to be awarded an average of £12,000 each.

On a wider point, the Uber decision will have a significant impact on companies who rely on gig economy workers to carry out services on their behalf. Corporations will have to rethink their business models so that they can have less control over their workers, and they qualify as ‘self-employed.’ However, this comes at a risk of companies like Uber losing their uniform service that they have built up as they will no longer have control over the way in which contracts carry out their service.

Additionally, as companies must pay further costs to their workers in order to comply with the law, this could be an issue for start-ups who are aiming to exercise control over staff to build their brand which, in turn, could lose backing from investors who are worried about gig economy firms losing control over their cash flow and employment control.

Finally, this decision adds further pressure to the UK government to enact new regulations to protect employees. Not only are the Covid-19 job related protection rules coming to an end, but Boris Johnson has been silent on his plans to enhance worker’s rights as the UK leaves the EU. This has been criticised as the Conservative party seeing worker’s rights as a barrier to businesses, but it seems more appropriate to suggest that Britain is now at a crossroads on how it should protect its workers.

The Paris Agreement Explained

Article by Simone Forostkenko (5th year BCrim/LLB student at University of New England)

At the 21st Conference of Parties in France 2015 the Paris Agreement was formulated. The most significant section is outlined in article 4, paragraph 2, of the Paris Agreement. This section stipulates that: ‘Each Party shall prepare, communicate and maintain successive nationally determined contributions that it intends to achieve. Parties shall pursue domestic mitigation measures, with the aim of achieving the objectives of such contributions.’ The National Determined Contributions (NDC) is significant as all countries attending the Conference of Parties agreed to create a plan, to be reviewed and updated every five years, outlining their future actions on climate change in the efforts to reduce global warming to well below two degrees Celsius by 2030.

There are no set guidelines in the Paris Agreement which specify what a country must include in their NDC plan or how they are to implement it to get below the desired target.  Along with no guidelines there are also no repercussions for not reaching the outlined goals in the NDC. Social pressure and the devastating effects of climate change are the reasons that countries are staying motivated to achieve their NDC goals.

In 2018, prior to the global effects of Covid-19, the United Kingdom was listed in top 20 countries highest emitters of annual carbon dioxide. The United Kingdom ranked as the 17^th highest with a total of 0.37GT of CO2 emissions. Despite not having a ranking as high as the United States of America or Australia, the United Kingdom is an influential first world country and needs to lead by example to demonstrate what is expected of all countries to combat the consequences of climate change.

When the United Kingdom ratified the Paris Agreement, they were still apart of the European Union (EU). The target set for all countries in the EU is to have at least a 40% reduction in GHG below 1990 levels by 2030. Despite leaving the EU at the end of 2020, the United Kingdom is still expected to uphold this pledge until such time they submit their own NDC plan and goals. This is expected to be done as soon as the United Kingdom is holding the next Conference of Parties later this year where all the climate change efforts of countries will be reviewed.

The United Kingdom has taken positive action as they became the first major country to legislate a net-zero 2050 emissions target is 2019 when they amended their Climate Change Act. They also barred the export credit agency, UK Export Finance, from offering financial support to foreign fossil fuel projects. Unfortunately, due to the unanticipated effects of Covid-19, there has been less funds and efforts available to put towards climate change action.

The Climate Action Tracker rated the United Kingdom’s efforts to meet the goal of reducing well below two degrees Celsius by 2030 as ‘insufficient.’ To meet this goal, the United Kingdom will have to place more weight and focus on their climate change policies and actions.

The Green Economic Recovery: New Climate-related financial risk disclosures in the UK

Article by Ali Sheikh (Law Graduate from the University of Birmingham)

Whilst the Covid-19 crisis has taken centre stage in government policy around the world, the challenges of climate change continue to manifest alongside the pandemic. Where lessons on lack of preparedness were learnt too late, there still remains a chance to take action in reducing the damage and the ultimate threats associated with climate related damage by implementing sustainable finance strategies.

The UK has positioned itself as a global leader in the race to Net Zero, being the first major economy to pass Net Zero emission laws with the aim of achieving the Net Zero target by 2050. Pioneering the path to become Net Zero involves understanding the ecosystem of a green economy which involves pursuing investment in green and low carbon technologies, services and infrastructure. As part of this, improved climate-related financial disclosures aim to ensure that the effects of climate change are routinely considered in business and investment decisions.

Task Force on Climate-related Financial Disclosures (TCFD) recommendations:

The TCFD was established to provide clear, comparable and consistent information that lenders, investors and insurance underwriters require when assessing the opportunities and risks associated with climate change that companies face. In their report, the TCFD recommendations provide 11 recommended disclosures under 4 pillars covering the following:

● Governance: Explain governance around climate-related risks and opportunities.

● Strategy: The actual and potential impacts of climate-related risks and opportunities on the businesses, its strategy, and financial planning.

● Risk Management: Identification, assessment, and management of climate-related risks.

● Metrics and Targets: Use of metrics and targets to assess and manage climate-related risks and opportunities.

Financial Conduct Authority’s (FCA) new rule integrating TCFD recommendations:

The FCA has implemented a new listing rule which applies to commercial companies with a UK premium listing, including sovereign-controlled commercial companies. The new Rule (LR 9.8.6(8)) requires disclosures in annual reports to address the recommendations and recommended disclosures set out by the TCFD. These are established on a “comply and explain” basis requiring companies to explain in their annual financial report whether they have made disclosures consistent with the recommendations or explain if they have not done so. The new LR will apply for accounting periods beginning on or after 1 January 2021. The first annual financial reports including disclosures subject to the rule to be published in spring 2022.

UK – Pioneering Climate-related financial risk disclosures

The Rt Hon Rishi Sunak MP, Chancellor, remarked that “The UK will become the first country in the world to make Task Force on Climate-related Financial Disclosures (TCFD) aligned disclosures fully mandatory across the economy by 2025, going beyond the ‘comply or explain’ approach.” As a result, the updated FCA rules taking into account TCFD recommendations aim to ensure that transparency regarding an organisation’s exposure to climate change risks and opportunities can eventually lead to investment towards green projects and materialising a sustainable finance strategy, with the potential for this to become a reporting template which can be adopted by nations around the world.

Uber has lost in the Supreme Court and what’s next?

Article by Joyce Yiu (LLM student at Queen Mary University of London)

Uber lost a U.K. Supreme Court ruling over the rights of its drivers, in a landmark decision that strikes a blow against the gig economy.

The UK Supreme Court ruled that Uber must classify its drivers as workers. The ruling entitles Uber drivers to holiday pay, rest breaks and minimum wage, protections they were unable to access while Uber classified them as self-employed.

Judges in the UK’s highest court unanimously upheld a 2016 Employment Tribunal decision that said drivers are in a “position of subordination and dependency to Uber”. Although the new decision only directly applies to the drivers who brought the claim against Uber, it will set an important precedent for how millions of gig economy workers are treated in the UK. In the UK, it could push for the government to bring new legislation to redefine the status of workers, and their rights.

In contrast, a public vote gave Uber the right to continue to class its drivers as independent contractors last November, due to the heavily spent campaign to dilute new workers’ rights laws in California.

Other companies have already been exploring changes to the employment statues of drivers. Just Eat Takeaway announced plans in December to offer more than 1,000 UK workers benefits including hourly wages and sick pay, although they will be employed through the Randstad agency.

It is noted that other companies are likely to contest the decision and it is likely to encourage those employed in gig economy roles to bring claims to enforce their right as workers. The decision did not offer a guaranteed amount of work, the right to receive sick pay, or the right not to be dismissed without the company having a fair reason and following a fair process.

You can read more here and here.