We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Branding as a service

In discussions about the necessity of regulations to protect consumers, I have argued that brands can fulfill the same role. In order to maintain a good reputation they need to provide reliability of service. For small businesses, branding can be licensed or franchised. If your small business injures customers it will lose the right to use the brand. All these things can happen through voluntary interactions.

This happens all the time. Owners of burger restaurants use the McDonald’s brand. People who want to drive people around for money use the Uber brand.

So I find it perplexing that lawyers are arguing that paying for the right to use branding can turn a person into an employee.

Jolyon Maugham, a barrister, said that there was an “unresolvable tension” between Uber’s claimed status as a intermediary and the fact that it has built a brand so powerful that it has entered our lexicon. “Uber is trying to enjoy the legal benefits of being a broker on the one hand, and establish themselves as a massive customer-facing brand,” says Mr Maugham, who is taking action against Uber to establish that it should be paying VAT.

There may well be legal technicalities around this, but the idea that there is any tension between being a broker and having a customer-facing brand is bizarre. For one thing I recently bought car insurance from a well-known broker and would have to look at the paperwork to see who the insurer is; it is of little consequence to me.

The Independent has some more details about a related court case involving a company who introduce people to plumbers.

Rebecca Hilsenrath, chief executive of the Equality and Human Rights Commission, hailed the judgment as “one of the biggest decisions ever made by the courts on workers’ rights”.

“If you wear the uniform, if you drive the branded vehicle, if you only work for one business, you are employed. That means you are entitled to the appropriate protections and adjustments which go with the job, to enable you to work safely and productively. Everyone has the right to a healthy working environment, and to that end businesses need to recognise their duties to their workers.”

Alternatively, millions of people will be poorer because the state is arbitrarily limiting the types of business model and voluntary interaction it will allow; preventing innovation.

In an amusing Twitter thread, Aemilius Josephus points out to Jolyon Maugham, “self-employed barristers market under shared brands by being in chambers”.

18 comments to Branding as a service

  • Mr Ed

    I tend to see brands as a way to charge a higher margin, simply because people are happy to pay ‘over the odds’ (albeit the ‘price’ is whatever something sells at). There is an incentive to maintain the brand, be it by QC, advertising etc. but it is never a guarantee, and there is also no guarantee that regulations will be followed, or enforced.

    millions of people will be poorer because the state is arbitrarily limiting the types of business model and voluntary interaction it will allow; preventing innovation.

    Not the State, but the law. The law (as passed by Parliament and applied by the Courts) is what limits the scope for freedom of contract.

  • Flubber

    In the inaugural “Cunt of the Century” competition, Jolyon Maugham is going to take some beating….

  • The ultimate form of ‘state regulation’ would seem to be nationalisation by the state: the NHS for example, something that brought us the Staffordshire and Gosport scandals that in no way seems to have dimmed the ardour it the NHS’s supporters.

  • Mr Ed

    There is an awful lot of rubbish talked about the employment status cases in the UK, and it is worth bearing in mind that on an appeal from an employment tribunal, where most ’employment status’ cases are heard, the question is most often whether or not the tribunal that heard plumber or driver A’s case got the law right. What you cannot do on an employment tribunal appeal is to re-argue the facts (unlike in some civil court appeals), so the question of whether an employment tribunal got the law right when considering if Mr A was or was not an employee or worker depends in the main on the impression given in the employment tribunal by the facts presented. IIRC, Uber’s case was always forlorn, as they clearly had an element of ‘control’ over their drivers when they were using the app to ‘tout’ for rides.

    Here is part of what the Employment Tribunal said about Uber’s case:

    Uber’s case is that the driver enters into a binding agreement with a person whose identity he does not know (and will never know) and who does not know and will never know his identity, to undertake a journey to a destination not told to him until the journey begins, by a route prescribed by a stranger to the contract (UBV) from which he is not free to depart (at least not without risk), for a fee which (a) is set by the stranger, and (b) is not known by the passenger (who is only told the total to be paid), (c) is calculated by the stranger (as a percentage of the total sum) and (d) is paid to the stranger. Uber’s case has to be that if the organisation became insolvent, the drivers would have enforceable rights directly against the passengers. And if the contracts were ‘worker’ contracts, the passengers would be exposed to potential liability as the driver’s employer … The absurdity of these propositions speaks for itself. Not surprisingly, it was not suggested that in practice drivers and passengers agree terms. Of course they do not since (apart from any other reason) by the time any driver meets his passenger the deal has already been struck (between ULL and the passenger). …”

  • So if I wear Lee brand jeans, with the Lee logo promenently displayed above the hip pocket, does this make me a contract employee or full-time regular of the Lee garment company?

  • Quentin

    For me, these are the two important lines:

    > “If you wear the uniform, if you drive the branded vehicle, if you only work for one business, you are employed.

    > since (apart from any other reason) by the time any driver meets his passenger the deal has already been struck

    Yup, that’s an employee. That they’re paid for piecework is not relevant.

  • Mr Ed

    Quentin,

    ““If you wear the uniform, if you drive the branded vehicle, if you only work for one business, you are employed.”

    That was a ‘hack’ for the Equality Commission speaking, not a legal proposition, and it’s basically crap, or rather, a gross over-simplification. The issues are basically ‘control’ and ‘mutuality of obligation’, the latter where the driver etc. has to turn up for work when required and correspondingly, the ’employer’ has to provide work (or opportunities). It’s perfectly possible to be ‘branded’ and not be an employee or even a worker, Deliveroo riders in Camden, north London were found not to be workers as they couild send someone else to deliver a pizza etc. They were genuinely freelancers without any rights other than what was in the contract.

    The Uber drivers were not ’employees’ but are ‘workers’, who have fewer rights than employees (such as protection against dismissal), but do have rights to crucially, paid leave of 5.6 weeks per year, which adds 12.07% to Uber’s pay costs if they haven’t factored it in, as for every £100 Uber pay them for driving, there is an additional £12.07p to cover annual leave, paid time away from work.

  • Andrew Douglas

    Jolyon Maugham is a pretty reliable counter indicator – witness his laughable legal attempts to stop Brexit.

  • Mr Ed

    Jolyon Maugham is, I understand, a distinguished tax QC and a noble chap, indeed, I understand him to be a Count of the Highest Order.

  • Paul Marks

    Branding is indeed vital – it provides an assurance of basic quality (if a brand loses its reputation – it looses everything).

    For example it is just not true that all trainers are the same – they are not.

    People are foolish if they just “pay a higher price for a label” (i.e. are just concerned with the brand name) – but one needs to know what company made something (in order to be able to judge by reputation).

    And that is why pretending something is made by a company when it is not (by putting a false label on it) is indeed fraud.

    It is a question of balance – not paying too much, but not just buying the cheapest goods either. As something that is of very poor quality is a false economy.

    Only the consumer can do make the balanced judgement – the state and its legislation can not do it for them.

    As for Uber – it is best understood as a broker, using its brand to say “these people are trustworthy taxi drivers”, and thus RIGHTLY open to legal action if they prove not to be. But the taxi drivers it recommends are NOT its employees.

  • Fraser Orr

    The question is why is this important? Why does it matter if someone is an employee or not? It reminds me of that old lawsuit of whether a Java cake is a cake or a biscuit. It matters because there is piles of law built on vague words. And ultimately what this is all about is state control. It is about taking away choices.

    If I want to be an employee, I can. There are lots of cab companies that will hire you, and treat you in the crappy way most employees are treated. Why can’t I also choose a different legal arrangement like a freelancer? Why do “they” want to take away that choice?

    Of course it is two groups arrayed together. Those whose power is vested in controlling people by controlling employment (including both unions and lefty politicians selling their indulgences), and it is also because the tax man wants to keep you an employee, since employees suffer the worst tax treatment of anyone else.

    I know a guy who ran a company in the UK. One of his employees didn’t turn up for six months. Turns out the reason why is that he was in jail for GBH. Nonetheless, it still took them six months to get through the process of firing him.

    Another person runs a small business doing web development, and he wanted to hire a guy to help him. “Just run it out your home and let him work from home too” I told him when he was telling me the exorbitant cost of renting office space. Can’t do that though, of course, because of ‘elf and safety.

    How can people not understand that these thing cost masses of jobs, encourage offshoring, and cripple business growth and the economy? I honestly believe that a large part of the explosive growth in the US economy is because of the massive regulatory stripping the Trump administration is engaged in. (And it is also one of the reasons he is hated so much.)

    As our President visits your shores, you might want to remind some of your fellow country people that he could actually rescue you from the mess Ms. May has left you in if you’d stop hating on him so much. I think most people don’t even really know why they hate him, apart from little snippets of misleading information they have picked up from the Beeb.

    What decent person could not have reveled in the way he spoke to the pompous, vampires at the NATO summit. His total disdain for these elitey people warms my heart, even if he is rather crass and thin skinned.

  • Alisa

    Amen, Fraser.

  • Rob Fisher

    The legal arguments from Mr Ed are interesting, the misleading presentation of them in the press is annoying, but Paul and Fraser are right and the law is wrong.

  • Mr Ed

    Rob,

    I am simply reporting on the cases and how they came about, and they are grossly mis-reported, mainly through ignorance I suspect. There is a great push in the law towards watering down freedom of contract, motivated in part by a wish to see ’employment protection’ apply to as many contractual relationships as possible. Whether it be hatred of freedom, lawyerly self-interest in fomenting disputes or misguided ignorance of what is seen and what is not seen, or any combination of that and other things, it has meant that there is a push towards having your cake and eating it. This is particularly true of the doctrine of illegality, where you cannot claim rights under an illegal contract, e.g. if you pay income tax under Schedule D (self-employment) and then claim rights of an ’employee’, taxed under Schedule E (Pay as You Earn) i.e. tax and higher national insurance deducted at source. Recent trends have been to ignore illegal contractual arrangements and allow those who wish to change horses in mid-stream to claim rights that were ostensibly only available to employees, despite contrary tax arrangements.

    But in the Uber case, I remember reading it and thinking that Uber were really on a hiding to nothing. If, however, they had a system whereby they found you the cabbie and a quote for a fare, and simply took a cut, even if handling the money, like a booking agency, then they would be rightly entitled to claim that, under the law as it stands, they were simply an introducer. The facts (of their own making) stacked up against them.

  • llamas

    As it happens, Warren Meyer, who is quite well-known in the US as ‘Coyoteblog’, has an excellent article in ‘Regulation’ magazine this month describing the negative effects of workplace and workforce regulation, based on his first-hand experience.

    https://object.cato.org/sites/cato.org/files/serials/files/regulation/2018/6/regulation-v41n2-1.pdf

    His site at http://www.coyoteblog.com has lots more discussion, including lots of feedback and his responses.

    llater,

    llamas

  • pete

    Even more millions of people will be poorer if our society allows Uber style pseudo self-employment to become the norm.

  • Fraser Orr

    @pete
    Even more millions of people will be poorer if our society allows Uber style pseudo self-employment to become the norm.

    Do you have any evidence to support that claim? On the contrary, thousands of people who sign up each year to be Uber drivers, or work at Upwork, or do a million other piece work jobs disagree. They vote with their feet, an the establishment wants to rob them of that choice.

    If freedom means anything it means preferring votes with the feet over votes at the ballot box. The former – people choosing how to run their lives, the latter – people choosing how to run other people’s lives.

    I think the idea of being rewarded in direct proportion to the value you provide, and being able to choose what types of “worker protections” and “benefits” you want would be a huge transformation for the good. Imagine how much better our society would be if we got rid of PAYE and people actually had to write a cheque to the government for their taxes.

  • Tim Worstall

    To understand Jolyon you’ve got to understand ambition in its most English sense. A distinguished tax QC who has been minting it at the bar for a decade or so. That country windmill has been purchased, is being restored with the aid of taxpayer funds (think it’s the addition of a music room to be used for occasional local concerts which bags that but only from memory). He, and perhaps more importantly the wife, might like a gong or a title to go with that. Sir Joly would be nice, Lord Maugham better. Lady _ of either value would suit very well.

    So, how to get the gong? Labouring in the tax mines won’t do it, pick some public cause and make a name for yourself. If the cause is fashionable then something between the spurs and the vermine will arrive.

    Lord Forbid that any accuse me of cynicism here, this is just realism.

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