In recent weeks there have been two major decisions that have come out of the Supreme Court that have caught the headlines and, in theory, could and should have major implications on the business sector overall. When we say “could”, there is a very good reason reason for choosing that word!

Business Interruption Insurance

The initial decision involved “business interruption insurance” and the failure of many Insurers to pay out to businesses who had been impacted by the COVID-19 virus. The Supreme Court found in favour of the Financial Conduct Authority (FCA) and businesses in an appeal concerning an earlier judgment by the High Court. The decision initially suggested that many thousands of businesses were in line for a pay-out as it was found that Insurers should have made payments under their business interruption insurance policies.

The problem is that the judgment only applies to particular wording in some clauses in some contracts.  Not many businesses had the cover that addressed non-specified diseases, so the actual number of businesses that were likely to benefit in any way, were calculated to be a maximum of approximately 350,000 businesses out or a total of six million that exist in the UK. Hiscox, one of the insurers involved, confirmed that fewer than a third of its business interruption policies would be affected by the judgment. This just goes to show that wording in legal documents can be vital in the provision of protection to the business community (and those offering insurance policies) and 2020 demonstrated that the most unlikely of events can and sometime sooner or later, will occur!

When workers are actually employees

The second major decision to make the headlines occurred when the Supreme Court ruled that Uber must now classify drivers as workers and pay benefits, such as holiday pay etc, that are due to them. Unlike the business interruption decision, this one seemed pretty unequivocal in how widely it would impact and that it would have an affect across their workforce. According to press reports and updates from those law firms representing the claimants, 20% of Uber’s 60,000 UK drivers have already launched a claim against Uber.

The claims are not insubstantial. Payouts, if successful, could equal between £10,000 to £12,000 for each claimant. On top of this some of the estimates from the likes of Deutsche Bank suggest that Uber could have to pay $2.5 billion in back VAT payments. Whether the VAT ever gets paid is a moot point. Suggestions in the latest Uber Global trading statements are that Uber are stating that they can never reach profitability and losses had grown to $16.4 bn in December 2019 and, remember, that’s before Covid-19 showed up!

The lessons from these two cases are huge. How well you fare over time is all about the quality of your legal document wording and the quality of who is giving you advice about your business model when you start up. The insurance market will live to see another day, whether Uber do in the long term is another question altogether!

rhw Solicitors in Guildford (logo) If you need high quality commercial legal advice, say for instance a contractual agreement or have any questions about contracts, then contact rhw’s commercial legal team on 01483 302000 or email and ask to speak to Nick Richardson.

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