In a decision that challenges the business model of the company and has wide consequences for the gig economy, Uber drivers in Britain are entitled to benefits such as paid holidays and minimum wage, the country’s top court ruled Friday.
A major setback for the ride-hailing giant is the announcement that the drivers should be counted as “workers” and not self-employed. And, experts said, it might encourage similar legal action against other businesses that rely on gig workers as well as impact courts in other countries that grapple with the problem.
Uber’s appeal against an employment tribunal decision that two Uber drivers were “workers” under British law was unanimously dismissed by the seven Supreme Court judges who heard the case.
The result was applauded by Yaseen Aslam and James Farrar, the two drivers.
James Farrar said by email, “This decision will fundamentally re-order the gig economy and bring an end to the rife exploitation of workers through algorithmic and contract trickery.” In 2016, the pair brought Uber to the tribunal, who ruled in their favour. Before it hit the Supreme Court, the ruling was upheld in two rounds of appeals.
Uber, which in the U.K. has 65,000 active drivers and 5 million daily users, based in San Francisco, had argued that Aslam and Farrar were independent contractors. The firm said it accepted the ruling of the court, which it claimed concentrated on a limited number of drivers who used the Uber app in 2016.
“We have made some significant changes to our business since then, guided by drivers every step of the way,” Jamie Heywood, Uber’s Northern and Eastern Europe Regional General Manager, said in a statement. “These include providing even more control over how they earn and new protections such as free insurance in the event of illness or injury.”
Heywood said the firm would contact its U.K. Drivers to comprehend the enhancements they want.
The ruling explained that when logging into the Uber app in their territories and ready and able to take rides, drivers are deemed to be on the job, which could be used to measure minimum wage and holiday pay. Uber had claimed that only when they were making a journey with a paying passenger were drivers working.
It is now predicted that the case will return to the employment court for rulings on compensation for the loss of pay for around two dozen drivers involved in the initial claim. Another 2,000 drivers’ cases were held awaiting the verdict. An total of 12,000 pounds ($16,800), calculated by the law firm Leigh Day, which represents drivers, may be entitled to drivers.
Uber drive Conrad Delphine, after years of working without holiday or sick leave, looked forward to taking paid time off.
“I am quite delighted. This means that I will go on vacation without having to think about how to pay for it,’ said Delphine. Because of the coronavirus, things are worse. We should be entitled to sick leave if we catch a virus. It’s about time we got some fair pay and terms.
A similar effort in California to recognise drivers as workers eligible for compensation and work security was prevented by Uber and other app-based ride-hailing services. Proposition 22, a ballot measure that exempts them from the state’s gig-economy laws by keeping drivers listed as independent contractors able to set their own hours, was bankrolled by the businesses. Voters in November approved it.
In their decision on Friday, the British judges cited a variety of factors: Uber sets tariffs and contract conditions and penalises drivers who refuse or cancel trips. It also uses passenger ratings to monitor drivers and reduce driver-passenger contact, resulting in the service being “very tightly defined and controlled by Uber.”
“With little ability to improve their economic position, drivers are in a position of subordination and dependence on Uber, and the only way to increase their earnings is by “serving longer hours while continuously following Uber’s performance measures,” said Judge George Leggatt, as he read out a summary of the court livestream decision.”
Uber claimed that there are no longer any features cited in the decision, adding that drivers face no penalties for refusing multiple consecutive trips since 2017.
It is likely that offering more benefits to its drivers would raise costs for Uber, which was already struggling to make a profit and had previously faced regulatory issues in London, where the authorities tried to remove its licence. The adjustments could eventually drive up fares for passengers, experts claim.
The ruling also comes as the coronavirus has modified the operating environment of Uber. As the virus decimated demand for trips while boosting demand for its Uber Eats food delivery service, the company cut more than 6,000 jobs last year. The decision does not impact Uber Eats couriers.
Experts said the decision did not have a significant immediate effect on other businesses because the judges cited Uber-specific market practises in the UK. Under strict legislation regulating minicabs, they must run.
“That being said, while it will not automatically make those rights available to all gig economy employees, it will obviously make people alive to the potential to bring those claims” in court, said Joe Aiston, a senior associate at Taylor Wessing law firm. “And you would not be surprised to see more claims against other similar companies coming in.”
Aiston said the decision could serve as a reference for courts and regulators outside Britain dealing with similar problems, such as the Executive Commission of the European Union, which is set to publish next week’s guidelines on how to control workers on the gig economy platform.
Dara Khosrowshahi, CEO of Uber, published a white paper this week urging the EU to enact laws that facilitate “flexible and decent earning opportunities” and indicated that legislation similar to that of California, along with other proposals such as the Portable Benefits Fund, could be adopted.