Uber suffered a significant loss of work in its largest European market on Friday when the UK Supreme Court ruled that drivers must be classified as workers eligible for minimum wage and vacation time.
The case had been watched closely for its impact on the gig economy, where companies like Uber rely on large numbers of independent contractors to offer car rides, deliver groceries and keep homes clean.
Uber and other gig economy companies say their model gives people flexibility in choice when they work, while critics say it has undermined job protection and the traditional relationship between businesses and employees.
The court ruled that while Uber said it was just a technology platform connecting drivers with passengers, it acted more like an employer by setting tariffs, assigning rides, asking drivers to follow specific routes, and a scoring system for discipline used by drivers.
“Drivers are in a position of obedience and dependence on Uber such that they have little or no ability to improve their economic position through professional or business skills,” said Lord George Leggatt of the Supreme Court while reading the Judgment. “In practice, the only way to increase their income is to work longer hours while always following Uber’s performance standards.”
Uber has battled UK drivers’ efforts to be classified as workers for the past five years and appealed the decision to the country’s highest court. Friday’s ruling is expected to initially affect only the 25 drivers who filed the case, but is seen as a precedent for others across the country.
After the decision, a labor court will decide how the drivers will be rewarded and how the decision will affect other drivers in the future.
Uber tried to downplay the decision, saying it would urge the labor court to narrow its scope.
The company said the ruling should only affect a small number of drivers and that it would not require all of its drivers to be classified as workers.
The company said it will argue before the tribunal that it has made a number of changes to its business model to offer workers more protection since 2016, when the case was first filed, such as offering insurance to drivers when they are get sick or injured. and allow drivers to refuse certain trips without penalty.
“We are determined to do more and will now consult with every active driver across the UK to understand the changes they are seeking,” said Jamie Heywood, Uber’s regional general manager for Northern and Eastern Europe, in a statement.
However, some labor lawyers said the ruling had wider ramifications than Uber’s suggested, and it was a key moment in the broader labor debate about gig workers, whose role in the economy had grown during the pandemic.
The case “has wider implications than the Uber case alone and is likely seen as a turning point in employment rights for workers in the gig economy,” said Schona Jolly, human rights and labor lawyer at Cloisters Chambers in London.
Nigel Mackay, partner at Leigh Day, the law firm that represents the drivers, said the decision has far-reaching implications and Uber must start providing drivers with a minimum wage and vacation time or else there is a risk of a wave similar cases occur from others. He said none of the changes Uber made since 2016 would “affect the key findings of the Supreme Court that Uber drivers are workers”.
“Any Uber driver can now join the claim to seek compensation for Uber’s failure to take paid vacation and ensure drivers are paid at least the national minimum wage,” he said.
Uber drivers are currently paid per trip, with Uber charging a 20 percent fee on each tariff. Drivers have to pay for their car, insurance and taxi license.
Uber and other gig economy companies in other parts of the world have made efforts to classify workers as workers with mixed success.
In France, Uber lost the ruling in the country’s highest court last year that a driver had the right to be considered an employee. In California, Uber and other companies sponsored a successful election campaign in November to get them exempt from a law requiring them to hire drivers and pay for health insurance, unemployment insurance, and other benefits.
The UK, where Uber has around 60,000 drivers, has been one of the company’s key markets but also a source of legal trouble. In London, where Uber cars are as ubiquitous as traditional black taxis, the city’s transport authority took two steps in recent years to revoke Uber’s taxi license before the company agreed to new safety guidelines.
Mr Mackay said he hoped the decision would support workers and lawyers seeking stronger legal protection for gig workers in other countries.
“People around the world will follow this decision,” he said.