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Uber has lost a landmark case in the Supreme Court and must now classify drivers on its platform as workers. The ruling entitles Uber drivers to minimum wage and holiday pay, 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 dependancy to Uber”. Although the new decision will only directly apply to the 25 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.
Yaseen Aslam, one of the original claimants in the case, said he was “overjoyed and greatly relieved” by the decision. “During the six years of these proceedings, we have watched the government commission and then shelve a review of the gig economy yet do nothing to help us. I hope in future the government will choose to carry out its duty to enforce the law and protect the most vulnerable from exploitation.”
Responding to the court’s ruling, Uber’s regional general manager for Northern and Eastern Europe said the company is “committed to doing more” and will now consult with drivers in the UK. “We respect the Court’s decision which focussed on a small number of drivers who used the Uber app in 2016,” Jamie Heywood said in a statement.
“Since then we have made some significant changes to our business, guided by drivers every step of the way. These include giving even more control over how they earn and providing new protections like free insurance in case of sickness or injury.”
Here’s what you need to know about the case and what happens next.
What does this loss mean for Uber?
This case is very important for these Uber drivers because it affords them employment protections that they currently don’t have. There are three main employment categories in the UK: employees, who are guaranteed employment rights and benefits; workers, who are entitled to some of those rights, and self-employed people and contractors, who have very little protection under employment law.
This judgment means that self-employed people working for Uber would have the same rights as workers for the first time. These include the right to be paid national minimum wage, to be given the statutory minimum level of paid holiday and rest breaks, to be protected from unlawful discrimination and whistleblowing in the workplace, and not to be treated less favourably if they work part time. They may also be entitled to maternity and paternity pay and statutory sick pay.
The Uber BV v Aslam and others case was first heard in 2016, when the Employment Tribunal ruled in favour of two former Uber drivers, Aslam and James Farrar. They made a claim under regulations including the Employment Rights Act 1996 and the National Minimum Wage Act 1998, alleging that Uber failed to pay the minimum wage and failed to provide paid leave. Uber defended the claim, arguing that the claimants were not “workers”, and therefore were not afforded protection under employment law.
The Employment Tribunal decided that the claimants were workers, and that their working hours started when they had the app switched on and they were ready to accept trips. In practice, this would mean that Uber would have to pay drivers for the hours they worked, regardless of the demand on the platform. The Tribunal said that while the app was turned off, there was no contractual obligation on either side, but when the app was on, they would fit the definition of “worker”.
But that was only the first step in the legal case. The ultimate decision on gig workers’ employment status has taken so long because Uber appealed this decision and has fought this claim through different courts ever since. The claim was upheld in the Employment Appeals Tribunal, the Court of Appeal and now, after a two-day hearing in July 2020, the Supreme Court has done the same.
In their judgment on Friday, Supreme Court judges said they made their decision based on five key points. Firstly, Uber sets the fare price and drivers are not permitted to charge more than the fare calculated by the Uber app. Judges determined that therefore, Uber dictates how much drivers are paid for the work they do.
Second, Uber imposes contracts and terms of service and drivers have no say in them. Third, once a driver has logged onto the Uber app, their choice is constrained by Uber by monitoring their acceptance rate and imposing “penalties” if too many trips are declined. Fourth, they found that Uber also exercises “significant control” over the way in which drivers deliver their services, using a passenger ratings system that impacts whether the driver can continue working for Uber.
Finally, they determined that Uber restricts communications between passenger and driver to the minimum necessary to perform the particular trip and takes active steps to prevent drivers from establishing any relationship with a passenger capable of extending beyond an individual ride.
What happens next?
An employment tribunal will now decide how much compensation to award the 25 drivers in the case, in a process that could take months. Meanwhile, the floodgates will open for around 1,000 similar claims against Uber. It does not mean that all Uber drivers will automatically be classed as workers, but this is the first step in that direction.
The gig economy company has around 60,000 drivers in the UK. If all of these drivers were to require minimum wage (and back pay in compensation), that would severely impact Uber’s bottom line. Prior to its IPO, the company said that it expected drivers to shoulder the burden as it worked to improve its financial results and cut operational losses, which at the time stood at $3 billion. At the time, Uber said it aimed to “reduce driver incentives” and expected driver dissatisfaction to increase as a result. It said that its business would be “adversely affected if drivers were classified as employees instead of independent contractors”.
But there will also be a knock-on effect for other companies within the gig economy. TUC figures show that around five million people in the UK were employed in the gig economy in 2019, a figure that is likely to have increased during the pandemic. Other companies including Ola, Addison Lee or Deliveroo operate similar business models, where people are hired on a job-by-job basis. While this judgment does not automatically mean that everyone in the gig economy can be classed as a “worker”, it opens the door for them to bring similar legal challenges, and provides a precedent.
The government tried to bring certainty to this sector by commissioning the Taylor Review in 2017, which prompted its Good Work Plan. The subsequent report made recommendations on how to restructure the UK labour market, suggesting the need for a greater balance between flexibility and employment rights and more security and certainty for gig economy workers. But since then, drivers and couriers working in the gig economy have complained about the erosion of their rights. The United Private Hire Drivers, a trade union for app-based drivers founded by Aslam and Farrar, is behind another claim against Uber where drivers argue they are being “fired by algorithm”.
What does this mean for Uber drivers in the rest of the world?
Uber has managed to fend off similar attacks on its business model in the US, where it lobbied hard for a piece of legislation called Proposition 22 to exempt them from a California labour law. Alongside Uber, the measure was backed by some of Silicon Valley’s most powerful tech companies including Lyft, Instacart and DoorDash, which spent upwards of $200 million on the efforts. Proposition 22 gives these companies an exemption from classifying contractors as workers and thus paying them benefits and minimum wage. The companies claimed that labour law AB5, which was passed in 2019, would impact their businesses – Uber and Lyft even threatened to pull out of California if the courts made them comply with this law. Drivers claim that their working conditions have deteriorated since Proposition 22 was passed, and are challenging the law.
The UK’s decision comes as new legislation is being drafted in Europe. The European Commission is poised to release recommendations on potential legislation for the gig economy later this month, to decide whether further scrutiny is needed on the role of gig workers. New proposals could be made by the end of this year.
Until now countries have been grappling with the regulation of the gig economy alone, and there has not been a unified approach on how to classify gig economy workers and what benefits they should be entitled to. Courts in Spain, Italy, the Netherlands, France and Belgium have so far ruled independently in favour of reclassifying gig workers.
Uber released a white paper of its own this month to lobby EU policymakers to provide a “new standard” of work. In it, Uber offered suggestions such as establishing a “portable benefits fund”, which would allow drivers to accumulate funds from different companies to access protections and benefits they want.
Natasha Bernal is WIRED’s business editor. She tweets from @TashaBernal
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