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Uber has definitively lost a six-year battle with its drivers in the U.K. and will now have to treat them as full-blown workers rather than independent contractors.
In premarket trading at 6 a.m. ET on Friday, Uber shares were down 3.6%.
In a unanimous ruling with grave implications for many “gig economy” platforms’ business models, the U.K.’s Supreme Court said Friday that Uber’s drivers are workers because the company controls everything from the fare to their communications with passengers to the number of rides they can reject before being penalized.
That means Uber’s U.K. drivers will have to be paid at least the national minimum wage, which is £8.72 ($12.19) an hour for people aged 25 or over. Uber will also have to give them annual paid leave, among other standard employment benefits.
What’s more, the Supreme Court also ruled that Uber’s drivers are working as long as they are logged into the app and waiting for or carrying out a ride, and not just when they are actively ferrying passengers, as the company had tried to argue.
And on top of that, Uber will now have to pay some British drivers compensation for treating them as “partners” rather than workers over the years. The company continues to insist that the case affects only the two drivers who initiated the matter nearly five years ago. But Leigh Day, the law firm representing the claimants, will advocate for compensation on behalf of thousands more—it estimates an average payment of £12,000 ($16,790) per driver is due.
What “worker” means
In the U.K., there is a distinction between workers and employees. Workers can still be technically self-employed, but they don’t have the freedom to reject work that independent contractors have. They also don’t get certain benefits that employees get, such as protection from unfair dismissal, or statutory redundancy pay.
It is now clear that the U.K. takes a very different view of the worker-status issue than the U.S. does. Last November, California voters backed a ballot initiative protecting Uber and rival ride-hailing firm Lyft from having to stop treating their drivers as independent contractors.
The U.K. case, originally brought by drivers Yaseen Aslam and James Farrar, can be traced back to a 2016 employment tribunal that found Uber’s drivers are workers. Uber appealed all the way to the country’s highest court, losing repeatedly along the way.
“The employment tribunal was, in my view, entitled to conclude that, by logging onto the Uber app in London, a claimant driver came within the definition of a ‘worker’ by entering into a contract with Uber London whereby he undertook to perform driving services for Uber London,” wrote Lord Leggatt, a Supreme Court justice, in the ruling.
The ruling also noted that “laws such as the National Minimum Wage Act were manifestly enacted to protect those whom Parliament considers to be in need of protection and not just those who are designated by their employer as qualifying for it.”
The case now goes back to the original employment tribunal, which will assess the damages owed to each driver.
Reactions
Uber, which earlier this week lobbied the European Commission to adopt California-style gig-economy rules, said Friday that it respected the U.K. Supreme Court’s decision “which focused on a small number of drivers who used the Uber app in 2016.”
“Since then we have made some significant changes to our business, guided by drivers every step of the way,” said regional manager Jamie Heywood in a statement. “These include giving even more control over how they earn and providing new protections like free insurance in case of sickness or injury. We are committed to doing more and will now consult with every active driver across the U.K. to understand the changes they want to see.”
However, the claimants see the ruling as a precedent for all gig-economy workers.
“I am overjoyed and greatly relieved by this decision, which will bring relief to so many workers in the gig economy who so desperately need it,” Aslam said in a statement.
Farrar, who with Aslam recently founded a union called the App Drivers & Couriers Union (ADCU), said the ruling would “fundamentally reorder the gig economy and bring an end to rife exploitation of workers by means of algorithmic and contract trickery.”
“Uber drivers are cruelly sold a false dream of endless flexibility and entrepreneurial freedom,” Farrar continued. “The reality has been illegally low pay, dangerously long hours, and intense digital surveillance. I am delighted that workers at last have some remedy because of this ruling, but the government must urgently strengthen the law so that gig workers may also have access to sick pay and protection from unfair dismissal.”
