Drivers win rights
Uber under pressure as ruling tests gig economy
Verdict has implications for the gig economy
Uber, the ride-hailing app, faces a fight for survival after the Supreme Court ruled that drivers are workers and not self-employed contractors.
Drivers will be entitled to breaks, holiday pay and the minimum wage, putting more pressure on the financially-strapped company.
They will be entitled to be paid for all the time they are logged onto the Uber App (even if they are not transporting passengers for the whole time) and will be able to recover up to six years of underpaid wages. HMRC may also step in to recover arrears of National Minimum Wage and could impose financial penalties on Uber.
The ruling on Friday was Uber’s last appeal, as the Supreme Court is Britain’s highest court, and it has the final say on legal matters.
Uber’s share price fell 1% on Wall Street’s open as investors considered what impact the London ruling could have on the firm’s business model.
Experts say the Supreme Court’s decision to uphold an earlier employment tribunal ruling will also have far-reaching consequences for the wider gig economy and raises big questions about employment law.
John Colley, associate dean at Warwick Business School and a former MD of a FTSE 100 company, said: “This does imperil Uber’s business model in the UK.
“To make money Uber needed to increase fares and control wages as total losses for Uber internationally have been $6.6bn in 2020 and over the last four years they have lost in excess of $20bn.
“Outside of the US it is looking increasingly unlikely it can make money as regulation starts to bite. Uber Eats may also find it is caught by this regulation too.
“Ultimately, this ruling will result in higher taxi fares for customers and likely higher cost for delivered takeaway food.”
Shah Qureshi, London head of employment at law firm Irwin Mitchell said: “This is a landmark decision by the Supreme Court. The cost to Uber will be considerable. The ruling confirms their drivers’ rights to the minimum wage, annual leave and whistle blowing protection and is significant, not just for their rights, but the wider gig economy and workers in non-traditional employment.”
Andy Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed (IPSE), said: “The very fact this case has come to the UK’s Supreme Court shows the UK’s employment law is not working. There is a glaring need for clarity in this area, to clear the confusion in the gig economy.
“The gig economy is enormously complex, including many people who are legitimately self-employed and many others who really, based on their working circumstances, should be classed as workers.
“It is a patchwork of grey areas between employment and self-employment: the only way to resolve this tangle is to clarify employment status in UK law.
“With the pandemic still raging and its financial impact ever more visible, it is more urgent than ever that struggling people who should technically be classed as workers get the rights they deserve.
“To bring this about – and protect the freedom of legitimately self-employed people – we urge government to write a definition of self-employment into law.”