Uber has lost a court battle over how its drivers are classified, potentially paving the way for a wave of compensation claims in the United Kingdom.
The ride-hailing app operates in over 10,000 cities worldwide, and in most cases, the drivers that are booked through the service are considered self-employed -- or the local equivalent -- and so are not entitled to holiday pay or a minimum wage.
The gig economy does work for many, as this allows individuals to choose their own hours or work around existing jobs. However, in the UK, gig worker conditions -- in the same manner as zero-hour contracts -- have also been criticized as a potential way for employers to exploit the workforce and lower labor bills.
In a court battle in the UK that has spanned years, ex-Uber drivers and co-lead claimants, James Farrar and Yaseen Aslam -- who also function as the president and general secretary of the App Drivers & Couriers Union (ADCU) -- have finally won their case.
The drivers originally succeeded in a claim against Uber in 2016 in an employment tribunal over the classification of workers and whether or not they should be considered employees or independent contractors. However, Uber then appealed first to the Employment Appeal Tribunal, then to the High Court, and then finally to the Supreme court, which has the final say.
As reported by the BBC, the Supreme Court has ruled in the drivers' favor, and so Uber will now be required to classify its drivers as workers rather than self-employed, which may require an overhaul of Uber's business model in the UK.
The court considered various elements of Uber's working structure, including how the company sets the fare, contract terms, and the past ability for the service to penalize drivers if they rejected multiple trips. Now, Uber will have to consider its drivers "working" from the point they clock-in to the app to the time they sign off -- which includes standby time.
In the UK, workers are signed up to PAYE tax structures and employers are often liable for National Insurance (NI) payments and they have to provide both a minimum wage and holiday pay. Pension enrolment may also be included.
Under self-employment terms, however, contractors are not entitled to the same benefits or employee protections and must manage their own tax, NI, and cannot claim holiday pay.
The ruling, therefore, could trigger a wave of claims for minimum wage and holiday backpay.
Other app services, such as Deliveroo, are also likely to take notice of the ruling, too, as the court's decision could signal a shift in how the UK views the legality of gig-economy worker agreements.
In a statement, Farrar said:
"This ruling will fundamentally re-order 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.
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."
Uber's regional manager for Northern and Eastern Europe, Jamie Heywood, told Business Insider that the company "respects the court's decision."
"Since  we have made some significant changes to our business, guided by drivers every step of the way," the executive added. "These include giving even more control over how they earn and providing new protections like free insurance in case of sickness or injury."
In a blog post, the company said that drivers now have "full transparency" over the price of a journey, and since 2017, there has been "no repercussion" for rejecting multiple trips. Uber added:
"At a time when we need more jobs, not fewer, we believe Uber and other platforms can be a bridge to a sustainable economic recovery.
We've made a lot of progress in recent years, but we know there is more to do. We will now launch a nationwide consultation to seek the views of all active drivers who use our app in the UK. We want to understand what drivers value about Uber and -- crucially -- where things could improve."
Previous and related coverage
- Uber Q4 revenue misses expectations despite near-tripling of delivery business, shares sag
- Uber plans to add alcohol delivery to Uber Eats with $1.1B acquisition
- Uber's future may be more about Uber Eats, Uber Freight than ride sharing
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