What does Uber’s defeat in court mean for drivers and customers in the long-run?
Uber lost its appeal against a landmark ruling, which orders the company to treat its drivers as fully-fledged employees of the company, not self-employed. That means drivers in the UK will be paid a minimum wage, & will be provided with sick pay & holiday pay. This brings Uber drivers in line with the rights of workers under UK & EU law.
What it means for drivers?
Mareike Mohlmann, assistant professor of information systems management at Warwick Business School, said a lot can change for the drivers.
“This decision is likely to result in advantages; some drivers might receive a higher salary once being officially employed by Uber since they might now get compensated for sick leave or holiday pay. It might be easier for them to have a voice when organising in workers’ associations, & this decision is likely to increase drivers’ work satisfaction,” she says.
However, Mareike warned it could also have an impact on freedom.
“Currently, Uber drivers are self-employed and work as freelancers… they can choose their working hours as they please, or use the car not only for business but also for private purposes…The decision (to grant these rights) might limit access to jobs for some of the current Uber drivers, those that work for Uber on a part-time basis…” she explains.
Uber’s immediate reaction was to condemn the decision, announcing it will look to alternative appeals, pointing towards the Court of Appeal and the Supreme Court.
“Almost all taxi and private hire drivers have been self-employed for decades, long before our app existed. The main reason why drivers use Uber is because they value the freedom to choose if, when & where they drive and so we intend to appeal,” said Tom Elvidge, Uber acting general manager for the UK.
“The tribunal relies on the assertion that drivers are required to take 80 per cent of trips sent to them when logged into the app. As drivers who use Uber know, this has never been the case in the UK.
“Over the last year we have made a number of changes to our app to give drivers even more control. We’ve also invested in things like access to illness and injury cover & we’ll keep introducing changes to make driving with Uber even better,” he said.
The company also pointed out that in 2016, average drivers were around £15 per hour, even after the company service fee – certainly higher than the National Living Wage.
Implications for Customers
If the ruling against Uber is enacted, costs for the company would undoubtedly rise – though its not yet clear how this would affect the price for customers.
Carolyn Brown, employment partner at consultancy services company RSM, said that costs could rise due to Uber’s exposure to tax & National Insurance Contribution liabilities.
“As it stands, Uber would not be obliged to pay employer NIC in respect of their drivers if they are self-employed. If they are workers though, they may be exposed to a significant NIC liability. There may also be a substantial VAT liability,” she said.
Could the ruling extend beyond the UK?
Tim Goodwin, associate at law firm Winckworth Sherwood, said this case is huge for Uber & the gig economy in general.
“Increasingly, we are seeing that courts & tribunals are reluctant to allow businesses to have their cake and eat it, by exercising enormous control over their workforce whilst also denying them basic rights like paid holiday, sick leave and protection from discrimination,” he said.
The ruling could set a precedent for other countries, where worker’s right is also under observation.
The Uber London licencing ban
Uber were already in a difficult situation earlier this year, when Transport for London announced it’s plans to scrap the company’s operating license from London. Several reasons were given for the decision, most notably public safety and security – Uber was alleged to have used Grey-ball, a secret software, to help avoid regulation.
By battling a slew of legal cases and challenges in several US states, and being forced to quit their operations in countries such as Denmark & Hungary, it seems now is an especially difficult time for Uber.