Uber suffered a major setback in one of its most important markets on Friday when the Supreme Court of England, in a ruling that could threaten the future of the company that has already lost money, said that A group of drivers should be classified as minimum wage and vacation workers.
The court decision, the latest in a series of confrontation between labor groups and so-called contract economic firms in courtrooms and legislative halls around the world, presents a threat. The threat exists for Uber and other companies that rely on independent contractors’ abundant workforce to provide ride-hailing, food delivery and housekeeping.
In a unanimous decision, Supreme Court justices ruled that while Uber said it was just a technology platform connecting drivers with passengers, it worked like an employer. By setting prices, assigning trips and asking drivers to follow certain routes and using the rating system to discipline them.
The decision is a huge win for labor activists in the US and Europe, who are driving better wages and stronger worker protection with services like Uber, Lyft, DoorDash and Grubhub, which have long been criticized for the way they treat drivers and deliver goods. Everybody.
It’s also a significant step backward for Uber, which has been able to beat other attempts to force it to change its way of treating its drivers, including its November failure. a California law would force gigs companies to make the same changes that are currently being enforced by a British court ruling.
Quickly becoming a part of everyday life and valued in the tens of billions of dollars on Wall Street, geek companies operate on precarious business models. More often than not, they lose money for each ride delivered and every delivery. In 2020, for example, Uber reported a net loss of $ 6.8 billion.
Their businesses were stressed even more by the pandemic, as travel and entertainment spending plummeted due to door locks. Companies still say they could be profitable in the near future as the Covid-19 vaccine helps open up the economy. But paying more drivers can make financial turns more elusive.
Daniel Ives, an analyst at Wedbush Securities, said the UK ruling could be a “nightmare” for Uber if it increases its labor costs. London is one of Uber’s top five markets globally, he said.
“This case could set a precedent for other workers and companies in the gig economy across the UK and Europe, which would be a blow to the overall ecosystem,” said Ives. say in a note to customers.
Uber and other contract economy firms have fought against worldwide efforts to classify workers as employees, with varying successes.
In France, Uber lost last year in the country’s highest court decision that drivers have the right to be considered employees. In Germany, Italy and Spain, Uber’s labor practice disputes have also raised alarm, especially in traditional taxi businesses, which limit Uber’s ability to provide.
But in California, Uber and other companies funded a successful voting measure in the November election to exempt them from a law that they should have recruited drivers and paid for healthcare. , unemployment insurance and other benefits. Battles broke out in Washington and state capitals over how to classify workers for Uber and other platforms.
While the UK is one of the company’s most important markets, it is also a source of legal trouble. In London, where Uber is as popular as traditional black taxis, the city transport regulator has twice taken steps to revoke Uber’s taxi license in recent years before the company agreed to the New safety policy.
Sadiq Khan, mayor of London, welcomed the decision.
“It was a landmark decision for people who were underpaid and unsafe at work,” he said in a statement. “Workers in a Gigabit economy deserve the same rights as other workers.”
Uber has been battling UK drivers to be classified as workers for the past five years, appealing the decision to the country’s highest court. Friday’s ruling was initially expected to affect only 25 drivers who filed the case, but is seen as a precedent for another 60,000 Uber drivers nationwide.
The ruling will now go to the employment council, an administrative court that will decide in the next few months how to reward drivers and how it will affect other drivers in the future.
Uber sought to deny the decision, saying it would press the employment court to limit its scope. The company says it believes the ruling affects only a small number of drivers, and Uber doesn’t need to reclassify all of its drivers as workers.
The company said it would argue with the court that it made some changes to its business model to provide more protective measures for workers since 2016, when the lawsuit last First are submitted, such as providing insurance to drivers if they lose income because of them. get sick or injured and allow drivers to refuse to take part in certain rides with impunity.
Jamie Heywood, Uber’s General Manager for North and Eastern Europe, said: “We are committed to doing more and will consult with every driver operating across the UK to understand our changes they want to see.
But some employment lawyers say the decision has broader consequences than Uber has proposed, and it represents a pivotal moment in the broader labor debate over contract labor.
Schona Jolly, the employment and human rights attorney for Cloisters Chambers in London, said: “The case has“ a much larger meaning than the Uber case and could be seen as a turning point in employment rights for workers in the contract economy ”.
Nigel Mackay, a partner at Leigh Day, the law firm that represents drivers, says the decision will have a broad impact and that Uber must start offering minimum wages and holiday times to drivers. drivers or risk facing a similar wave of cases from others. He said no changes made by Uber since 2016 “will affect the Supreme Court’s central outcome that Uber drivers are workers.”
“Any Uber driver can participate in a claim for Uber’s failure to offer paid vacation and to ensure drivers are paid at least the national minimum wage,” he said.
Uber and other contract economics firms say their business models give people the flexibility to choose when to work, while critics say it undermines job protections and termites. Traditional employee-company relations.
Uber drivers get paid for each ride, with Uber charging 20% for each ride. The court said drivers, who have to pay for a car, insurance and a taxi driver’s license, have the right to be paid when they log into the app, not just when they are offering a ride, with some restrictions.
In the UK, workers are classified into one of three categories: “self-employed” with little protection; “Employees” are entitled to a minimum wage and some paid leave; and “employees” have more rights such as not being unfairly fired. Judges have criticized the legal agreements Uber requires drivers to sign before their employment classified them as self-employed. Uber does not have the power to “decide for itself” whether the worker protection law applies to its drivers, the court said.
“Drivers are in a position to depend on and depend on Uber so they have little or no ability to improve their economic standing through professional or business skills,” said Lord George Leggatt of the Court Supreme said when reading judgment. “In fact, the only way they can increase their income is to work longer hours while consistently meeting Uber’s performance metrics.”
Uber said it will send a survey to drivers on Saturday to measure their perspectives on employee judgment and flexibility, to better gauge how to tailor their model to fit. with the judgment. When the case goes to job court, Uber may rely on the appeal of contract work to some – the ability to work to their liking.
The case originated in 2015, when an Uber driver, James Farrar, was assaulted by a London passenger. After Uber does not cooperate with the police Investigating the case, Mr. Farrar was involved in an emerging labor movement among drivers promoting minimum wages. Without a pay guarantee, Uber could flood the UK market with drivers, who are left competing for a limited number of rides, Farrar said, reducing their income.
In 2016, drivers filed a lawsuit in the employment court. In the UK, the national minimum wage for people over 25 is £ 8.72 an hour.
“All Uber has to do is make sure that the jobs they deliver cross the minimum wage line,” said Farrar, now general secretary of the App Drivers & Couriers Union. “The sad part of this is that we worked so hard for such a humble request.”