UK Court Rules Uber Drivers Should Be Classed as Workers, in Blow to Business Model

UK Court Rules Uber Drivers Should Be Classed as Workers, in Blow to Business Model

2021-02-19 12:22:40

LONDON – A group of Uber drivers are entitled to workers' rights such as the minimum wage, Britain's Supreme Court ruled Friday in one fell swoop for the taxi service affecting millions of others in the gig economy.

In a case led by two former Uber drivers, a London labor court ruled in 2016 that they owed duties that also included paid holidays and rest breaks.

Uber drivers are currently treated as self-employed, which means they have only minimal protection under the law, a status the Silicon Valley-based company tried to maintain in a lengthy legal battle.

"The Supreme Court unanimously rejects Uber's appeal," Judge George Leggatt said Friday.

"The legislation is designed to provide certain protections to vulnerable individuals who have little or no control over their pay and working conditions."

A total of 25 drivers were part of the case, and Uber said the verdict would not apply to all of its current 60,000 drivers in Britain, including 45,000 in London, one of the major global markets.

"We respect the court's decision, which targeted a small number of drivers using the Uber app in 2016," said Jamie Heywood, Northern and Eastern Europe chief.

"We are committed to doing more and will now consult every active driver in the UK to understand the changes they want to see."

Uber shares fell 3.4% in premarket trading after the court announcement.

Gig Economy Workers

The gig economy, where people tend to work for one or more companies per job, has been criticized by unions saying it's exploitative, while companies say many of those who work in it enjoy the flexibility.

Lawyers say it could be several months before details of Friday's decision are processed at a subsequent labor court hearing to settle practical matters regarding amounts owed to drivers.

Law firm Leigh Day says eligible drivers may be entitled to an average of £ 12,000 ($ 16,780) in compensation. It represents more than 2,000 potential claimants.

Uber has faced opposition from trade unions and challenges to its business model in several countries as it disrupted the taxi market.

In November, however, it faced a challenge in its home California market, where voters backed a vote that bolstered app-based food delivery and the status of chocolate sprinkles drivers as independent contractors, not employees.

One of the two former Uber drivers who led the UK cause, James Farrar, called on Prime Minister Boris Johnson's government to do more to reform the gig economy.

"I am delighted that workers finally have a remedy because of this ruling, but the government urgently needs to strengthen the law so that gig workers also have access to sick pay and protection against unfair dismissal."

(Reported by Costas Pitas; edited by Guy Faulconbridge and Pravin Char)

Interested in Legislation

Receive automatic alerts on this topic.

Insurance News