- The Supreme Court has ruled that Uber drivers are workers, not self-employed.
- The case was filed in 2016 by 25 drivers who demanded employee benefits from Uber.
In a landmark judgment, the Supreme Court (SC) has ruled that drivers working for Uber Technologies Inc (LON:0A1U) are workers and should not be treated as self-employed. The decision could pave the way for employment benefits like minimum wage and paid leave for several Uber drivers.
The judgment could change the future of the gig economy and could technically change Uber’s business model in the UK going ahead.
In 2016, a London employment tribunal had ruled in favour of 25 drivers who had filed the case, saying that they had rights to employment benefits like minimum wage, paid leaves, and recess. As per Uber’s present rules, drivers are self-employed, which legally give them very little protection.
Uber did not wish to define drivers as employee as it would increase the company’s costs and dilute the flexible working agreements it offers. Uber had also lost all cases in the UK’s lower courts.
Uber said that the decision would have a direct impact on only a small number of workers. However, it would work as a precedent for treatment of those employed in UK’s gig economy. The drivers, led by Yaseen Aslam and James Farrar, would now be entitled to a compensation amount fixed by an employment tribunal.
Importance of the judgment
A number ride-hailing companies have made good business during the pandemic by utilising drivers to provide home delivery services. Uber relied on Uber Eats to make up for the loss of customers from the ride-hailing service due to lockdown. The company’s shares have gained 50 per cent in the last year.
The UK’s gig economy employs about 5.5 million people. The ruling assumes significance not just because of the definition of workers but it has specified that drivers would now be workers whenever logged in to the app and would not be considered working only while ferrying customers.
Since 2016 when the case was first lodged, Uber has given benefits like insurance for illness and parental leave. It also gave financial aid for a specific period in case its drivers had Covid-19 or had to self-isolate.
Experts believe that the pandemic has led to an increase in gig activities and that would also lead to more demands to re-evaluate the terms of the trade.
The Supreme Court considered various aspects before delivering the verdict. It said that because Uber quoted the fare, it was the company that decided how much a driver can earn. Drivers do not have any say in the terms of the contract set by Uber and that Uber could penalise drivers for rejecting too many rides. It also said that Uber had the power to terminate services if the ratings of a driver did not improve.
Earlier this week, Uber CEO Dara Khosrowshahi shared a list of things it would do in the European Union, ahead of the European Commission’s review on gig economy. Uber said it aimed to provide fair pay and other benefits to its workers. It has also requested its competitors in the space to create a joint fund that will let workers get better protection and benefits like paid leave.