Uber suffered a major defeat in one of its most important markets on Friday when the UK Supreme Court, in a ruling that could endanger the future of an already unprofitable company, said a group of drivers Should be classified as workers entitled to minimum wages and leave time.
The court’s decision, the latest in a string of confrontations between labor groups and so-called gig economy companies, which counted in court rooms and legislative halls around the world, poses a potential threat to Uber and other companies that have huge labor of independent contractors Rely on power. Provide car rides, deliver food and clean house.
In a unanimous ruling, the Supreme Court stated that although Uber said it was only a technology platform that connected drivers with passengers, it set rates, specified rides and allowed drivers to follow certain routes and ratings. Treated more as a need to use. System of disciplining them.
The decision was a major victory for labor workers in the United States and Europe, who have been emphasizing better pay and stronger protections for workers with services such as Uber, Lyft, DoorDash, and GrubHub, which have long been criticized Is how they treat their drivers and delivery. People.
It was also a huge blow to Uber, which was able to scale back other efforts to force it to change how it treats its drivers, including a California law defeat in November to jig companies To force them to make similar changes. It is now being forced by the decision of the British court.
Fasting as they have become a part of everyday life and valued at billions of dollars on Wall Street, gig economy companies operate on uncertain business models. More often than not, they lose money on every ride offered and every delivery. For example in 2020, Uber introduced a Net loss of $ 6.8 billion.
Their businesses were even more tense due to the epidemic, as the lockdown reduced travel and entertainment expenses. Companies still say they could be profitable in the near future as Kovid-19 vaccines help reopen economies. But overpaying drivers can make a financial corner more elusive.
British rule could be a “nightmare” for Uber if it increases its labor costs, Daniel Ives, an analyst at Wesbush Securities. He added that London is one of Uber’s top five markets globally.
“This case could set an example for other workers and companies in the gig economy across the UK and Europe, which would be a body blow to the overall ecosystem,” Mr Ives said in a note to clients.
Uber and other gig-economy companies are fighting worldwide efforts to classify them as workers with mixed success.
In France, Uber Lost a decision Last year, the country’s top court had the right to consider a driver an employee. in Germany, Italy and Spain, disputes about Uber’s labor practices have also raised alarms, especially within traditional taxi businesses, limiting its availability.
But in California, Uber and other companies funded Successful ballot measure In the November election to exempt him from a law that required him to employ drivers and pay health care, unemployment insurance and other benefits. Excess Battle loom In Washington and state capitals about how to classify workers for Uber and other platforms.
While the UK has been one of the company’s most important markets, it has also been a source of legal trouble. In London, where Uber cars are as ubiquitous as traditional black taxis, the city’s transport regulator has stepped up twice Cancel uber’s taxi license In recent years the company agreed to new security policies.
Mayor of London Sadiq Khan praised the decision.
“This is a historic decision for those struggling with low wages and lack of security at work,” he said in a statement. “Gig economy workers are entitled to the same rights as other workers.”
Uber struggled to decide all the way to the country’s top court in an attempt by drivers in Britain to be classified as workers for the past five years. The ruling on Friday is expected to initially affect only the 25 drivers who brought the case, but is seen as setting a precedent for 60,000 other Uber drivers nationwide.
The ruling will now be referred to an Employment Tribunal, an administrative court that will decide in the next few months how to award drivers and how the ruling will affect other drivers moving forward.
Seeking to play the decision, Uber said it would pressurize the Employment Tribunal to limit its scope. The company said it believed the ruling should affect only a small number of drivers, and Uber should not need to reclassify all of its drivers as workers.
The company said it would argue before the tribunal that it had made several changes to its business model since 2016 to provide greater protection for workers when the case was first filed, such as insuring drivers Offerings if they lose income because they are ill or injured, and allows drivers to refuse to take some rides without punishment.
Uber’s Regional General Manager for Northern and Eastern Europe Jamie Heywood said in a statement, “We are committed to doing more and will now consult with every active driver in the UK.
But some employment lawyers said the decision had broader consequences than Uber, and it represented a pivotal moment in the broader labor debate about gig workers.
Shona Jolly, a human rights and employment law barrister with Cloist Chambers in London, said “the case has wider implications than the Uber case alone and can be seen as a right to employment for workers in the gig economy.”
Nigel McKay, a partner at Lee Day, a law firm representing drivers, said the decision would have a broader impact and Uber would have to start providing drivers with minimum pay and vacation time or a wave of similar cases from others May have to face. He added that none of the changes Uber has made since 2016 “will not impact the Supreme Court’s central findings that Uber drivers are workers.”
“No Uber driver can now claim to be involved in seeking compensation for Uber’s paid leave and to ensure that drivers are given at least the national minimum wage,” he said.
Uber and other gig economy companies say their business model allows people to choose when to work, while critics say it has eroded job protection and traditional company-employee relationships.
Uber drivers are paid per ride, Uber is charged 20 percent of each fare. The court said that drivers, who have to pay for their car, insurance and taxi licenses, are entitled to pay when they are logged into the app and not when they are providing a ride With some restrictions.
In Britain, workers are classified into one of three categories: “self-employed” with some protection; “Workers” are entitled to a minimum wage and some paid time off; And “employees” with more rights such as do not be unfairly fired. The Justice criticized the legal agreements that Uber required drivers to sign before committing to work that classified them as self-employed. The court said Uber did not have the power to “determine for itself” whether labor safety laws applied to its drivers.
Supreme Court Lord George Leggt said, “Drivers in relation to Uber are in a state of subordination and dependency, as if they have no ability to improve their economic situation.” Holocaust. “In practice, they can increase their earnings by working longer hours while continuously completing Uber’s performance measures.”
Uber said it would send a survey to drivers on Saturday to gauge their views about the ruling and worker flexibility, to better gauge how their model would be adjusted to suit the ruling. As the case in the Employment Tribunal puts it, Uber can rely on the appeal of gig work for some – the ability to work as little or as little as possible.
The case dates back to part of 2015, when an Uber driver, James Farrar, was attacked by a passenger in London. Did not cooperate with police after Uber Investigating the incident, Mr. Farrar joined an emerging labor movement among drivers who pushed for a minimum wage. With no guarantee, Mr. Farrar said, Uber was able to flood the British market with drivers competing for a limited number of rides, reducing their income.
In 2016, the drivers filed a claim with an employment tribunal. in Britain, National minimum wage The rate is 8.72 pounds per hour for people over 25.
“All Uber has to do is to ensure that the work they provide crosses the minimum wage limit,” said Mr. Farrar, who is now Secretary General. App Driver and Courier Union. “The sad part of it is that we have worked very hard for such a trivial question.”