Supreme Court ruling has huge ramifications for the gig economy

On 19 February, the UK’s highest court finally handed down its ruling on a legal battle that has been raging for years between ride hailing app Uber and its drivers. In 2016, two drivers took Uber before an employment tribunal for the right to be classed as employed workers, thus granting them basic rights such as minimum wage and holiday pay.

The case
The co-claimants were two drivers named James Farrar and Yaseen Aslam, who were acting on behalf of a group of around 20 other drivers. They went before a London employment tribunal five years ago, winning their case to be seen as workers.

Uber appealed, lost, and appealed two more times. After losing these too, the case came to rest with the Supreme Court, the highest and final court of appeal – meaning that rulings it makes cannot be appealed further.

The judge who handed down the case, Lord Legatt, also ruled that drivers should be paid for all time they spend logged into the app (i.e. time spent waiting for passengers, journeys to pick up passengers, etc.). Currently, they are paid only their fare and any tips, minus Uber’s 25% cut.

The ruling
As a rule, self-employed status can be identified by certain key characteristics, which are listed on the government’s website. These include (but are not limited to):

  • The ability to decide when to work, how they do it and where;
  • Control over how they run their business and responsibility for its success or failure;
  • Setting their own fixed price for their work.

A number of Uber’s practices do not fit with the self-employed model, and this was the basis for the Supreme Court’s decision:

  • Drivers have to sign a standard contract with Uber, with no say on its terms;
  • Uber imposes “what amounts to a penalty” if a driver rejects too many rides, meaning they have restricted control over their hours;
  • Uber sets the fare, with drivers having no say on their wages;
  • Uber reserves the right to terminate employment if a driver’s ratings dip too low.

The judges concluded that Uber contracts “can be seen to have as their object precluding a driver from claiming rights conferred on workers by the applicable legislation” – i.e., the contracts which drivers have to sign are deliberately worded to ensure they don’t receive the workers’ rights to which the judgment has ruled they are entitled.

The reaction
Mr. Farrar, one of the co-claimants on the original 2016 case, celebrated the news as he said: “This ruling will fundamentally reorder the gig economy and bring an end to rife exploitation of workers by means of algorithmic and contract trickery. Uber drivers are cruelly sold a false dream of endless flexibility and entrepreneurial freedom. The reality has been illegally low pay, dangerously long hours and intense digital surveillance.”

Meanwhile, Uber insists that the judgment applies only to a small group of drivers who were using the app when the case was first brought before a tribunal in 2016. It says that it has been working to improve its business practices since this date, introducing free insurance to protect drivers financially if they become sick or injured, and giving them more control over how they earn. Despite this, the firm could find itself facing a long list of compensation claims from its drivers for back-paid wages and overtime.

The future
The future ramifications of the ruling for Uber could be extremely significant – and expensive. In a list of risks to its business provided to the US Securities and Exchange Commission (SEC) in 2019, the classification of drivers as workers and the subsequent additional expenditure this would incur featured prominently.

It said: “any such reclassification would require us to fundamentally change our business model, and consequently have an adverse effect on our business and financial condition.”

Meanwhile, this landmark case has the potential to forever change the landscape of the gig economy, with repercussions for the 4.7 million self-employed contractors who work in this growing industry, such as couriers and delivery drivers.

-Savanita Atwall


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