In a legal battle which has lasted over five years, the UK’s Supreme Court has ruled that Uber drivers must be treated as workers rather than self-employed. The ruling means that thousands of their drivers can now finally benefit from holiday pay, wage guarantees and a rare slice of security in the otherwise fragile gig economy.
How did this happen?
Back in 2016, former Uber drivers James Farrar and Yaseen Aslam took Uber to an employment tribunal arguing that they were entitled to the benefits that being an employee would bring.
James and Yaseen won the case but Uber went on to appeal the decision multiple times, eventually leading to the February Supreme Court hearing. As the UK’s highest court with the ultimate final say on legal matters, the appeal case has been thrown out once and for all.
What was Uber’s defence?
Up until now, Uber had argued that they were purely acting as a booking agent, only hiring self-employed contractors on a ride-by-ride bases. The business model also means they are not officially classified as a transport provider and so Uber are not currently paying 20% VAT on fares (HMRC and Uber are still in dispute about the firm’s VAT liability).
But the Supreme Court wasn’t convinced by the supposed booking agent defence – the ruling means that Uber has to consider its drivers as workers from the time they log on to the app, until they sign off. Considering that vast amounts of their working day can be spent waiting for customers to book rides, this is set to make a huge positive impact on the drivers’ monthly pay packet. This is welcomed news at such a crucial time – with fares down 80% due to the pandemic, many drivers have been struggling financially.
Why did the court rule against Uber?
The court considered many elements in its judgement including how Uber dictates fare prices (meaning they are effectively in control of potential earnings), how contract terms are non-negotiable, and how drivers could be penalised by the company for low customer ratings or for rejecting ride requests.
By considering these factors, the Supreme Court found that drivers are in a position of subordination to Uber and so self-employed status is not appropriate.
How will this impact Uber customers?
Brace yourself – the ruling could potentially have an impact of fares. Uber had previously warned that should their drivers no longer be deemed self-employed; they would expect to “incur significant additional expenses” to cover minimum wage requirements and overtime costs. This would “fundamentally change [the] business model, and consequently have an adverse effect on [the] business and financial condition.”
What does the ruling mean for the wider gig economy?
It’s not just Uber drivers that will benefit from the Supreme Court’s decision. Experts predict that the ruling will trigger changes for other roles such as couriers or delivery drivers, with many more companies being challenged to care for their team’s wellbeing better.