By Michelle Jones. Originally published at ValueWalk.
The U.K.’s Supreme Court has ruled that Uber drivers are employees instead of self-employed contractors. The ruling marks a major blow for a company that has built its business on not paying benefits or dealing with other aspects of hiring employees directly instead of working with contractors.
Q4 2020 hedge fund letters, conferences and more
Uber drivers must be treated as employees
The BBC reports that the Supreme Court decision could mean Uber must start paying thousands of drivers minimum wage and holiday pay. It could also mean the ride-sharing company will see its compensation costs go through the roof and have a broader impact on the so-called “gig economy.”
Uber said the decision is focused on a small number of drivers and has already made changes. The company has been facing off with the Supreme Court for quite some time, having lost three previous rounds of legal wrangling.
Drivers in multiple countries are challenging Uber over whether they should be considered employees rather than self-employed contractors. In the U.S., voters in California passed Proposition 22, which classifies freelance workers as independent contractors and overturns landmark labor legislation passed in 2019.
Long-running court case
Former Uber drivers Yaseen Aslam and James Farrar initially won an employment tribunal against the company in 2016. They told the BBC they were “thrilled and relieved” and called it a “massive achievement” because they stood up to “a giant.”
Uber appealed that original decision from the employment tribunal, but the Employment Appeal Tribunal upheld it the following year. Then the ride-sharing firm took the case to the High Court, which also upheld the ruling in 2018. Today’s Supreme Court decision comes on Uber’s last possible appeal because the court is the highest in the U.K. and makes all final legal decisions.
Lord Leggatt said the Supreme Court dismissed the appeal unanimously. Uber had argued that it was an intermediary party, and Leggatt said drivers should be considered working whenever they are logged into the app instead of just while driving a passenger.
The court looked at several factors when making its judgment. For example, it noted that Uber is the one that sets the fares, which means it determines how much drivers can be paid. The ride-sharing company also set the contract terms, giving drivers no say in them. Uber can also penalize drivers if they reject too many requests for rides and monitor drivers’ service through star ratings, which means it could terminate the driver after repeated warnings.
The post U.K.’s top court rules that Uber drivers are employees, not contractors appeared first on ValueWalk.
Sign up for ValueWalk’s free newsletter here.
