Uber suffered a major labor defeat in its largest European market on Friday, when Britain’s Supreme Court ruled that drivers should be classified as workers entitled to a minimum wage and vacation.
The case was closely watched because of its ramifications for the gig economy, in which companies like Uber rely on an extensive workforce of independent contractors to provide car trips, deliver food and clean houses.
Uber and other companies in the gigantic economy say their model gives people flexibility to choose when they work, while critics say it has eroded job protections and the traditional relationship between company and employee.
The court ruled that while Uber said it was just a technology platform that connected drivers with passengers, it behaves more like an employer, setting fees, assigning trips, requiring drivers to follow certain routes and using a rating system to discipline drivers.
“Drivers are in a position of subordination and dependence on Uber, so they have little or no ability to improve their economic position through professional or business skills,” said Lord George Leggatt of the Supreme Court, reading the verdict. “In practice, the only way to increase your earnings is to work more hours while, at the same time, meeting Uber’s performance measures.”
Uber struggled against British drivers’ efforts to be classified as workers in the past five years, appealing the decision to the country’s highest court. Friday’s decision is expected to initially affect only the 25 drivers who brought the case, but it is seen as a precedent for others across the country.
After the decision, an employment tribunal will decide how to reward drivers and how the decision will affect other drivers in the future.
Uber tried to downplay the decision, saying it would pressure the labor court to limit its scope.
The company said that the decision should affect only a small number of drivers and that it would not require all drivers to be reclassified as workers.
The company said it would argue to the court that it had made a series of changes to its business model to provide more protection to workers since 2016, when the case was first presented, how to offer insurance to drivers if they get sick or injured, and allow that drivers reject certain trips without punishment.
“We are committed to doing more and will now consult with all active drivers across the UK to understand the changes they want to see,” said Jamie Heywood, Uber’s regional general manager for Northern and Eastern Europe, in a statement.
But some labor lawyers said the decision had wider consequences than Uber was suggesting, and that it represented an important moment in the broader labor debate about gig workers, whose role in the economy grew during the pandemic.
The case has “far broader implications than the Uber case alone and will likely be seen as a watershed in the labor rights of gig economy workers,” said Schona Jolly, human rights and labor law attorney at Cloisters Chambers in London .
Nigel Mackay, a partner at Leigh Day, the law firm that represents drivers, said the decision would have a broad impact and that Uber should start offering drivers a minimum wage and vacation time or risk facing a wave of similar cases from others. He said that none of the changes Uber has made since 2016 “would impact the Supreme Court’s central findings that Uber drivers are workers.”
“Any Uber driver can now take action to seek compensation for Uber’s failure to provide paid vacation and to ensure that drivers receive at least the national minimum wage,” he said.
Uber drivers are currently paid per trip, with Uber charging a 20% fee for each fare. Drivers must pay for the car, insurance and taxi license.
Uber and other gigantic economy companies have been fighting efforts in other parts of the world to classify workers as employees with mixed success.
In France, Uber lost a ruling in the country’s highest court last year that a driver had the right to be considered an employee. But in California, Uber and other companies funded a successful electoral measure in the November elections to exempt them from a law that would require them to hire drivers and pay health care, unemployment insurance and other benefits.
Britain, where Uber has about 60,000 drivers, has been one of the company’s most important markets, but also a source of legal problems. In London, where Uber cars are as ubiquitous as traditional black taxis, the city’s transportation regulator has twice taken steps to revoke Uber’s taxi license in recent years, before the company agreed to new security policies.
Mackay said he hoped the decision would provide support for workers and lawyers seeking stronger legal protections for concert workers in other countries.
“People around the world will follow that decision,” he said.