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The UK Supreme Court ruled that Uber drivers are legally employed, not self-employed, as Uber has argued in courts around the world. The decision means that drivers in Great Britain and Northern Ireland are entitled to additional benefits and protections, including a minimum wage.
Uber claims it acts merely as a technology provider and broker between independent drivers and their customers – in the same way that eBay facilitates sales between buyers and sellers. In Uber’s view, this means that it does not owe its drivers benefits such as unemployment insurance, does not need to reimburse drivers for costs, and is not bound by minimum wage and overtime rules. Uber emphasizes that its drivers are free to decide when, where and how much to work.
But critics point out that Uber exerts far more control over its drivers – and the driver-passenger relationship – than a conventional platform like eBay or Airbnb. Uber sets fares, collects customer payments, deducts its own fee and passes the rest on to the driver. It requires drivers to accept the vast majority of trips offered. It deals with customer complaints and expels drivers from the platform if their average drops too much.
“A position of subordination and dependence”
Therefore, the UK Supreme Court ruled on Friday that Uber drivers are legally Uber workers, and not owners of independent companies that happen to get most of their Uber business.
“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, one of the Supreme Court judges , as he delivered the decision.
One consequence is that Uber drivers must receive at least the minimum wage. Most importantly, the high court has ruled that drivers must be paid not only for the time they are driving, but also for the time they are connected to the application waiting for another fare.
This can have significant implications for Uber’s relationship with drivers. While drivers presumably appreciate a minimum wage guarantee, it could also mean that Uber will restrict when drivers are allowed to work – since having many drivers online during periods of low demand can cost Uber more than it earns in fares.
According to the Financial Times, the decision means that Uber must establish a pension program for its drivers. Thousands of drivers may be eligible to process late payment as a result of the decision.
A global battle
In recent years, Uber has struggled with the same problem in jurisdictions around the world. California passed legislation in 2019 requiring Uber (and Lyft) to treat their drivers like employees. Uber and Lyft fought the law in court the following year, delaying its implementation until voters rejected it in a November 2020 vote.
According to the Financial Times, UK law has three legal categories – employees, workers and independent contractors. UK workers have more rights than independent contractors, but not as many as employees. Labor law in the United States generally has only two categories – employees and independent contractors.
Last year, France’s high court ruled that Uber drivers should be treated as employees. Spanish courts reached a similar conclusion in September. Uber is facing collective action in Canada on the same subject.
Uber also faces litigation in Massachusetts over the legal status of its drivers.
Of course, Uber can ultimately overturn some of those decisions in national courts or legislatures, or through referenda. But it seems unlikely that Uber will triumph in all these fights. Which means that unless Uber wants to abandon large areas of the territory it conquered with such effort, it will have to figure out how to make its business model work while treating drivers as employees.
This can mean higher prices for consumers and less flexibility for drivers. But advocates say that drivers will eventually benefit from having the same legal protections as most other workers.