Last month, a prodigious ruling by the UK Supreme Court classified a small group of Uber employees as workers rather than self-employed, which ended a six-year legal battle that had been escalating through the lower courts. This judgment comes at the same time that the gig industry has been increasingly scrutinised for exploiting their workers, who can often work long hours and earn less than the minimum wage. Although this lawsuit only concerns the original group of employees, it creates an opportunity for many other Uber employees, or even gig workers from other companies to follow suit.
The case commenced in the employment tribunal in 2016 by two drivers, James Farrar and Yaseen Aslam, who took Uber to court on behalf of a group of others, presenting the argument that they were employed by the firm rather and thus shouldn’t be classed as self-employedhttps://en.wikipedia.org/wiki/Uber_BV_v_Aslam. The classification would have entitled them to a wide range of benefits, from holiday pay, sick pay, guaranteed minimum wage and a pension. The tribunal ruled in favour of the drivers, stating that they are considered workers from the time their apps are switched on and are ready to accept trips. Uber appealed this decision over the course of 6 years, firstly through the tribunal in 2017, then the Court of Appeals in 2018, before finally landing at the Supreme Court. Three failed appeals mean that Uber now must accept this ruling, and the employment tribunal will decide how much compensation is suitable to award the drivers in the original case.
The Supreme Court’s decision was based on five factors: (2)
Firstly, drivers have no say in the amount of money that they charge for each trip, the amount they are paid for each trip is fixed by Uber. Drivers are not permitted to charge more than the fare which Uber calculates, and Uber has complete control over whether to make a full or partial refund of the fare in response to a passenger complaint.
Secondly, the contract on which drivers perform their services is dictated by Uber, drivers have no control of what is included in it.
Thirdly, although drivers have the freedom to choose when and where to work, once a driver has logged onto the system, a driver’s choice to accept requests for rides is constrained by Uber. Uber operates a rating system, and if a driver receives consistently low ratings, they are terminated from the app. The app also monitors the driver’s acceptance rate of trip requests, with too many cancellations leading to a series of warning messages which escalate to the driver being automatically logged off the Uber app for 10 mins. This places drivers in a position of subordination to Uber.
Fourthly, Uber exercises control over a significant amount of how drivers deliver their services. While drivers provide their own cars, Uber vets the types of car that might be used. The technology of the platform is also owned wholly by Uber.
Finally, Uber restricts the amount of communication between the passenger and driver to the minimum necessary to perform the particular trip, which also prevents drivers from establishing a subsequent relationship with a passenger. Drivers are prohibited to exchange contact details with one of their passengers or to contact a passenger after a trip ends.
Overall, these factors mean that Uber very tightly controls the drivers’ service, and the drivers ultimately have little or no ability to improve their economic position through professional or entrepreneurial skill.
This ruling opens the floodgates for similar claims against Uber for gig workers in the UK. Leigh Day, one of the law firms involved in the case, have said that drivers could be entitled to an average of £12,000 each in compensation, depending on how much time they have worked with Uber (3). It is estimated that over 20% of the 60,000 Uber drivers in the UK have already filed a mass action lawsuit, which will severely impact the company’s bottom line(4). Uber has expanded aggressively over the past ten years, expanding into many geographical regions worldwide. However, like many other aggressive tech start-ups, it has so far been unable to turn a profit, and its rising costs have been fueled by its investors. Its costs have already gone up over the past few years as a result of the regulatory battles it has had to undergo, and the consequences of the ruling will add further strain to their financials. This verdict will also set an example for Uber which will influence their operations all around the world.
Uber maintains the argument that the ruling only applied to the small group of drivers who filed the claim in 2016 and that their classification as a ‘worker’ is different from that of an employee(5). They emphasised that they have made significant changes to their business since then, and as a result some of the evidence in the trials would no longer be relevant. Working drivers were also sent a message through the app to disregard the Supreme Court rulings.
This is not the only situation in which Uber has been in trouble regarding the classification of its workers. Last August, the California courts ruled that ride-hailing companies such as Uber must treat their drivers as employees, with the ruling intended to go into effect in 10 days(6). Uber responded quickly and amongst other ride-hailing companies such as Lyft, spent over $200m lobbying Californians to pass Proposition 22. This had the aim of allowing ride-hailing companies to continue to treat their workers as independent contractors, but with the caveat of providing some albeit limited healthcare options and going forward with a minimum earnings guarantee. They argued that the shift towards treating their workers as employees would have resulted in many people being trimmed from the workforce and that their drivers preferred the flexibility that came with being self-employed. The proposition was passed with a vote of 59% to 41%, but some drivers have felt betrayed on the back of this, and there have been reports that a few drivers are worse off financially after the ruling as a result(7).
Uber are not alone in facing these issues – with the whole gig economy under attack. The shift in public opinion towards supporting equal working rights for gig workers resulted in an increase in activity and unionised action towards this issue. In Europe, following the UK Supreme Court’s ruling, Spain has ruled similarly(8). As Alexandra Mizzi of law firm Howard Kennedy remarks: “Businesses can’t have it both ways, to protect their brand through tight quality control, and to claim that the individuals providing the service are self-employed”. The future of the gig industry hangs in the balance.