Uber suffered a major defeat in one of its most important markets on Friday when Britain’s Supreme Court, in a ruling that could threaten the future of the already unprofitable company, said a group of drivers should be classified as workers entitled to a minimum wage and vacation time.
The court’s decision, the latest in a string of confrontations between labor groups and so-called gig economy companies in courtrooms and legislative halls around the world, poses an existential threat to Uber and other companies that rely on a sprawling labor force of independent contractors to provide car rides, deliver food and clean homes.
The Supreme Court justices ruled unanimously that although Uber said it was only a technology platform that connected drivers with passengers, it behaved more like an employer by setting rates, assigning rides, requiring drivers to follow certain routes and using a rating system to discipline them.
The case, which dates back to 2016, has major ramifications for Uber’s business model (and other gig economy platforms) in the U.K. — and likely regionally, as similar employment rights challenges are ongoing in European courts.
European Union lawmakers are also actively eyeing how to improve conditions for gig workers, so policymakers were already feeling pressure to clarify the law around gig work — today’s ruling only increases that.
In a press summary the court said: “Drivers are in a position of subordination and dependency in relation to Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill. In practice the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance.”
Uber’s fight over drivers’ employment rights extends across its global operations. In its home state of California, drivers are suing to invalidate a ballot measure approved last year that declared them independent contractors. Meanwhile, policy makers in the European Union are expected to publish recommendations for improving working conditions for gig-economy workers later this month.
“The ruling strikes at the heart of Uber’s business model,” said Paul Jennings, a lawyer at Bates Wells, who represented the drivers. “As a business, it will need to reflect very carefully on the implications of the judgment.”
The ruling is the end of the road for Uber’s five-year fight over the status of its drivers and another setback in the U.K., which is home to the ride sharing company’s largest European market. Last year, Uber had to fight to retain its license to operate in London after the transport regulator complained about safety concerns.
The decision nevertheless opens the way for additional claims — and not just from Uber drivers. Those making deliveries for companies like Amazon.com Inc., which uses third-party services that employ freelance workers, as well as other, smaller players, now have a clearer path for challenging the terms of working for their platforms, said Mick Rix, a national officer for the GMB union. The GMB, which has more than 620,000 members, will use the decision to take on other tech platforms, he said.
“It wasn’t just about Uber, it was about the gig economy,” Rix said. “It’s a bogus, false model of employment, and it’s wrong and people are being exploited.”
“Any business with a gig economy model should take heed today,” said Michelle Hobbs, employment law expert at Stevens & Bolton. “This landmark ruling undoubtedly revs up the pressure on gig-economy businesses to provide much better terms and conditions to those working for them.”
The U.K. Supreme Court judgement can be found here.