The Supreme Court Decision
On Friday, the UK Supreme Court unanimously ruled that Uber drivers must be classified as workers, not independent contractors. However, this ruling does not classify all drivers as workers. This news comes as a huge defeat for the $109.23 billion rideshare app company, which will potentially have to change its business model as Uber drivers are now entitled to minimum wage and paid holidays. Additionally, the court ruled that drivers are working from the time they turn on the app, rather than when only transporting passengers.
While the small number of drivers who brought the case to court will most likely be the first ones affected, the company currently has 40,000 drivers in the UK; therefore, the business will potentially have to provide the same benefits to all employees. This could lead to major changes in the business model, as the company may be forced into limiting the number of drivers working for Uber so it can provide appropriate compensation.
Furthermore, this ruling could potentially affect the entire gig economy in the UK. According to The Verge, there are approximately 4.7 million gig workers in the UK, as apps like Deliveroo work on a similar business model to the rideshare app. That said, Lord Robert John Reed, president of the UK Supreme Court, said about the ruling, “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.”
The case now goes back to the Employment Tribunal, which could force the rideshare app company to pay compensation to about 20 original claimants. Consequently, thousands of drivers have taken action against the business, who may also be eligible for compensation if they were drivers for the company at the time the suit took place.
Since the news of this story broke, and the writing of this article Friday morning, the rideshare app company stock has dropped nearly 3%.
How the Lawsuit Started
The lawsuit against the rideshare company was first brought to court in 2016 by Yaseen Aslam and James Farrar. The former previously worked for another company but was incentivized to work for Uber. Aslam claimed that the benefits dissipated, resulting in fewer rides and lower fares.
UK courts ruled in favor of the men in 2016, and through subsequent appeals in 2017 and 2018, the ruling was still upheld. The court also stated it took several key elements into consideration before finally determining that drivers for the rideshare app are subordinates.
Since 2016, the rideshare app company has made considerable changes, such as offering insurance to drivers if they become sick or injured. Jamie Heywood, the regional general manager in northern and Eastern Europe, said, “We are committed to doing more and will now consult with every active driver across the UK to understand the changes they want to see.”
About the Author
McKenzie Carpenter is a graduate of Central Michigan University with a B.A.A. in Integrative Public Relations and French. McKenzie has previously worked for small businesses and nonprofit organizations.