Uber UK has lost its Supreme Court appeal of a 2018 employment tribunal ruling that it must treat its drivers as employees rather than self-employed contractors. Uber drivers will now be eligible for statutory benefits such as holiday pay and a minimum wage. Uber may also be liable to pay compensation for depriving its drivers of these benefits in the past. Judge George Leggatt determined that Uber had such stringent control over the terms of drivers’ employment and how they carry out their work that they cannot be considered to be independent workers. He noted that fares are set by Uber, Uber constrains the driver’s ability to reject ride requests, and that a driver’s relationship with Uber can be terminated if they do not maintain a set minimum standard rating provided by passengers.
Treating their drivers as independent contractors has been a crucial element of Uber’s business model; it keeps costs down, making the business financially viable, while also attracting drivers by offering them the flexibility to determine when and for how long they wish to work. When the California state legislature passed bill AB-5, which also determined that so-called “gig workers” must be treated as employees rather than independent contractors, Uber and another ride-sharing app, Lyft, stated they would be withdrawing their services from the state. Their business would be financially and functionally inviable, they claim. The companies are still operating in the state while they appeal a court ruling that AB-5 applies to them. The warning that they will leave should not be taken as an empty threat, when Austin, Texas implemented a local ordinance in 2016 requiring drivers to be fingerprinted for background checks, Uber and Lyft stopped operating in the city. However, it’s arguable that this was simply a power play to pressure legislators to reverse the regulation. A year later, after intense lobbying from the ride-share businesses, the Texas legislature passed a law that reversed Austin’s local ordinance. Uber and Lyft swiftly returned to operating in the city.
Could Uber try such a play in the UK? It’s certainly possible, however, the time is not propitious to make such a threat. The Covid lockdowns have significantly reduced demand for taxi and ride-share services. Threatening to pull out of the market, leaving thousands unemployed and leaving customers without their services, doesn’t hold much weight when most of their drivers are already unemployed and customers don’t require their services. Nor have Uber and other app-based services penetrated the UK market to the extent that they have in the US, with 57% of taxis and ride hails being booked or hailed using offline methods. If they are to make any such threat, it’s unlikely that it will be anytime soon. More likely, they will resort to aggressively lobbying the government, as they did in Texas, to make an exception in the law for their business.