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12/05/2021

Court sends Uber into reverse – What does this mean for its drivers?

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The ride-hailing app must treat its drivers as staff rather than as self-employed contractors.

Uber’s business model has been sent into reverse thanks to a landmark judgement over the ride-hailing apps UK drivers’ employment status, says Simon Freeman in the Evening Standard. The UK Supreme Court has decided to uphold a 2016 ruling by an employment tribunal that drivers on its platform should be classified as Uber workers rather than self-employed. This means that Uber’s drivers in the UK are entitled to a minimum wage, overtime,
sick pay, holiday pay, pensions,” and possibly retrospective compensation.

The ruling is bad news for Uber, as it threatens its entire business model, says Morgan Schondelmeier in The Daily Telegraph. Not only will drivers be entitled to rights such as paid holidays and regular breaks, but the Supreme Court has also ruled that a driver is considered working any time they are logged into the app, not just when on an active trip. As a result, Uber will have to pay for any downtime as well. All this will drastically raise employment costs and prices for customers. There is even a chance that Uber could reach a tipping point and decide to leave the UK, putting tens of thousands of jobs at risk.

Trouble ahead?

Not so, says Sam Schechner in The Wall Street Journal. Uber argues that the ruling will
only set a limited precedent as it has changed how it handles its relationships with drivers since 2016. It has given them more flexibility, including the right to turn down fares repeatedly. According to the judgement, the lack of such flexibility played a key part in the Court’s original decision to rule against them. In any case, the impact on costs will be lessened because Uber has already increased benefits for its drivers and the fact that other places in the world, such as California, have voted to classify Uber drivers as independent contractors.

Still, the UK isn’t the only place thinking about regulating employment platforms, such as Uber, more closely, says Natalia Drozdiak on Bloomberg. The European Union is working on proposals to improve platform workers’ working conditions, including strengthening their right to bargain collectively.

Simultaneously, even the recent Californian law sponsored by the company forces Uber to provide more benefits. Besides, even Uber’s CEO, Dara Khosrowshahi, has admitted that the company needs to “do more and go much further” to pre-empt additional regulation. Overall, there’s no hiding the fact that the ruling is a kick in the tyres for Uber, says Lex in the Financial Times.

Investors who have already borne the cost of regulatory battles from New York to Hong Kong must be wondering how long it will be before the technology platform finally turns a profit. Still, they are not alone in their misery. You can expect potential litigation and labour policies to rate a mention or two in Uber Eats rival Deliveroo’s prospectus when it floats in a few weeks.

Source: moneyweek.com

Kris Paterson is a writer for www.whatjobs.com the global job search engine

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