The UK’s Supreme Court on Friday February 19, ruled that cab hailing app, Uber drivers are workers and not self-employed and must be treated as such.
The landmark ruling means thousands of Uber drivers are set to be entitled to minimum wage and holiday pay forcing the company to pay a hefty compensation bill.
Former Uber drivers, James Farrar and Yaseen Aslam, took the company to the supreme court over whether they should be classed as workers or self-employed.
The drivers originally won an employment tribunal against the ride hailing app giant in October 2016, and on Friday told the BBC they were “thrilled and relieved” by the ruling.
Uber had appealed to the Supreme Court after losing three earlier rounds and the company’s share price fell 1% on Wall Street’s after the ruling.
Uber first appealed against the employment tribunal decision but the Employment Appeal Tribunal upheld the ruling in November 2017.
Uber then took the case to the Court of Appeal, which upheld the ruling in December 2018.
The ruling on Friday was Uber’s last appeal, as the Supreme Court is Britain’s highest court.
“I think it’s a massive achievement in a way that we were able to stand up against a giant,” said Mr Aslam, president of the App Drivers & Couriers Union (ADCU).
“We didn’t give up and we were consistent – no matter what we went through emotionally or physically or financially, we stood our ground.”
Delivering his judgement, Lord Leggatt said that the Supreme Court unanimously dismissed Uber’s appeal that it was an intermediary party and stated that drivers should be considered to be working not only when driving a passenger, but whenever logged in to the app.
The court considered several elements in its judgement:
1. Uber set the fare which meant that they dictated how much drivers could earn.
2. Uber set the contract terms and drivers had no say in them.
3. Request for rides is constrained by Uber who can penalise drivers if they reject too many rides.
4. Uber monitors a driver’s service through the star rating and has the capacity to terminate the relationship if after repeated warnings this does not improve.
Looking at these and other factors, the court determined that drivers were in subordination to Uber where the only way they could increase their earnings was by working longer hours.
Jamie Heywood, Uber’s Regional General Manager for Northern and Eastern Europe, said in reaction to the ruling:
“We respect the Court’s decision which focussed on a small number of drivers who used the Uber app in 2016.
“Since then we have made some significant changes to our business, guided by drivers every step of the way. These include giving even more control over how they earn and providing new protections like free insurance in case of sickness or injury.
“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.”
In Uber’s legal argument, the company said it is a booking agent, which hires self-employed contractors that provide transport.
And by not being classified as a transport provider, Uber is not currently paying 20% VAT on fares.
The Supreme Court ruled that Uber has to consider its drivers “workers” from the time they log on to the app, until they log off.
This is a key point because Uber drivers typically spend time waiting for people to book rides on the app.
In previous legal arguments Uber said that if drivers were classified as workers, then it would only count the time during journeys when a passenger is in the car.
“This is a win-win-win for drivers, passengers and cities. It means Uber now has the correct economic incentives not to oversupply the market with too many vehicles and too many drivers,” said James Farrar, ADCU’s general secretary.
“The upshot of that oversupply has been poverty, pollution and congestion.”
Mr Aslam, in reaction to the ruling said;
“It took us six years to establish what we should have got in 2015. Someone somewhere, in the government or the regulator, massively let down these workers, many of whom are in a precarious position,” he said.
“We’re seeing many of our members earning £30 gross a day right now,” he said, explaining that the self-employment grants issued by the government only cover 80% of a driver’s profits, which isn’t even enough to pay for their costs.
“If we had these rights today, those drivers could at least earn a minimum wage to live on.”
Rachel Mathieson, senior associate at Bates Wells, which represented Farrar and Aslam, said her firm’s position was that the ruling applies to all 90,000 drivers who have been active with Uber since 2016.
“Our position is that the ruling applies to all of their drivers at large,” she said.
“However, we don’t think it stops there. The judgement today underscores some very important principles in respect to workers.”