Uber drivers yesterday won the right to a minimum wage and paid holidays – sparking fears that the firm could pass on costs to passengers.
In a landmark decision with far-reaching implications for the ‘gig economy’, the Supreme Court ruled the ride-hailing giant’s drivers should be classed as ‘workers’.
Uber – which may have to pay millions in backdated compensation – had argued that they are independent contractors and therefore not entitled to employment benefits.
The Uber case centred on its app, which drivers log in to when they want to work and pick up fares. They typically receive around 80 per cent of a fare
An employment tribunal first sided with drivers in 2016. Uber appealed against the decision at the High Court and Supreme Court but has now lost.
Delivering yesterday’s judgment, Justice Lord Leggatt said: ‘It can be seen that the transportation service performed by drivers and offered to passengers through the Uber app is very tightly defined and controlled by Uber.
‘The employment tribunal was, in my view, entitled to conclude that, by logging on to the Uber app in London, a claimant driver came within the definition of a ‘worker’ by entering into a contract.’
Leigh Day, the law firm enlisted by the GMB union, said thousands of drivers could be entitled to an average £12,000 in compensation.
But experts warned it could lead to a price rise as Uber may look to pass on any increased operating costs to customers.
Lawyers for the drivers argued that once costs such as leasing a car and petrol are accounted for they could end up earning below minimum wage. They were also not entitled to any paid leave regardless of time spent logged into the app while working. Uber drivers Yaseen Aslam (left) and James Farrar (right) are pictured outside the Supreme Court, London
It also paves the way for more claims by ‘gig economy’ workers. A claim is already being brought against Uber rival Addison Lee. And some courier firms, such as DPD, are said to use similar models that could be open to legal challenge.
The Uber case centred on its app, which drivers log in to when they want to work and pick up fares. They typically receive around 80 per cent of a fare.
Passengers log in to ‘e-hail’ rides and the app matches them with a driver who is given their location and can accept or refuse the fare.
But lawyers for the drivers argued that once costs such as leasing a car and petrol are accounted for they could end up earning below minimum wage. They were also not entitled to any paid leave regardless of time spent logged into the app while working.
Nigel Mackay, a partner at Leigh Day, said after the ruling Uber can still offer flexible work to drivers but added: ‘All they have to do is make sure that when they are working they are accruing holiday and being paid the minimum wage rate.’
The case was brought by a group of Uber drivers who said they often had to work punishing hours to make ends meet.
Uber argued it acted solely as a technology provider and booking agent for drivers to use the app and earn fares. It said that when a passenger requests a ride and the driver accepts, a contract is made between them and therefore drivers were independent contractors.
But judges disagreed on five main grounds, including that Uber controls fares and drivers are unable to charge more.
Passengers log in to ‘e-hail’ rides and the app matches them with a driver who is given their location and can accept or refuse the fare
The ruling stated: ‘In practice the only way in which [drivers] can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance… The drivers were rightly found to be ‘workers’.’
Uber has around 60,000 drivers in the UK, including around 45,000 in London. Paul Chamberlain, head of employment at JMW Solicitors, said: ‘Uber cannot appeal the decision further, so we may see the business looking to pass on its increased operating costs to customers.’
GMB national officer Mick Rix said the court had upheld what the union ‘has said all along – Uber drivers are workers and entitled to breaks, holiday pay and minimum wage’.
Jamie Heywood, of Uber, said: ‘We respect the court’s decision, which focused 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.’
This post was first published on DailyMail.