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The UK Supreme Court has ruled that Uber drivers are legal workers and not self-employed, as Uber has argued in courts around the world. The ruling means drivers in the UK and Northern Ireland are entitled to additional benefits and protections, including a minimum wage.
Uber claims that it merely acts as a technology provider and broker between independent drivers and their customers – much like eBay facilitates sales between buyers and sellers. According to Uber, this means it doesn't owe its drivers benefits like unemployment insurance, doesn't have to reimburse drivers, and isn't bound by minimum wage and overtime rules. Uber emphasizes that its drivers are free to choose when, where and how much to work.
However, critics point out that Uber has much more control over its drivers – and the driver-passenger relationship – than a traditional platform like eBay or Airbnb. Uber sets tariffs, collects payments from customers, deducts its own fee, and remits the rest to the driver. The drivers have to accept a large part of the trips offered. It handles customer complaints and throws drivers off the platform if their average rating is too low.
"A position of subordination and dependence"
Hence, the UK Supreme Court ruled on Friday that Uber drivers are legal Uber workers and not independent business owners who happen to get most of their business from Uber.
"Drivers are in a position of subordination and dependence with Uber such that they have little or no ability to improve their economic position through professional or business skills," said Lord George Leggatt, a Supreme Court Justice issued the verdict.
One consequence is that Uber drivers must receive at least the minimum wage. And most importantly, the Supreme Court ruled that drivers not only have to be paid for the time they drive, but also for the time they are logged into the app and waiting for a different fare.
This could have a significant impact on Uber's relationship with drivers. While drivers are likely to appreciate a minimum earnings guarantee, it could also mean Uber restricts when drivers can work – with too many drivers online during times of low demand, Uber could cost more than it earns in fare.
According to the Financial Times, the ruling means Uber must set up a retirement program for its drivers. Thousands of drivers could be entitled to claim back payment as a result of the ruling.
A global fight
For the past few years, Uber has been battling the same problem in countries around the world. California passed a law in 2019 requiring Uber (and Lyft) to treat its drivers as employees. Uber and Lyft have fought the bill in court for next year, delaying its implementation until voters overturned it in a November 2020 vote.
According to the Financial Times, there are three legal categories in UK law: worker, employee and independent contractor. UK workers have more rights than independent contractors, but not as many as workers. Labor law in the US generally has only two categories: employees and independent contractors.
Last year, the French Supreme Court ruled that Uber drivers must be treated as employees. The Spanish courts came to a similar conclusion in September. Uber is facing a class action lawsuit in Canada over the same matter.
Uber is also facing litigation over the legal status of its drivers in Massachusetts.
Of course, Uber can ultimately overturn some of these decisions in court or in national law or through referendums. However, Uber is unlikely to prevail in all of these battles. That said, if Uber doesn't want to give up much of the hard-won territory, it'll have to figure out how its business model works while treating drivers as employees.
This could mean higher prices for consumers and less flexibility for drivers. Proponents say, however, that drivers will ultimately benefit from the same legal protection as most other workers.