By Steve Scherer
OTTAWA (Reuters) - Canada's Supreme Court on Wednesday heard arguments in an appeal by Uber Technologies Inc <UBER.N> against a ruling in favour of one of its drivers that could affect how the country classifies workers in the so-called gig economy.
Uber is seeking to overturn a lower-court ruling that had paved the way for UberEats driver David Heller to file a class action suit aimed at securing a minimum wage, vacation pay and other benefits for himself and other drivers.
Drivers are now classified as independent contractors and not as employees who are entitled to such benefits. The ride-hailing company's contract allows arbitration, but not class-action lawsuits.
The top court's ruling may eventually open the way to the class action suit, which could have a deep impact on firms like Uber, which hire workers on flexible contracts that allow them to work simultaneously for different companies, but provide no guarantee of minimum work hours or pay.
Businesses say the model offers flexibility to both sides, while unions and other critics argue it is exploitative and creates a sub-class of often low-paid and insecure jobs.
Uber is appealing the province of Ontario's high court ruling from a year ago, which said the company's arbitration clause violates provincial labour rules and is "invalid and unenforceable."
The arbitration process, which must be conducted in the Netherlands where Uber has its international headquarters, is costly for the average driver. The base cost is about C$19,000 ($14,500), while Heller earned between C$21,000 and C$31,000 per year, said Michael Wright, one of Heller's lawyers who spoke at the hearing.
Not a single Ontario Uber driver has ever used the arbitration process, according to another lawyer who represented Heller.
Linda Plumpton, who argued on behalf of Uber, said the company introduced a one-size-fits-all arbitration process because of a need to regulate its drivers in 77 different countries.
"Yes there is a fee... but there are costs associated with every form of arbitration. We should not fool ourselves into thinking that any form of arbitration or litigation comes without cost," Plumpton said.
The Supreme Court will announce its decision in the coming months. If it rejects Uber's appeal, a lower court judge would still have to rule to allow Heller's class action suit before the issue of the drivers' employment status is discussed.
(Reporting by Steve Scherer; Editing by Marguerita Choy)