Uber has lost a long-running employment tribunal challenge in the U.K.'s Supreme Court -- with the court dismissing the ride-hailing giant's appeal and reaffirming earlier rulings that drivers who brought the case are workers, not independent contractors.
The case, which dates back to 2016, has major ramifications for Uber's business model (and other gig economy platforms) in the U.K. -- and likely regionally, as similar employment rights challenges are ongoing in European courts.
European Union lawmakers are also actively eyeing how to improve conditions for gig workers, so policymakers were already feeling pressure to clarify the law around gig work -- today's ruling only increases that.
The U.K. Supreme Court judgement can be found here.
In a press summary the court said: "Drivers are in a position of subordination and dependency in relation to Uber such that they have little or no ability to improve their economic position through professional or entrepreneurial skill. In practice the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance."
"A classic form of subordination"
The court rejected Uber's argument that it merely acted akin to a booking agent for drivers, noting that the company would have no means of performing its contractual obligations to passengers (nor complying with its regulatory obligations as a licensed private hire vehicle operator) -- "without either employees or subcontractors to perform driving services for it".
The court also weighed how Uber's business operates in light of U.K. employment law, which provides for a "worker" status -- a classification which is neither employed nor self-employed -- considering other case law and the detail of the drivers' relationship with Uber in coming to its interpretation of the legislation.
Its conclusion is that "the transportation service performed by drivers and offered to passengers through the Uber app is very tightly defined and controlled by Uber".
"Although free to choose when and where they worked, at times when they are working drivers work for and under contracts with Uber (and, specifically, Uber London)," the court wrote, noting its agreement with the earlier tribunal ruling Uber also lost.
In the judgement the court has emphasized a number of aspects of that ruling as important -- namely (emphasis ours): Pay/remuneration (since Uber drivers are not free to set the price of rides); the contractual terms of the performance of the service (again, drivers are not free to set these; Uber does); and Uber's control over service provision, such as via the use of algorithmic management of logged-in drivers and through ownership of the technology infrastructure. The court also flagged how Uber restricts communications between driver and passenger to a bare (and even "stark") minimum.
In a discussion of how Uber uses driver ratings as another tool of control, the court also noted that driver ratings are not disclosed to passengers (i.e. to help them inform/choose their choice of driver) -- but are exclusively for Uber's use; "purely as an internal tool for managing performance and as a basis for making termination decisions where customer feedback shows that drivers are not meeting the performance levels set by Uber".
"This is a classic form of subordination that is characteristic of employment relationships," it added.
The court also agreed with the earlier tribunal finding that time spent by the drivers logged into Uber's app and on duty in London available to accept a trip can be classed as working time under U.K. law (aka the Working Time Directive and Regulations) -- which has implications for fulfilling the National Minimum Wage.
The Supreme Court appears to have had a harder time with the scenario of how to calculate working time if ride-hailing drivers are logged onto multiple (i.e. competing) apps simultaneously, with the judge writing: "I have concluded that this question cannot be answered in the abstract." However, in the case of Uber, its dominant market share in London has made the question moot for this particular legal challenge.
In a statement responding to the Supreme Court's dismissal of its appeal, attributed to Jamie Heywood, regional general manager for Northern and Eastern Europe, Uber said:
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.
The ride-hailing company emphasized that the worker reclassification that flows from this judgement applies to a specific group of Uber drivers who brought the claim, many of whom it said no longer drive on its app.
It also pointed to factors the court had weighed which it said no longer apply -- saying it has, for instance, changed its app so that drivers do see the trip destination and price; and also claiming that since 2017 there has been no repercussion for rejecting multiple consecutive trips.
Uber added that it would be launching a nationwide consultation with all active U.K. drivers -- seeking views to feed its lobbying on gig-working conditions.
It said it will share the outcome of its process in the coming weeks.
In recent days -- and likely in anticipation of this verdict -- the company has kicked off a major lobbying effort in Europe calling for deregulation of platform work.
It argues that without a carve out from employment laws platforms' hands are tied over how far they can go to offer workers a better deal.
Uber says it's pushing for some of the same "principles" that featured in the Prop 22 ballot initiative, which ride-hailing giants Uber and Lyft spend hundreds of millions of dollars pushing in California, going on to win a carve out for delivery and transport work from employment reclassification there last year.
However, responding to Uber's EU white paper this week, the academic research group Fairwork accused it of downplaying its ability to make changes to improve working conditions on its platform. It said the tech giant is trying to legitimize a lower level of protection for platform workers than most European workers benefit from -- urging lawmakers to focus on expanding and strengthening employment protections, not watering them down.
The Supreme Court ruling certainly dials up the risk to Uber of a wave of successful challenges from other U.K. drivers -- increasing its imperative to lobby lawmakers to deregulate platform work. Although, given the U.K. already has a more nuanced classification of employment status than many other markets in Europe, it's not clear how much "favorable travel" Uber's lobbying might achieve in the market (versus on a pan-EU level).
A major U.K. government-commissioned review of workplace rights, back in 2017, recommended renaming workers as "dependent contractors" -- in a bid to help clarify "workers" versus the genuinely self-employed. But the government has yet to take up the suggestion.
It has also been slow to legislate to improve the clarity of employment status tests (as it committed to doing as part of its "Good Work" plan in 2018) -- but the Supreme Court verdict may be the nudge it was waiting for.
Calls to clarify U.K. employment law by defining self-employment in legislation are following hard on the heels of the verdict. (The Association of Independent Professionals and the Self-Employed, for example, said the ruling shows the "glaring need for clarity" in the gig economy and U.K. employment law.)
Returning to Uber, the cost of extending workers to all or even a portion of its U.K. drivers would be substantial -- as it would need to cover benefits such as holiday pay, minimum wage (for time spent working with the Uber app active, including waiting, not just when driving after accepting a job) and pension scheme contributions.
Such workforce status changes could also affect its wider tax liabilities -- so the stakes are high.
Alternatively, it could seek to avoid the costs and risk inherent to any major reclassification of its drivers by changing its model to try to remove the risk that drivers could be reclassed as workers -- such as by reducing how much control it applies to how they perform their tasks.
However, the level of change necessary to meet the legal bar may entail a far more radical redrawing of the Uber service than Uber is comfortable with. Not least as Uber has to consider impacts on its business globally.
Trying to reconfigure its service to avoid paying employment benefits would also be risky in optics/reputational terms, argues Joe Aiston, a senior associate at the law firm Taylor Wessing. He suggests Uber has sought to pro-actively manage its exposure on this front -- via the white paper it released earlier this week -- in which it seeks to reframe the issue of gig workers rights/working conditions by claiming a "new standard" is needed for platform work (i.e. as a tactic to avoid the application of existing employment law).
While he points out that any mass reclassification of Uber drivers would significantly increase Uber's costs, and any attempt to pass that on to passengers (in the form of higher prices) would knock Uber's competitiveness. So there are no easy options for it there either.
"One thing that is for sure is that other businesses engaging individuals as contractors will be looking at this latest decision and seeking to assess the extent to which the concepts considered are applicable to their business model and what changes might be required as a result," said Aiston in a statement.
"Many will see the Supreme Court judgement as a victory for gig economy workers -- often seen as under-protected in law -- and those representing them. The reality may not be quite that bright as with improved employment rights come an increased potential for people to be controlled and, for example, restricted from working for competitive businesses; one of the benefits hailed by gig economy businesses is the freedom to choose when to work and for whom," he added.
Jill Toh, a PhD researcher in platform rights at the University of Amsterdam, described the Supreme Court ruling as a "huge win" for platform workers, while noting that U.K. employment law's "limb (b) worker" status is distinct versus employment laws in many other European countries.
Though she also suggested the ruling will have a significant influence on how judges approach ongoing gig worker rights cases in Europe.
"What's significant is that worker organising has to be central to any solution," she told TechCrunch. "Workers need to come together to debate and decide these issues that are directly impacting them. I don’t think our current institutions are really empowering this. Even with the wins (in the Netherlands with Deliveroo and the Italy case), driver sentiment is still mixed on the ground."
Toh pointed out that data access is a key issue -- and battleground -- to ensuring a better deal for gig workers.
On that front, as it stands, it's the platforms that control all the cards -- including as they lobby for deregulation with self-serving talk of "surveying drivers for feedback" -- given they are the only entities with an omniscient view of both sides of their marketplaces.
"A big part of allowing drivers to debate requires access to data and understanding of algorithmic management," she added.
Legal challenges related to data access and algorithmic management were filed against Uber (and Ola) at the Amsterdam District Court last year, referencing Europe's General Data Protection Regulation -- including by James Farrar (one of the former Uber drivers who brought the employment tribunal challenge) and the not-for-profit Workers Info Exchange, which is pushing to further workers rights via data access.