Uber has lost a long-running legal battle over the employment rights of its drivers, who must now be treated as workers rather than as self-employed and are entitled to the minimum wage and holiday pay.
After several attempts at appeals, the firm behind the ride-hailing app was finally defeated in a unanimous decision by the Supreme Court, the highest court in the UK, over the results of a 2016 employment tribunal case brought by James Farrar and Yaseen Aslam.
Uber drivers now count as workers, who start work from when they log into the Uber app within the area they are licensed to operate in and are ready to work.
The Supreme Court found that drivers were in a position of 'subordination and dependency' in relation to Uber with little or no ability to improve their position and earnings except by working longer hours while constantly meeting Uber’s measures of performance.
Uber had argued that drivers are independent contractors who work under contracts made with customers and do not work for Uber.
However, the employment tribunal found that Mr Aslam and Mr Farrar satisfied the definition of a 'worker' in the Employment Rights Act 1996 and worked under worker's contracts for Uber London. Now the Supreme Court has dismissed Uber's final attempt to appeal this finding.
While the decision only directly applies to the 25 drivers involved in the original successful employment tribunal, it has a far reaching impact on Uber's business model and the wider gig economy.
There are also reportedly many other similar cases against Uber, which have been on hold while awaiting this judgement.
The company could be facing a significant compensation bill, with some estimating each of the drivers could be entitled to a £12,000 payout.
It is not clear whether Uber accepts the decision as relating to all its tens of thousands of UK drivers, or whether it would argue that reforms it has put in place since 2016 mean the situation has materially changed.
Jamie Heywood, Uber's regional general manager for Northern and Eastern Europe, 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.'
In making their judgement, the Supreme Court considered five key aspects:
- Uber sets the fare and drivers are not permitted to charge more than the fare calculated by the Uber app - so Uber dictates how much drivers are paid for the work they do.
- The contract terms on which drivers perform their services are imposed by Uber and drivers have no say in them.
- Once a driver has logged onto the Uber app, the driver’s choice about whether to accept requests for rides is constrained by Uber, which imposes penalties if too many trip requests are declined or cancelled.
- Uber has significant control over the way in which drivers deliver their services - including through the driver ratings system. Any driver who fails to maintain a required average rating will receive a series of warnings and could eventually have their relationship with Uber terminated.
- Uber restricts communications between passenger and driver to the minimum necessary and takes active steps to prevent drivers from establishing any relationship with a passenger capable of extending beyond an individual ride.