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What does Uber's employment case mean? What does Uber employment ruling mean?
(17 days later)
An employment tribunal in London is to hand down what could be a seminal judgement in a case that could have wide-ranging implications. An employment tribunal in London has ruled that Uber drivers can be classed as employees - and are not self-employed.
Two Uber drivers claimed the company was acting unlawfully by not paying holiday or sick pay.
It has been described as a test case not only for the business model of ride-hailing firm Uber, but for the whole so-called "gig economy".It has been described as a test case not only for the business model of ride-hailing firm Uber, but for the whole so-called "gig economy".
Two Uber drivers are claiming that Uber is acting unlawfully by not paying holiday or sick pay. Uber insists its drivers are self-employed and says it will appeal.
Uber insists its drivers are self-employed. The firm has more than 40,000 licensed drivers in 20 UK towns and cities making more than a million trips per week.
The ride-hailing firm has really taken off in the UK. Drivers and campaigners hail Uber ruling
It has more than 40,000 licensed drivers in 20 towns and cities making more than a million trips per week. The outcome of this case may not only affect its business model, but could also change the relationship between many firms and their self-employed workers.
But the outcome of this case may not only affect its business model, but could also change the relationship between many firms and their self-employed workers. What did the drivers say?
What are the drivers saying? Two drivers, James Farrar and Yaseen Aslam, argued that they were employed by Uber but didn't have basic workers' rights. The cases were brought by the GMB union.
Two drivers, James Farrar and Yaseen Aslam, have argued that they were employed by Uber, but they didn't have basic workers' rights. The cases were brought by the GMB union. The drivers said they should be entitled to holiday pay, and that they should be paid the National Minimum Wage.
Mr Aslam no longer drives for Uber. For example, Mr Farrar (who no longer drives for Uber) said his net earnings in August 2015 after expenses were £5.03 an hour.
The drivers also argued that their actions were controlled by Uber, so in effect they were employed by the firm.
Once a driver accepts a job he or she is not notified of the destination, and faces punitive measures if they don't perform well enough, for example, following a customer complaint.
The two drivers claimed sums of money were frequently deducted from their pay, often without advance warning.
A further 17 claims have been brought against Uber, according to law firm Leigh Day.A further 17 claims have been brought against Uber, according to law firm Leigh Day.
The drivers say they should be entitled to holiday pay, and that they should be paid the National Minimum Wage. What did Uber say?
For example, Mr Farrar said his net earnings in August 2015 after expenses were £5.03 an hour. Uber argued that there are more than 30,000 drivers in London and 40,000 in the UK using its app to find customers. Many do so, it says, because it allows them to work flexibly.
The drivers are arguing that their actions are controlled by Uber, so in effect they are employed by the firm. The firm says drivers, whom it calls "partners", can "become their own boss".
Once they have accepted a job they are not notified of the destination, and they face punitive measures if they don't perform well enough, for example, following a customer complaint. It also doesn't set shifts or minimum hours, or make drivers work exclusively for Uber.
They say sums of money are frequently deducted from their pay, often without advance warning. Uber said that in September, drivers for UberX (the most basic private car service that Uber offers) made £16 an hour on average, after Uber's service fee, and that only 25% logged in for 40 or more hours per week.
However, not all Uber drivers are unhappy with pay and conditions. Jonathan Esseku told the BBC he was happy to describe himself as self-employed, and that he had initially been attracted to Uber by potential earnings.
"When I want to work I log on [to the Uber app], and when I don't, I log off," he said. "I think it's good."
He added that after expenses he makes around £13 per hour, and works 35 to 40 hours per week.
What is Uber saying?
Uber argues that there are more than 30,000 drivers in London and 40,000 in the UK using its app, and that many do so because they can work flexibly.
The firm says drivers, whom they call "partners", can "become their own boss".
The firm says it is a technology company that provides an app to put drivers in touch with customers.
It doesn't set shifts or minimum hours, or make drivers work exclusively for Uber, it says.
It adds that in September UberX (the most basic private car service that Uber has to offer) drivers made £16 an hour on average, after Uber's service fee, and that only 25% logged in for 40 or more hours per week.
What is at stake?What is at stake?
The case has huge implications for employment law, according to Luke Bowery, a partner at Burges Salmon. Alex Bearman, partner at law firm Russell-Cooke, says the outcome is likely to have "significant implications for other operators in the fast growing 'gig economy'".
It could extend employment rights to many more people "and could have a major impact on how the growing gig economy functions". Similar cases are currently being brought against the courier firms CitySprint, eCourier and Excel as well as taxi firm Addison Lee.
Either side will be likely to appeal against the tribunal's decision if it loses, because the stakes are high. But Martin Warren, partner and head of labour relations at Eversheds, says the fact the Uber claimants have won their case does not mean that cases brought by others will have the same success.
Although the decision isn't technically binding on employment tribunals, it will be "highly persuasive" for them, Mr Bowery says. "Each case will depend on the specific terms and arrangements between the individual and the company they work for."
What happens if Uber loses? What does this mean for Uber?
The company would have to give drivers back-pay for unpaid benefits in the UK, and pick up the future cost of those benefits. Uber is appealing against the decision, but it may have to give drivers back-pay for unpaid benefits in the UK, and pick up the future cost of those benefits.
The tribunal's decision "may also have an impact on how Uber operates in other countries and we have already seen similar significant claims from drivers being settled in the US," Mr Bowery says. "We may not see a final determination for some time to come," says Mr Bearman.
Would fares go up? Will fares go up?
They may have to. They may have to, as Uber may pass on any higher labour costs to its customers. "Consumers will see prices rise and a less stable, predictable service," believes Sam Dumitriu, head of projects at the Adam Smith Institute.
Uber could pass the costs on to customers through higher fares, but that would "disrupt Uber's ability to offer a flexible and responsive service to its customers - potentially hitting at the heart of service delivery, as well as its profit margins," says Mr Bowery. Luke Bowery, a partner at Burges Salmon agrees. "[Higher fares will] disrupt Uber's ability to offer a flexible and responsive service to its customers - potentially hitting at the heart of service delivery, as well as its profit margins," he says.
Could the ruling affect Uber outside the UK?
The ruling applies only in the UK. Different countries have different employment laws.
However, the tribunal's decision "may have an impact on how Uber operates in other countries and we have already seen similar significant claims from drivers being settled in the US," Mr Bowery says.
What happens to the 'gig economy'?What happens to the 'gig economy'?
If Uber loses, the trend of firms taking on self-employed workers who engage with work through apps may have to change radically. The trend of firms taking on self-employed workers who engage with work through apps may have to change radically, says Mr Bowery.
"Other major operators in the gig economy such as Excel, CitySprint, Addison Lee and Courier are already facing similar claims from their drivers," says Mr Bowery. Firms like Deliveroo could also be affected. Faced with similar employment tribunal claims, these firms may either have to change their business models, or pass the increased costs onto customers.
These firms would either have to change their business models, face similar employment tribunal claims, or pass the increased costs onto customers. "When operated in the right way, many individuals, including some Uber drivers, highly value the benefits the gig economy can bring," adds Mr Bowery.
But if the case goes against the Uber drivers, then it gives a green light for new technologies and services to enter the market, Mr Bowery says. It also validates this type of flexible working.
"At its best, [the gig economy] increases flexibility and enables people to combine more secure employment with additional income.
"When operated in the right way, many individuals, including some Uber drivers, highly value the benefits the gig economy can bring," says Mr Bowery.
"These benefits do need to be balanced, however, against potential exploitation and we are unlikely to have seen the last of claims of this type as the gig economy continues to grow.""These benefits do need to be balanced, however, against potential exploitation and we are unlikely to have seen the last of claims of this type as the gig economy continues to grow."