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Uber Drivers Aren’t Independent Contractors, U.K. Tribunal Rules Uber Drivers Aren’t Self Employed, U.K. Tribunal Rules
(about 2 hours later)
LONDON — Uber suffered another blow on Friday to its operations in London — its biggest market outside the United States — when an employment tribunal rejected the company’s argument that its drivers were independent contractors. LONDON — Uber suffered another blow on Friday to its operations in its biggest market outside the United States when an employment tribunal in London rejected the company’s argument that its drivers were self employed.
The decision, which affirmed a ruling made last year, means Uber will have to ensure its drivers are paid a minimum wage and entitled to time off, casting doubt on the hiring model used by Uber and by other businesses in the so-called gig economy that rely on workers who do not have a formal contract as permanent employees. The decision, which affirmed a ruling made last year, means that Uber will have to ensure its drivers in Britain are paid a minimum wage and entitled to time off, casting doubt on a common hiring model in the so-called gig economy that relies on workers who do not have a formal contract as permanent employees.
Companies argue that such a system increases the flexibility for both workers and employers in the modern economy, but critics say it is exploitative and deprives employees of key benefits like unemployment insurance.Companies argue that such a system increases the flexibility for both workers and employers in the modern economy, but critics say it is exploitative and deprives employees of key benefits like unemployment insurance.
For Uber, the ruling is the second hit to its business in London in recent months. In September, the city’s transport authority issued a surprising decision to bar the ride-hailing service from operating in the British capital. Uber is appealing that ruling, which said the company was not “fit and proper” to operate in the city. It can continue offering its services until a final ruling is made. The ruling is the second hit to Uber’s business in London in recent months. In September, the city’s transport authority issued a surprising decision to bar the ride-hailing service from operating in the British capital. Uber is appealing that decision, which said the company was not “fit and proper” to operate in the city. It can continue offering its services until a final ruling is made in the case.
In the case before the employment tribunal on Friday, two Uber drivers, James Farrar and Yaseen Aslam, had challenged the company on behalf of a group of 19 drivers, saying that the service had denied them basic protections by classifying them as self-employed. Uber relied on an argument it has used repeatedly around the world: Its drivers were independent contractors.In the case before the employment tribunal on Friday, two Uber drivers, James Farrar and Yaseen Aslam, had challenged the company on behalf of a group of 19 drivers, saying that the service had denied them basic protections by classifying them as self-employed. Uber relied on an argument it has used repeatedly around the world: Its drivers were independent contractors.
In a statement following the ruling, Uber’s acting head in Britain, Tom Elvidge, said the company would appeal the decision. Once it does so, the case would be heard by the Court of Appeal.It could eventually be referred to Britain’s Supreme Court. “You can hide behind technology, but the laws are there, and they need to be obeyed and respected,” Mr. Aslam, 36, said in an interview. “The impact of this ruling could affect thousands of drivers, and not just drivers but millions of workers across the U.K.”
The employment case is one of several challenges facing Uber. Though the service has expanded at a breakneck pace, growing into a behemoth valued at $70 billion, it has grappled with an array of issues, including allegations that it does not do enough to vet its drivers and revelations that it used software to evade the gaze of the authorities. “It just means we can’t be exploited,” he added.
Complaints of an aggressive workplace culture, meanwhile, forced its founder, Travis Kalanick, to resign this year as chief executive. He was replaced by Dara Khosrowshahi, who has introduced a more conciliatory style. He sought to win over the London transport authorities with a charm offensive last month. In a statement made after the ruling, Uber’s acting head in Britain, Tom Elvidge, said the company would appeal the decision to the Court of Appeal or to Britain’s Supreme Court.
In an effort to win over customers and drivers concerned about its reputation, the company has introduced new measures and services, like allowing users add tips to their fares. Uber has also promoted its efforts, particularly in Britain, to provide drivers with benefits like access to a pension and insurance. The employment case is one of several challenges facing Uber. Though the service has expanded at a breakneck pace and grown into a behemoth valued at $70 billion, it has grappled allegations that it does not do enough to vet its drivers and revelations that it used software to evade the gaze of the authorities, among other issues.
The company’s operations in London are crucial to its global expansion. Some 40,000 people drive for Uber in the British capital, and it claims three million customers have used the app at least once in London in the past three months. Complaints of an aggressive workplace culture forced its founder, Travis Kalanick, to resign this year as chief executive. He was replaced by Dara Khosrowshahi, who has introduced a more conciliatory style. He sought to win over the London transport authorities with a charm offensive last month.
Mr. Khosrowshahi’s shift comes at a crucial time. Uber is targeting an initial public offering in 2019, and is working on securiting a multibillion dollar investment from SoftBank, the Japanese conglomerate.
And in an effort to win over customers and drivers concerned about its reputation, the company has introduced new measures and services, like allowing users add tips to their fares. Uber has also promoted its efforts, particularly in Britain, to provide drivers with benefits like access to a pension and insurance.
The company’s operations in London are crucial to its global expansion. It first began offering its services in the city in 2012, but is now present in dozens of cities nationwide. Some 40,000 people drive for Uber in the British capital, and it claims three million customers have used the app in London at least once in the past three months.
The arrival of Uber in London has, however, created a clash with the city’s iconic black cabs. The centuries-old taxi system requires its drivers to pass an exacting test known as The Knowledge, where they must memorize around 25,000 streets and 100,000 landmarks. Black cabs are typically far more expensive than Uber’s services, which cabbies complain are too lightly regulated.
The challenge over its hiring practices strikes at the heart of Uber’s business model. The company faces a similar challenge in Europe — the region’s highest court is expected to rule by the end of the year in a case over whether the company should be regulated as a taxi service, which would make it subject to rigorous safety and employment rules, or as a digital platform that simply connects independent drivers to passengers.The challenge over its hiring practices strikes at the heart of Uber’s business model. The company faces a similar challenge in Europe — the region’s highest court is expected to rule by the end of the year in a case over whether the company should be regulated as a taxi service, which would make it subject to rigorous safety and employment rules, or as a digital platform that simply connects independent drivers to passengers.
Labor experts say that laws in most countries have failed to keep up with the development of technology and the spread of the gig economy. In Britain, for example, the main piece of legislation that regulates how workers are treated was passed in 1996.
“The legislation is old,” said Susannah Kintish, a partner at the law firm Mishcon de Reya specializing in employment law. “It came out when the Spice Girls had their first hit, it’s just way out of date.”