Uber loses Supreme Court appeal as court rules drivers are workers with rights to minimum wage

The decision could send shockwaves through Uber’s business model and the operations of similar companies

Uber drivers must be classed as workers with rights to holiday pay and the minimum wage, Supreme Court judges have said in a ruling hailed as a “historic” victory for those in the gig economy.

The US ride-hailing app has not offered workers rights to its drivers since the business was established in 2009, insisting they are self-employed and independent.

But top UK judges today ruled against the mini-cab giant, in a decision that could send shockwaves through Uber’s business model and the operations of similar companies.

GMB union national officer Mick Rix hailed the decision as a “historic win”, after a gruelling legal battle which started in the employment tribunal in 2016.

“The Supreme Court has upheld the decision of three previous courts, backing up what GMB has said all along - Uber drivers are workers and entitled to breaks, holiday pay and minimum wage.

“Uber must now stop wasting time and money pursuing lost legal causes and do what’s right by the drivers who prop up its empire.”

Lawyers have estimated tens of thousands of Uber drivers could be entitled to payouts of up to £12,000 each as a result of today’s decision. 

Delivering the ruling, Lord Leggatt said the way Uber operates, restricting its drivers from building relationships with customers, temporarily logging them off the app if they turn down too many fares, and the passenger rating system meant they should qualify as workers.

“They are in a position of subordination and dependency in relation to Uber”, he said. “In practice the only way they can increase their earnings is by working longer hours, while consistently meeting Uber’s measures of performance.”

Michelle Hobbs, an employment law expert at Stevens & Bolton, said the decision could lead to more expensive Uber rides, and will shine a spotlight on the trading practices of other companies.

“This landmark ruling undoubtedly revs up the pressure on gig economy businesses to provide much better terms and conditions to those working for them”, she said.

The test case will now return to the employment tribunal for a decision on the payouts due to the two drivers who fought the legal battle.

The test case began in 2016, when two drivers – Yaseen Aslam and James Farrar - fought and won an employment tribunal against Uber on workers’ rights.

That ruling was upheld by an employment appeal tribunal and by Court of Appeal judges, reaching the Supreme Court for a two-day hearing last July.

Lawyers for Uber insisted drivers did not work for the Uber but were “independent, third party contractors”.

Law firm Leigh Day, which represented the drivers, said it believes tens of thousands of Uber drivers could be entitled to an average of £12,000 each as a result of today’s decision.

When the case was first brought in 2016, Uber had around 40,000 drivers operating across the UK, with around two million customers signed up to the app in London alone.

Joe Aiston, a senior associate at law firm Taylor Wessing said that while many will see today’s decision as a victory for workers, Uber could seek to circumvent the decision by changing the way it operates.

“The Uber decision may eventually lead to a push towards similar actions against other gig economy businesses in the future”, he said.

“Uber may instead look to adjust its business model in order to move it away from the key indicators in determining that its drivers are worker.

“Instead, Uber may seek to maintain drivers as contractors and therefore not give employment rights. This is a risky move in terms of Uber managing its reputation as an ethical business, particularly with the level of press exposure this judgment promises to attract.”

Jamie Heywood, Uber’s Regional General Manager for Northern and Eastern Europe, said:  “We respect the Court’s decision which focused 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 case of the two drivers who emerged victorious today will now return to the employment tribunal for a ruling on the compensation they are owed.

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