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Wednesday, November 29, 2023

The UK Is the Latest Country to Tighten the Screws on Uber

For four years, the employment status of Uber drivers in the United Kingdom has been like a colorful beach ball: insubstantial, batted from court to court, appearing different depending on where you stand. On Friday, the highest court in the country decided: A group of 25 Uber drivers who brought a case against the company should never have been treated as independent contractors, justices concluded. Instead, the workers are entitled to national minimum wage, paid leave, rest breaks, and discrimination protection.

For now, the decision applies only to the 25 drivers. But it’s the latest sign of governments around the globe pressuring Uber’s business model, and those of its gig economy siblings—including DoorDash, Lyft, Amazon, Instacart, and in the UK, the food delivery company Deliveroo. Lawmakers, jurists, labor unions, and organizers want the companies to treat their workers better, even as the companies remain unprofitable.

“Over the past 12 months, there’s been a pendulum swing by the courts towards protecting worker rights in the gig economy,” says Ruwan Subasinghe, the legal director of the International Transport Workers’ Federation, which represents nearly 20 million workers in 150 countries. Last March, France’s top court ruled that an Uber driver did not qualify as a self-employed contractor, opening the ride-hail and delivery company to tax liability. A similar ruling followed last fall in Italy. Belgium’s labor authority filed a court case challenging the worker status of food delivery workers last month. Just this week, judges in the Netherlands ruled that cycling couriers for Deliveroo do not qualify as freelance workers, and that Deliveroo must pay an hourly rather than per-delivery wage.

Outside courtrooms, the Spanish government is set to release strict new rules changing the employment status of the country’s food delivery workers as soon as this month. And the European Union this month will begin discussing legislation that would govern platform-based work, with the goal of issuing new labor rules by the end of the year. The EU could, for example, loosen antitrust laws to allow gig workers to collectively bargain, a kind of coordination that today might be considered an illegal cartel.

Uber has argued for years that it is simply a tech platform, connecting business owners—people who own cars and want to make money—with customers who want rides and snacks. But Friday’s unanimous decision by the UK Supreme Court ruled that, unlike other independent contractors, Uber drivers don’t have control over key parts of their work. The court said drivers don’t establish their own contract terms, that they are penalized for declining too many ride requests, that they are evaluated—using rider ratings—as employees. Sure, the court said, Uber drivers theoretically get to choose what sort of car to use—but Uber vets the make and model first.


In response to the decision, Jamie Heywood, Uber’s regional general manager for Northern and Eastern Europe, stressed that the ruling only applies “to a small number of drivers who used the Uber app in 2016,” and that the company has made changes to its driver app since then. “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,” he said. Uber did not immediately announce any changes to its service, but in the past has said it will raise prices if it is forced to treat more of its drivers as employees.

Similar arguments are playing out in the US. A 2019 California law restricted employers’ use of independent contractors. Soon after, a federal appeals court ruled Uber’s drivers should be treated as employees, entitled to minimum wage, workers’ compensation, and other benefits. In the end, Uber, Lyft, DoorDash, Instacart and others evaded both lawmakers and the courts by spending more than $200 million on a ballot measure that allows them to continue to treat workers as contractors, with some added benefits. Californians approved Proposition 22 in November.

Now, Uber and others say they hope to promote a new form of labor classification—a “third way”—in other states, and on the federal level. New York, Massachusetts, and Illinois are set to become the first testing grounds for the gig companies’ new policy approach, which would cement the drivers’ status as contractors while granting them limited benefits, including a wage guarantee, health care stipend and some occupational accident insurance. Under the scheme, Uber would still not be required to pay minimum wage for all the hours workers spend signed on to its apps, nor traditional benefits including sick pay and family leave. It would also avoid paying into state unemployment insurance programs.

Cases challenging the tenets of the gig economy began wending their way through legal systems in the middle of the last decade, and many have now finally made their way to their countries’ highest courts. The Covid-19 pandemic has also highlighted the challenges of working in the gig economy, often without health insurance or paid sick leave. Judges have paid attention, says Shannon Liss-Riordan, a labor attorney who has represented ride-hail drivers in lawsuits against Uber and Lyft. “There's been a recognition of how essential these workers are to our society and that they should receive protections,” she says. “Courts are human, too.”

In Europe, Uber is preparing a fight similar to the one it waged in California. On Monday, Uber released a white paper arguing for a European-style Proposition 22, which would limit workers to contractor status but might, for example, set up an industry-paid benefits fund to defray some workers’ expenses. The ride-hail company has also reached out to trade unions in efforts to broker nation-by-nation compromises on worker classification.

The UK case will now move to an Employment Tribunal, which will determine how much compensation the Uber drivers are entitled to. Leigh Day, the law firm that represented the 25 drivers, says it is bringing other cases against UK ride-hail companies. Other companies “may choose to be proactive and begin providing workers’ rights in order to avoid similar cases being brought against them,” says Anna Mauremootoo, a spokesperson for the firm.

The Dutch food delivery company Just Eat Takeaway said this summer that it would stop using gig workers in Europe, but was still evaluating its employment models in Canada and US. (The company acquired the US company Grubhub this summer.) “In Europe, because we've looked at all these countries, we do not believe that the freelance model in most countries is either legal or sustainable for a longer period of time,” founder and CEO Jitse Groen said on an August call with investors. In the US, he said, the status of gig workers would depend on state legislation “But also there, we would be interested in insuring our people decently and offering people a decent salary,” he said.

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