A person who uses the Uber app in London.
Peter Summers | Getty Images
LONDON – Uber’s troubles in the UK are not over, despite regaining his license to operate London.
The hail-fighting company is awaiting a major decision from the country’s highest court on whether its drivers should be classified as workers rather than independent contractors.
It’s a case that reflects Uber’s struggle with California regulators over the employment rights of its drivers over the past year. A loss for the company could endanger its business model and have far-reaching effects on the so-called gig economy.
Here’s what you need to know.
How did we get here?
It all started with a ruling by the UK Labor Court in 2016.
The Tribunal ruled in favor of a group of Uber drivers, led by Yaseen Aslam and James Farrar, who claimed they were employed by Uber and therefore entitled to rights such as minimum wage, vacation pay and rest breaks.
Former Uber drivers James Farrar (L) and Yaseen Aslam react as they leave the Employment Appeals Tribunal in central London on November 10, 2017.
Tolga Akmen | AFP via Getty Images
Uber insists that its drivers be self-reliant, a classification that gives them minimal protection. She does not want her to be treated as an employee as it would decrease the flexible working arrangements her service has become known for and result in higher costs for the company.
The company has lost all appeal against the original Labor Court decision in the UK lower courts and has therefore appealed to the Supreme Court as a last resort.
Uber says it has improved over time in the way it treats its drivers, with the introduction of benefits like insurance to cover illness or injury, and maternity and paternity payments. However, lawyers representing the drivers say the company has an employer-employee relationship with the drivers and should therefore pay them a minimum wage.
Uber isn’t the only platform struggling to classify their drivers as workers. Free Now, a taxi app from Daimler and BMW, said most drivers use multiple services and “enjoy the flexibility that comes with it”.
“This would make it inherently very challenging and not necessarily beneficial for them to change their status from contractors to workers or employees,” a Free Now spokesman told CNBC.
The Supreme Court will give its verdict at around 9:45 a.m. London time on Friday. The verdict will be broadcast live on the court’s website.
Why it matters
Friday’s decision could have huge long-term implications for Uber and the UK gig economy, which employs an estimated 5.5 million people.
For Uber, a loss would mean the company would have to go back to the UK Labor Court to determine driver compensation.
The decision of the Supreme Court will not only depend on whether drivers should be classified as employees, but in which scenarios they work. For example, does a driver work as soon as he opens his app or only after he has picked up his passengers? The judges are discussing this.
Pinar Ozcan, professor of entrepreneurship and innovation at Oxford University’s Saïd Business School, told CNBC last year that the case was an example of “another showdown of the power struggle between platforms and their members”.
The world has changed since Uber originally lost its case in labor court. The coronavirus pandemic has taken its toll on drivers and demand has plummeted amid the ongoing global health crisis. Meanwhile, couriers for Uber Eats and other takeaway apps are viewed by many as key workers delivering groceries to people who stay at home.
The pandemic has “accelerated gig work,” according to Ozcan, with people losing their jobs due to lockdown measures.
“I think we will see more people wondering how we should redefine the conditions for gig work and make them attractive to (platform) members,” she said.
“Of course the platforms will fight back because it really hurts their revenue,” said Ozcan. “This power struggle will intensify, if at all, as more people are drawn to gig work.”
Uber won a battle with the state of California last year for introducing new laws to classify app-based taxi drivers as employees. However, voters backed an electoral measure called Proposition 22, which allowed companies like Uber and Lyft to continue treating them like independent contractors.
Uber is promoting a “third way” for gig worker employment status that would give drivers some protection while still allowing them to work flexibly.
The company announced proposals for such a model to the EU on Monday before the European Commission reviewed the gig economy platforms. One measure that Uber has proposed is the idea of benefit funds that workers could use for things like health insurance and paid time off.