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Uber awaits crucial UK Supreme Court ruling which could jeopardize its business model


A person using the Uber app in London.

Peter Summers | Getty Images

LONDON – Uber’s problems in the UK are not over, despite winning back its London operating license.

The rideshare company is awaiting a major ruling from the nation’s highest court on whether its drivers should be classified as employees rather than independent contractors.

It’s a case that echoes Uber’s fight with California regulators over the labor rights of its drivers last year. A loss for the company could jeopardize its business model and have wider ramifications for the so-called odd-job economy.

Here’s what you need to know.

How did we get here?

It all started with a UK employment tribunal ruling in 2016.

The court ruled in favor of a group of Uber drivers, led by Yaseen Aslam and James Farrar, who claimed to be workers employed by Uber and therefore entitled to rights such as minimum wage, paid time off and breaks.

Former Uber drivers James Farrar (left) and Yaseen Aslam react by leaving the Employment Appeals Tribunal in central London on November 10, 2017.

Tolga Akmen | AFP via Getty Images

Uber insists its drivers are self-employed, a classification that grants them minimal protections. He doesn’t want them to be treated like workers, as that would reduce the flexible working arrangements his service has become known for and result in higher costs for the company.

The company has lost every appeal against the original UK lower court employment tribunal decision and therefore appealed to the Supreme Court as a last resort.

Uber says it has improved over time when it comes to treating its drivers, introducing benefits like insurance to cover illness or injury and maternity and paternity payments. But lawyers representing the drivers say the company has an employer-employee relationship with the drivers and should therefore pay them a minimum wage.

Uber is not the only carpooling platform to oppose the reclassification of its drivers as workers. Free Now, a taxi app jointly owned by Daimler and BMW, said most of its drivers use multiple services and “appreciate the flexibility that comes with it.”

“By its very nature, it would make it very difficult and not necessarily beneficial for them to change their status from entrepreneurs to workers or employees,” a spokesperson for Free Now told CNBC.

The Supreme Court will deliver its verdict at around 9.45am London time on Friday. The judgment will be broadcast live on the Court’s website.

Why is this important

Friday’s decision could have huge long-term consequences for Uber and the UK’s odd-job economy, which has an estimated workforce of 5.5 million people.

For Uber, a loss would mean the company would have to go back to the UK employment tribunal to determine drivers’ compensation.

What will matter in the Supreme Court ruling is not just whether drivers should be classified as workers, but in what scenarios they work. For example, does a driver work as soon as he opens his application, or only after taking his passengers? This is what the judges are debating.

Pinar Ozcan, professor of entrepreneurship and innovation at the University of Oxford’s Said Business School, told CNBC last year that the case was an example of “yet another showdown between platforms. and their members ”.

The world has changed since Uber lost its case in labor court. The coronavirus pandemic has taken its toll on taxi drivers and demand has plummeted amid the ongoing global health crisis. Meanwhile, Uber Eats couriers and other take-out apps are now seen by many as essential workers, delivering food to people who stay at home.

The pandemic has led to an “acceleration of concerted work,” according to Ozcan, with people losing their jobs as a result of lockdown measures.

“I think we will see more people asking how we should redefine the terms of working together and making it attractive to members (of platforms),” she said.

“Of course the platforms are going to fight back because it really cuts their income,” Ozcan said. “This power struggle will, on the contrary, increase because more people will be drawn to concerts.”

Last year, Uber won a battle with the state of California, which introduced new legislation in an attempt to classify app-based taxi drivers as employees. But voters backed a voting measure called Proposition 22, which allowed companies like Uber and Lyft to continue to treat them like independent contractors.

Uber touts a “third way” for the employment status of construction workers, which would offer drivers certain protections while ensuring flexible work.

The firm shared proposals for such a model with the EU on Monday, ahead of a European Commission review on odd-job economy platforms. One measure suggested by Uber is the idea of ​​contingency funds that could be used by workers for things like health insurance and paid time off.

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Note: The content and images used in this article is rewritten and sourced from www.cnbc.com

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