Another blow for Uber's UK business: The company has lost its appeal against an employment tribunal ruling which last year judged that the Uber drivers who brought the case should be classified as workers, rather than self-employed contractors -- meaning they are entitled to benefits such as holiday pay and the UK's National Minimum Wage.
Uber's appeal against the ruling was heard in September. But the Employment Appeal Tribunal has now upheld the original verdict -- denying a first appeal.
And while the original employment tribunal ruling only applies to the group of individuals who brought the case it sets a legal precedent for other Uber drivers to mount challenges over their own employment status.
The company has previously said that if it had to provide all the ~50,000 'self-employed' Uber drivers on its platform in the UK with workers' rights it would cost the company “tens of millions” of pounds.
In its appeal, Uber had sought to argue that it merely acts as an agent on the driver’s behalf -- likening its operation to that of a traditional minicab operator. Clearly the tribunal was not swayed.
Commenting on losing the appeal in a statement, Uber UK’s acting general manager, Tom Elvidge, said: "Almost all taxi and private hire drivers have been self-employed for decades, long before our app existed. The main reason why drivers use Uber is because they value the freedom to choose if, when and where they drive and so we intend to appeal.
"The tribunal relies on the assertion that drivers are required to take 80% of trips sent to them when logged into the app. As drivers who use Uber know, this has never been the case in the UK."
“Over the last year we have made a number of changes to our app to give drivers even more control. We’ve also invested in things like access to illness and injury cover and we’ll keep introducing changes to make driving with Uber even better,” he added.
One of the (now ex-) Uber drivers who brought the employment rights challenge, Yaseen Aslam, had this statement on the result: "I am glad that the judge today confirmed what I and thousands of drivers have known all along: that Uber is not only exploiting drivers, but also acting unlawfully. We will carry on fighting until this exploitation stops and workers' rights are respected.”
Co-claimant and former Uber driver, James Farrar, added: "Uber cannot go on flouting UK law with impunity and depriving people of their minimum wage rights. We have done everything we can, now it is time for the Mayor of London, Transport for London and the Transport Secretary to step up and use their leverage to defend worker rights rather than turn a blind eye to sweatshop conditions.”
Uber's decision to appeal the judgement means it's not the end of the story. And there are two further avenues open to it at this point: The UK's Court of Appeal and also the Supreme Court.
But, at the same time, the direction of travel for legal opinion over gig economy employment rights is not looking good for the sustainability of Uber's current business structure in the UK.
Commenting on the tribunal ruling in a statement, Sean Nesbitt, partner in international law firm Taylor Wessing LLP, said: "The judgment is not a surprise. In recent reported UK cases, workers have won eight out of eight challenges, including at higher levels than this case.
"Notably, the judge seemed to struggle with the idea that there is really a two-sided market, when there appears to be a one-sided bargain."
Although he also suggested it could be difficult for a class action-style legal action to monetize claims for thousands of Uber drivers off of this ruling -- owing to the tribunal's assessment of how to determine working time being "partly determined by whether a worker holds themselves out as available for other jobs", meaning the exact value of working time and minimum wage rights "will still depend on the facts of their individual situation".
"If the case proceeds to the Supreme Court, it will be keenly fought by excellent lawyers but the signs suggest that Uber will continue to be driving uphill," he added of Uber's longer term appeal prospects.
Meanwhile, Uber is also fighting an appeal against London's transport regulator which in September shocked Uber by declining to renew its license to operator -- citing concerns over its behavior and safety issues, including criticism of how Uber operates from London's Met Police.
(In public comments on its situation in London yesterday, Uber CEO Dara Khosrowshahi said the company had been "guilty of not communicating", adding: “I think we were generally immature in how we deal and dealt with regulators.”)
The tribunal judgement also adds more fuel to the debate in the UK over gig economy rights in general, ramping up pressure to accelerate reform of employment law to take account of business models that have sought to circumvent traditional employment structures and thus avoided having to be liable for paying worker benefits.
Last year the UK government commissioned an independent review of gig economy working practices, which came up with a series of recommendations -- including suggesting creating a new classification for workers on tech platforms.
Although the government has yet to signal which recommendations it might adopt and how it generally intends to move forward.
MPs continue to take soundings. Last month, for example, a parliamentary committee grilled representatives for Uber and Deliveroo on their working practices -- including asking about approaches to sick pay; attitudes to safety; and whether they can be sure they always pay workers on their platforms the minimum wage.
Uber losing another employment tribunal over workers rights will likely also feed politicians' thinking as they work to reshape UK law to accommodate the business models that sought to disrupt it.
While the possibility of future rule changes meaning Uber could have to shell out tens of millions more to operate in its most important European market will add further dampeners to its profitability prospects.
- This article originally appeared on TechCrunch.