Uber drivers in the UK will have to be paid a minimum wage and vacation pay after the Supreme Court ruled that the company’s contractors should be classified as workers, in a decision that could have serious consequences on the digital economy.
“We are committed to doing more and will now consult with all active drivers across the UK to understand the changes they want to see,” said Jamie Heywood, Uber’s regional head of Eastern and Northern Europe, referring to Friday’s court decision.
“This decision will fundamentally reorder the digital economy and put an end to the abundant exploitation of workers through algorithmic and contractual tricks,” said James Farrar, one of the former drivers involved in the case who now serves as General Secretary of the App Drivers & Messengers Union.
The verdict comes after a more than a five-year legal battle between the app and its drivers. Uber will now have to give a group of 25 drivers employee status. Despite the small number of people benefiting from the court’s decision, because of its characteristics, this case could escalate into a requirement for employee status to be extended to more than 60,000 Uber drivers across the UK.
Uber has argued that its drivers are independent contractors, so they are not subject to employment benefits. However, the court found that the app’s drivers “are in a subordinate position” under Uber’s “rigid and controlled” fare system, so they could not be classified as independent contractors.
It is estimated that around 5.5 million people in the UK work in the digital services sector. The Court’s decision could have significant consequences on the digital economy if future appeals against other companies using a similar model as Uber are validated.
This is not the first lawsuit Uber has lost in Europe. In September 2020, the Swiss Federal Supreme Court ruled that Uber Eats had to stop classifying its couriers as independent contractors. In France, it happened in March of the same year.
In California, Uber won a class action appeal before the U.S. Ninth Circuit Court of Appeals, in a controversial decision where the Court ruled that each driver should request to be bound as an employee of the app individually and not through a class action.
In recent years Uber has granted benefits in Europe to its regular drivers and couriers, such as payments of more than 1,000 pounds for maternity leave or insurance payments to cover disability in the event of accidents or illness, in an effort to ease tensions between the company and its drivers.
Other companies, such as delivery app DoorDash, are facing similar lawsuits in both the European Union and the United States. DoorDash also claims that its couriers are contractors and not contract employees. The company recently had to pay $2.5 million for a lawsuit accusing the app of having a misleading and non-transparent tipping system.
With the Supreme Court ruling in the UK against Uber, a door opens for European regulators to legislate on how these apps pay their users. Despite the court’s intentions, it is likely that these digital applications will decrease the demand for drivers, couriers, and other types of collaborators in the face of court impositions such as minimum wage requirements.