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What does the UK Supreme Court ruling on Uber mean for the gig economy? Business and legal experts react

Uber has seen the UK’s highest court rule that its drivers are workers in an “historic” case.

The Supreme Court ruled in favour of 35 Uber drivers in a case first brought in 2016. The drivers, who were deemed self-employed by the US-based ride-hailing app, argued that they should instead be classed as workers.

Under UK law, a person classed as a worker is entitled to some rights traditionally enjoyed by employees, including holiday pay and the minimum wage.

The ruling is one of the most significant employment cases the UK has seen.  It is a serious blow to Uber in what is one of its biggest consumer markets, and it is not yet known how big an impact it will have on the UK’s wider gig economy going forward. 

Several other taxi apps, including Bolt, Kapten and Ola, also currently operate on a similar model to Uber around the UK, and the wider gig economy has grown significantly over the past decade across the retail and consumer sectors. 

Self-employment accounts for more than one-third (35%) of employment growth since 2008, according to the Resolution Foundation. 

A lead claimant in the case, James Farrar, said that he hopes the ruling will “fundamentally re-order” the way businesses in the gig economy operate. 

Here we bring you reactions to the ruling and comments on its significance from political, legal, business and HR experts: 

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, noted that Uber’s share price fell 1% in opening trading on Wall Street “as investors digested the implications of the UK ruling”.

She said that a “significant rethink” of Uber’s labour policies is likely to be on the cards – and that it may even accelerate Uber’s plans to bring in self-drive cars “to eliminate the headache and cost of human labour.’’

The analyst pointed to delivery firm Hermes, which lost a similar ruling in the UK back in 2018, and ended up coming to a deal with unions which saw couriers offersed a “self- employed plus” status. 

Streeter said that the Supreme Court’s decision is the latest blow “chipping away at the gig economy model upon which the transport and delivery companies have developed sprawling and lucrative businesses”.

“Uber faces challenges in other parts of the world to drivers’ self-employed status, so a significant rethink of its labour policies is likely to be on the cards,” she said. “The UK Supreme Court decision steers Uber into a dead end in its legal fight and now the ride-hailing service will have to incur significant additional costs in the UK, to pay drivers the minimum wage and overtime and potentially also compensation.”

The Mayor of London, Sadiq Khan, welcomed the ruling and said he “wants London to be the best place to do business and also the best place to work”.

He said: “Gig economy workers deserve the same rights as other workers.

“I urge businesses in the capital, including private hire companies, to pay their workers the London Living Wage, and to give them the security they deserve.

“Treating workers well leads to increased productivity.

“London is a tech powerhouse for the world – but employers must play by the rules.”

Alexandra Mizzi, Legal Director at law firm Howard Kennedy, said the result “underlines the key lesson for gig economy businesses: calling someone self-employed doesn’t mask the legal reality”.

Mizzi said: “This result will mean that the estimated 45,000 Uber drivers in the UK will benefit from a host of legal protections, including sick pay, holiday pay and whistleblower protections going forward.”

The lawyer noted that Uber will also face “a huge liability for unpaid national minimum wage, enforced by HMRC, as the Court also found that drivers were working when logged into the app”. 

Andy Davies, Senior VP at global HR company,MHR , said that the ruling shows “the tide is turning” on gig economy employers.

He said: “The tide is turning on those employers who unscrupulously use gig workers as a source of cheap labour and should serve as a stark reminder to other businesses that unless staff fit squarely into the ‘employee’ bracket, then they need to carefully consider their employment status, or consider themselves severely out of pocket in the future.”

The ruling that drivers are workers could even see workers across the entire gig economy rights to pension contributions, Aegon expert Kate Smith said.

Smith, who is the financial service firm’s head of pensions, said the ruling “could have ripple effects for all gig workers, giving them not only rights to holiday pay, but potentially other workplace  benefits such as employer pension contributions”. 

She said:“This reclassification is another step towards opening the doors to auto-enrolment for all gig workers, giving them the opportunity to save for retirement, with the important boost of the right to a 3% employer pension contribution.“  

Rosie Hooper, chartered financial planner at wealth manager Quilter, added: “There needs to be concerted effort to continue to boost engagement in pensions and ensure that those being enrolled for the first time know what they are contributing to and where it is going.”

Consumer rights groups warned that the decision may push up prices, and deter ride-hailing companies from investing in the UK.

Yaël Ossowski, deputy director of the global consumer advocacy group Consumer Choice Center, said that the “ruling sends the signal that rideshare companies are not welcome in the UK”and that  this is “not what consumers want”.

She said: “The flexible model that has so far propelled the growth of companies like Uber, Lyft, and others has been beneficial for both drivers who want independence and consumers who want convenience and competitive prices.”

Uber said it “respects the court’s decision”

Jamie Heywood, Uber’s Regional General Manager for Northern and Eastern Europe, said: ”We respect the Court’s decision which focussed on a small number of drivers who used the Uber app in 2016.

“Since then we have made some significant changes to our business, guided by drivers every step of the way. These include giving even more control over how they earn and providing new protections like free insurance in case of sickness or injury.

“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.”

Uber noted that being a worker “is a legal classification that’s specific to the UK” and that the ruling did not find the claimants to be employees” – and that the judgement “does not relate to couriers who earn on Uber Eats”.

Originally published here.

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