LONDON – Uber drivers in Britain are entitled to benefits such as paid holidays and minimum wage, the country's top court ruled Friday, in a decision that threatens the company's business model and holds broad implications for the gig economy.
The ruling that the drivers should be classed as “workers” and not self-employed is a big defeat for the ride-hailing giant. And it could inspire similar legal action against other companies who rely on gig workers as well as influence courts in other countries grappling with the issue, experts said.
The seven Supreme Court judges who heard the case unanimously rejected Uber's appeal against an employment tribunal ruling that two Uber drivers were “workers” under British law.
Yaseen Aslam and James Farrar, the two drivers, cheered the outcome.
“This ruling will fundamentally re-order the gig economy and bring an end to rife exploitation of workers by means of algorithmic and contract trickery,” Farrar said by email.
Uber and other app-based ride-hailing services avoided a similar attempt in California to classify drivers as employees eligible for benefits and job protections.
The companies bankrolled Proposition 22, a ballot measure exempting them from the state's gig-economy laws by keeping drivers classified as independent contractors able to set their own hours. Voters approved it in November.
San Francisco-based Uber, which has 65,000 active drivers and 5 million regular users in the U.K., had argued in Britain that Aslam and Farrar were independent contractors.
The company said it respected the court's decision, which it argued focused on a small number of drivers who used the Uber app in 2016.
The British judges on Friday cited a number of factors in their decision: Uber sets fares and contract terms, and penalizes drivers who reject or cancel rides.
It also uses passenger ratings to control drivers and minimizes communications between drivers and passengers, which results in the service being “very tightly defined and controlled by Uber.”