Uber, which has over 30,000 drivers in the UK, workers that have been characterized by the company as ‘independent contractors’ or ‘self-employed’, has received what may turn out to be a devastating blow to the on-demand economics underlying the company’s multi-billion valuation. Since these independent workers are not considered employees, the company sidesteps requirements for minimum wages, insurance, vacation and sick leave, and other benefits.
The BBC reports:
Drivers and campaigners hail Uber employment ruling via BBC News
Bosses of the mobile app company, which lets customers order taxis over their smartphones, said their status did not entitle them to the benefits of employees and is to appeal against the decision of the tribunal.
But the drivers said they were being treated unlawfully.
The Central London Employment Tribunal ruled in the drivers favour, with the GMB union saying that outcome of the case could have “major” implications for other staff at the firm.
This summer, two Uber drivers took the company to an employment tribunal with the help of the GMB Union.
James Farrar and Yaseen Aslam argued that they were “employed” by Uber, which under employment law would entitle them to certain rights, including sick and holiday pay.
But the company insists it was simply a technology platform that links supply with demand — in this case the supply of self-employed drivers with demand for cabs.
After deliberating over the case, the employment tribunal in London ruled in favour of the drivers, agreeing they should be treated as employees and entitled to all the workers’ rights that go with it.
A further 17 claims have been brought against Uber, according to law firm Leigh Day, which are likely to be decided on this ruling.
Uber is to appeal against the decision.
And of course, if this leads to judicial policy then other on-demand services — not just on-demand car services — may be subject to similar interpretations and regulation.
The bottom might be starting to fall out of the on-demand economy, where entrepreneurs seek to make billions by socializing the externalities of their business models — namely, benefits for the workers — onto the workers and public, since the workers gain few or no benefits from the companies, and the national and regional governments are left to act as the safety net.
Originally published at www.stoweboyd.com.