Uber Technologies Inc should no longer treat its drivers as self-employed, a British tribunal ruled on Friday, in a decision which threatens the taxi app’s business model by forcing it to pay the minimum wage and offer holiday entitlement.
Two drivers brought their case to a British employment tribunal in July, arguing the rapidly expanding app, which allows users to book and pay for a taxi by smartphone, was acting unlawfully by not providing certain employment rights.
Uber said it plans to appeal the decision which could also affect thousands of others who work for firms, including meal delivery services such as Deliveroo, in the so-called “gig economy,” where individuals work for multiple employers day-to-day without having a fixed contract.
“This is a monumental victory that will have a hugely positive impact on drivers ... and for thousands more in other industries where bogus self-employment is rife,” said Maria Ludkin, legal director at the GMB union which brought the case.
British judges ruled that Uber should pay the drivers the minimum wage, which is ￡7.20 (US$8.78) for workers at least 21 years old, adding that working hours began from the moment most drivers logged into the app rather than just per ride.
“The Uber driver’s working time starts as soon as he is within his territory, has the App switched on and is ready and willing to accept trips and ends as soon as one or more of those conditions ceases to apply,” they said in their verdict.
Uber might also have to pay pension contributions.
Lawyers representing the drivers said that there would now be a further hearing to calculate the holiday and pay that the drivers are entitled to receive.
The issue of low pay and a lack of job security has sparked a public outcry in Britain in recent years with firms such as sports retailer Sports Direct facing a backlash over their use of zero-hour contracts.
In April, Uber agreed to pay up to US$100 million to settle a class-action lawsuit in the US which allowed the ride-hailing service to keep its California and Massachusetts drivers as independent contractors.
In Britain, the San Francisco-based firm had argued that its more than 40,000 drivers enjoy the flexibility of being able to work when they choose and receive on average much more than the minimum wage.
“While the decision of this preliminary hearing only affects two people we will be appealing it,” Uber’s general manager for the UK and Ireland Joanna Bertram said.
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