What the UK Supreme Court Ruling on Uber Could Mean for the Gig Economy

Sarthak Mishra

Samridhi Poddar

The UK Supreme Court unanimously ruled on February 19, 2021, that drivers for ride-hailing service giant Uber Technologies Inc. are to be counted as “workers” under employment law instead of self-employed.

Uber said it was only an intermediary booking agency, promoting the autonomy of the drivers; nevertheless, drivers have enough subordination to be considered workers. Uber drivers’ hours of service were confirmed to have begun when they logged into the Uber app and were able to receive ride orders, and they would be charged for hours working regardless of demand. They now have worker rights such as holiday pay, rest breaks, the universal minimum wage, and protection from discrimination.

People who work with “gig economy” firms are often required to sign increasingly complex contracts that make them seem as though they are independent contractors rather than workers. The firms will use these contracts to argue their case in court if the matter goes to court. This contracts are critical to the “gig economy’s” operation because they are the primary means by which businesses want to hide the fact that they are hiring workers and directing them how to do their jobs while refusing to provide them with basic workplace rights and protections.

In the United Kingdom, there are three types of working relationships: employees, who have the most protections and privileges under employment law, self-employed individuals, who have no legal security, and “workers,” a mixed group with few rights. The tests for worker, employment, or self-employment status are multifaceted and are usually applied regardless of the parties’ labelling of the partnership. 

The Supreme Court made a decision regarding the employment status on the basis of five factors: (1) When delivering services, Uber has control of how much drivers are paid because Uber sets fare prices; (2) drivers have no autonomy in terms of the contract or terms of service; (3) drivers are subject to Uber’s control, according to a passenger rating system, which may result in a driver’s service being discontinued; (4) drivers are subject to penalties if they decline a ride.

Another major argument raised by the Supreme Court was that the terms of the parties’ arrangement could not be used to determine wages or employment status. The arrangement between Uber and its drivers in this case did more than merely define the relationship as one of self-employment. It represented Uber’s activities, including its driver app, in terms that promoted a self-employment determination. The English courts, including the Supreme Court, have repeatedly found that the truth of how the partnership and the driver app worked was somewhat different from how it was portrayed in the contract and was not compatible with self-employment in this case.

This Supreme Court decision will have severe repercussions for the flow of disruptive innovation. This is not the first time a government body in a jurisdiction has taken such a stance; a French court did so only last year. However, the recent decision suggests that other countries faced with related concerns about the interests of app-using service-providers, such as Germany, Italy, Spain, and the United States, will follow suit and rule in favour of the position that “drivers are workers.” In such a case, it is doubtful that Proposition 22 —the California referendum that permitted Uber and Lyft to circumvent legislation that would have listed drivers as their employees—would have any impact on policymakers.

Even though Uber appears to be a technology platform, the judges in the UK Supreme Court ruled that it acts as an employer by settling prices, assigning fares, and disciplining drivers via a rating model. Compare this to the flexibility that drivers have when it comes to rejecting trips, flipping between rival applications, deleting an app at any time, and so on. Although Uber has increased driver protections—in 2018, it announced that EU drivers would get medical benefits and sick leave, and that British drivers would not be charged for cancelling rides and will now be shown the fare and destination for each ride—it has been under pressure to classify drivers as employees, which would mean more onerous demands on drivers’ social security, insurance, and clerical work.  Furthermore, such a classification can imply that drivers must be paid a minimum hourly wage.

Uber recently circulated a report for European policymakers that discussed shared qualifying incentives to guarantee higher wages while keeping drivers’ status as independent contractors. Employers in India are now paying the bill for a social security net for platform/gig jobs, according to new guidelines. Requiring platforms to treat them as employees on par with long established conventional services, on the other hand, would raise prices, potentially rendering their business model unsustainable. If those platforms fail, customers and service providers that depend on them would suffer. Such platforms have created significant economic benefit in terms of new job openings and increased efficiency due to time saved. Users’ cost reductions have also led to an increase in demand for the services; for example, in India, Uber and Ola have cultivated ride-sharing as a service (Uber Pool and Ola Share), providing benefit to both drivers and riders, as well as the climate through reduced traffic emissions. Airbnb has reduced the cost of accommodation by providing buyers with home-stay options and assisting homeowners in maximising the value of their unused room. Imposing the same regulations on Airbnb as they do on hotels will only increase the latter’s prices. Setting base fares and minimum wage regulations, on the other hand, would boost the cost of commuting by taxi, reducing demand. Although policymakers around the world should strive to ensure that such businesses deliver more value and quality to customers and service providers who use their platforms, restricting them to the old economy’s workplace liabilities would suffocate competition that depends on modulated regulation. 

Sarthak Mishra is a law student at Symbiosis Law School, Pune.

Samridhi Poddar is a law graduate from Government Law College, Mumbai.

Photo by Justin Sullivan

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