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Technology Stocks : Peer-to-Peer, Gig and On-Demand Economies

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From: Glenn Petersen2/19/2021 7:46:24 AM
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A big blow for gig companies in the UK,:

Uber dealt a major blow in the UK as top court rules its drivers are workers

PUBLISHED FRI, FEB 19 20214:54 AM EST
UPDATED FRI, FEB 19 20216:40 AM EST
Ryan Browne @RYAN_BROWNE_
CNBC.com

KEY POINTS

-- The U.K.’s Supreme Court upheld a ruling that Uber’s drivers should be classified as workers rather than independent contractors.

-- Uber insists its drivers are self-employed and that it acts as more of an “agency” which connects them with passengers through an app.

-- The ruling potentially jeopardizes Uber’s business model in the U.K. and has major implications for the country’s gig economy.

LONDON — Uber lost a crucial legal fight in the U.K. on Friday as the country’s Supreme Court upheld a ruling that its drivers are workers, not independent contractors.

The Supreme Court voted unanimously to dismiss Uber’s appeal against the ruling. The decision could have huge implications for Uber’s U.K. business, as well as the wider gig economy.

Friday’s verdict concludes an almost five-year legal battle between Uber and a group of former drivers who claim they were workers entitled to employment rights like a minimum wage, holiday pay and rest breaks.

In 2016, an employment tribunal ruled in favor of the drivers, led by Yaseen Aslam and James Farrar, who claimed they were workers employed by Uber and therefore entitled to certain labor protections.

Uber insists its drivers are self-employed and that it acts as more of an “agency” which connects them with passengers through an app. Uber wants to keep the legal classification of its drivers as independent contractors unchanged, arguing drivers prefer this “gig” model as it’s more flexible — it also benefits Uber from a cost perspective.

“We respect the Court’s decision which focused on a small number of drivers who used the Uber app in 2016,” Jamie Heywood, Uber’s regional general manager for Northern and Eastern Europe, said in a statement Friday.

“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.”

Heywood added: “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.”

The U.K. case echoes Uber’s legal fight with Californian regulators, who last year attempted to reclassify drivers of Uber and other ride-hailing services like Lyft as employees to grant them more employment protections.

But voters supported a ballot measure called Proposition 22, which exempted Uber and other gig economy platforms from reclassifying drivers as employees.

What happens next?

The Supreme Court ruling potentially jeopardizes Uber’s business model in the U.K. Though it only concerns drivers involved in the 2016 case, in theory it is applicable to other drivers using Uber’s app.

The company will now have to go back to the employment tribunal to determine compensation for the group of drivers. But it could face further claims from thousands of other drivers in the country.

It also has major implications for Britain’s gig economy, which is thought to have a workforce of around 5.5 million people. Other companies operating a similar model to Uber’s include Bolt, Ola and Deliveroo.

“This verdict will undoubtedly have far and wide-reaching implications for all gig economy operators and will make it harder for companies engaging people via digital platforms to assert that they are self-employed, despite contractual documentation which may state otherwise,” said Helen Crossland, partner at U.K. law firm Seddons.

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