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UK ruling on worker perception threatens to disrupt Uber model

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Six years after a group of British minority drivers took Uber to the employment tribunal and demanded recognition as a worker, the UK Supreme Court ruled in one of the largest markets threatening to break the app’s business model.

A Friday’s Supreme Court ruling, reaching the end of the court road, could turn Uber’s biggest asset, the countless drivers waiting for passengers, at a huge cost.

The ruling that the 35 Uber drivers who filed the case must be recognized as workers and qualify for vacation pay, minimum wages, sick leave and pensions opens the way for 60,000 Uber’s British drivers to sue and overturn others. can. Companies that rely on gig economy labor.

“The ramifications of this decision will go far,” said Mary Walker, partner at law firm Gordons. She added that historical claims of unpaid minimum wages and holiday allowances will lead many performing economy companies to “review practices and associated risks in an emergency.”

Leigh Day, one of the law firms involved in the case, said he thought drivers deserved compensation of up to £12,000 each.

[The UK decision] It can set a precedent for other workers and companies in gig economies across the UK and Europe, which can hit the entire ecosystem.

The results for Uber were so important that someone close to the company suggested last year that they could repeat their tactics in California, where they forced a referendum to amend the state’s new labor laws to their advantage. In the UK, the government could push for new legislation to redefine the status and rights of workers.

On Friday, Uber declined to comment on how it should change its business model in light of the ruling, and the company’s stock has barely sprung up in trading after the news.

However, lawyers have suggested that a lot of changes may be required, especially after the Supreme Court ruled that the driver works at Uber for the entire duration of being logged into the app, as well as during the trip.

The distinction is important. According to a study from the University of California, Berkeley, every 25 hours of driving, drivers can log in for 40 hours.

Rhona Darbyshire, partner at law firm Cripps Pemberton Greenish, said Uber may need to switch to a shift-based model and pay the driver an hourly rate instead of receiving commissions as it is now. “This is a significant change to the current operating model and it will not be attractive to both sides,” she said.

Stephen Morrall, partner at Hunters Law, added that the customer is likely to incur additional costs. New York City’s Minimum Wage Act, which went into effect in 2019, has increased Uber prices for city travelers.

James Farrar, one of the former drivers who filed the case, also said one question the ruling did not address was how to deal with the “multi-app” practice of drivers logging into more than one app at a time.

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This had nothing to do with 2016 when Uber dominated the ride-sharing market, but it is now much more common. Farrar suggested that if drivers had to limit themselves to a single app, they could eventually re-establish Uber’s dominance.

Britain’s decision came to Uber, and the gig economy is under pressure across Europe. Earlier this month, Uber urged EU politicians to enact “clear and progressive legislation” to clarify workers’ rights within the block.

Next week, the European Commission plans to work with representatives of gig economy workers and employers to draft new legislation for the sector by the end of the year.

Meanwhile, the company saw a series of legal decisions. Last year, a Parisian court ruled that former Uber drivers should be given employee status rather than being treated as self-employed.

In the Netherlands, Uber drivers in Portugal and the UK are challenged by the Uber algorithm for false accusations of “fraud”.

Wedbush analysts said the UK’s decision could “set a precedent for other workers and companies in the gig economy across the UK and Europe, which will be a major blow to the entire ecosystem.”

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Other companies are already looking to change the employment status of drivers. Last December, Just Eat Takeaway announced plans to work through the Randstad agency, but will provide benefits for over 1,000 UK workers, including hourly wages and sick leave.

In a letter published this week in the Financial Times, Jitse Groen, CEO of Just Eat Takeaway, said, “The performance economy costs society and the workers themselves.”

Among those facing similar problems to Uber is Deliveroo, a food delivery company, which has not commented on whether it was affected by the ruling.

Despite winning three court proceedings in the UK for Rider’s self-employed status, this week the Amsterdam Appeals Court faced backlash in Europe as it ruled that Rider was an employee.

This ruling could also affect drivers working at Amazon under the “Flex” Geek Walker program where drivers use their vehicles to work hourly. The company did not respond to requests for comment.

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Law firm Stewart’s hiring partner Charlie Thompson said the Uber case was symbolically important, but that other companies are likely to challenge similar claims by pointing out that they have less control over their employees or they can exchange work with others. . .

He added that the decision did not provide the company with a guaranteed amount of labor, the right to get sick leave, and not be fired, without justifiable reasons and following fair procedures. Geek economy businesses can still “hire and fire” whatever they choose, he said.

A spokesman for ride-sharing company Free Now said that most drivers enjoy the flexibility of self-employment and are always looking for ways to improve service for their drivers. “We have always given our drivers more freedom than our competitors,” they said. Vehicle-sharing companies Ola and Bolt did not respond to requests for comment.

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