‘Uber Drivers are Workers’: What does this mean for the Gig Economy?

  

Image by Jackson David from Pixabay

On the 19th of February 2021, six Lord Justices of the Supreme Court ruled that UK Uber drivers were not self-employed and should be classified as ‘workers’. With the Supreme Court unanimously dismissing Uber’s claim that they acted as an intermediary party, and that drivers were working whenever logged in to the app not just when carrying passengers, it is clear that this ruling could have seismic impacts not only for Uber, but for gig economy as a whole.

Where did this all begin?

The case was first brought against Uber at a London-based employment tribunal in 2016, where the tribunal ruled in favour of the claimants and found that the drivers were in fact ‘workers’. At the time, this was declared a “monumental victory” by the GMB trade union who saw this is as the beginning of a fairer future for Uber drivers. However, Uber rejected this ruling and appealed it to the Employment Appeal Tribunal in 2017 and then to the High Court in 2018 – in both cases the verdict was upheld.

The case was appealed three times in total and ended up being reviewed for the final time by the Supreme Court. The Supreme Court is the ‘highest court in the land’ and thus has the final say on any legal matters within the United Kingdom. 

Today, the Supreme Court upheld the verdict initially given in the employment tribunal, with Lord Leggat declaring that “the employment tribunal was entitled to find the claimant drivers were ‘workers’.”

What does this ruling actually mean?

The classification of ‘worker’ legally requires that the company provide basic employment rights to their drivers including, a minimum wage, holiday pay, and rest breaks. 

Frances O’Grady, the General Secretary of the Trade Union Congress (TUC) has said that “No company is above the law. Uber must play by the rules and stop denying its drivers basic rights at work. “

A law firm enlisted by the GMB union to represent Uber drivers has also said Uber may be liable to pay compensation for lost pay. Leigh Day, the law firm representing more than 2,000 workers with stakes in this claim, estimates they could be able to claim up to £12,000. As is the nature of the gig economy, drivers only get paid whilst they are delivering a passenger and thus spend a lot of time not getting paid whilst waiting for a call. Under this new ruling, they may be able to claim compensation for this lost time. 

One of the most powerful parts of this verdict is that the Supreme Court has ruled that Uber drivers are also considered to be working whenever logged into the app which entirely undermines the logic that the gig economy operates on. It is clear therefore that this really could be the beginning of a new chapter for gig economy workers. 

Sorry, what exactly is the gig economy?

A quick Google search will define the gig economy as a ‘labour market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.’ Also known as the sharing economy, the gig economy is defined by the Office for National Statistics as an activity that is “facilitated by digital platforms which enable people or businesses to share property, resources, time and skills.” 

The gig economy is often criticised as profiting of workers who have no job security and work without the core protections of ‘employees’ as they are considered to be self-employed. Companies often package this as being ‘partners’ or your ‘own boss’, whilst others claim it holds a greater resemblance to visceral exploitation than it does to partnership.

For gig economy workers, pay no longer reflects how many hours they work but how productive they can work in a given time. For example, an Uber driver’s hourly rate is determined by how many passengers they drive within an hour. This means that there is no wage guarantee for these workers. An undeterminable income is not the only risk that gig economy workers are expected to take on, however. Workers that become ill or injured can also find themselves out of pocket. 

The gig economy embodies free-market principles and encourages workers to compete against each other for work. Some gig economy companies such as Deliveroo have ‘supplier’ agreements’ that can be terminated if a rider falls below a particular standard. Having a ready supply of workers ready to take the place of workers who fall below the standard allows gig economy companies to be constantly pressuring their workers to work harder. This reinforces the neoliberal that the free market will produce the higher quality service at the lowest possible price. 

Gig economy companies, by constituting workers as ‘contractors’, are able to circumvent workers’ rights and employee protections that neoliberals see as improper incursions into the inherent logicality of the market.

The main points that have until now have defined the gig economy are: zero-hour contracts which are entirely undeterminable, no minimum wage, and no access to basic employment rights. Some may therefore say that the gig economy is better called the ‘rigged economy’ with companies profiting at expense of their supposed ‘partners’.

How have Uber responded to the ruling?

Uber’s Regional General Manager for Northern and Eastern Europe (Jamie Heywood) has responded to the ruling stating that they “respect” the decision, however, appear to believe that this only applies to the “small number of drivers who used the Uber app in 2016” (those directly involved in the claim).

It is clear that Uber does not want to classify their entire workforce as ‘workers’ as they have stated in the past that this act would “incur significant additional expenses”. Doing so, Uber argues, would necessitate a fundamental change in its business model that would negatively affect its financial situation.

Despite Uber’s response, unions are arguing that worker status will become available to the 60,000 drivers operating in Britain – and some people are even going as far as to suggest it may not stop at Uber.

How could this affect other companies operating in the space?

James Farrar, the co-lead claimant and general secretary of the App Drivers and Couriers union claims that “This ruling will fundamentally reorder the gig economy and bring an end to rife exploitation of workers by means of algorithmic and contract trickery.”

It is likely that the ruling made by the Supreme Court will establish a powerful precedent for other companies offering on a similar business model – such as Uber’s competitor, Addison Lee. The adoption of Uber’s business model by start-up companies has been so popular that some began calling the phenomenon ‘Uber for X’.

However, the principles considered in this case could apply to a wider section of the gig economy.

The court considered 4 core elements in their judgement were:

  1. Uber set the fare which meant that they dictated how much drivers could earn
  2. Uber set the contract terms and drivers had no say in them
  3. Request for rides is constrained by Uber who can penalise drivers if they reject too many rides
  4. Uber monitors a driver’s service through the star rating and has the capacity to terminate the relationship if after repeated warnings this does not improve

Looking at these and other factors, the court determined that drivers were in a position of subordination to Uber where the only way they could increase their earnings would be to work longer hours.

As we have seen from our brief exploration of the gig economy, these principles are fundamental to the gig economy and apply to a large proportion of companies operating in this space. Companies such as Deliveroo that have been the target of much criticism in the past may be the next to fall victim to this movement towards justice for gig economy workers. Therefore, it may be the case that James Farrar is right: this ruling really could have seismic implications for workers and for the structure and fundamental nature of the gig economy.

As the verdict announced today sinks in, gig economy giants may have to begin re-evaluating their model whilst workers may begin to launch claims against these companies, just as was done with Uber.  

The Future of the Gig Economy

What does this mean, however? Will it be the beginning of the end or simply the start of limited reform? Will Uber and companies alike challenge the classification and its entitlement, or will they be forced to adopt it begrudgingly? Only time will tell. 

But it is clear that whatever happens moving forward, the verdict announced today will shake up the conversation surrounding the gig economy and, as we have seen, truly holds the power to mark the beginning of real change and a brighter and fairer future for workers operating in this space.