UK Supreme Court says Uber drivers are not independent contractors

The UK Supreme Court has ruled that Uber drivers are legally workers and not independent contractors, as Uber has argued in courts around the world. The ruling means drivers in Britain and Northern Ireland are entitled to additional benefits and protections, including a minimum wage.

Uber says it simply acts as a technology provider and broker between independent drivers and their customers, just as eBay facilitates sales between buyers and sellers. In Uber’s view, this means that it does not owe its drivers benefits such as unemployment insurance, does not need to reimburse its costs to the drivers and is not bound by minimum wage and overtime rules. Uber emphasizes that its drivers are free to decide when, where and how much they work.

But critics point out that Uber has much more control over its drivers – and over the driver-passenger relationship – than a conventional platform like eBay or Airbnb. Uber sets the rates, collects payments from customers, deducts its own charges, and remits the rest to the driver. It forces drivers to accept a large majority of the trips offered to them. It handles customer complaints and kicks drivers off the platform if their average score is too low.

“A position of subordination and dependence”

So the UK Supreme Court ruled on Friday that Uber drivers are legally Uber workers, not self-employed business owners who get the bulk of their business from Uber.

“Drivers are in a position of subordination and dependence on Uber, so they have little or no ability to improve their economic position through professional or entrepreneurial skills,” Lord George said Leggatt, one of the justices of the Supreme Court, as he rendered the decision.

One consequence is that Uber drivers must be paid at least minimum wage. Most importantly, the High Court ruled that drivers should be paid not only for the time they drive, but also for the time they are logged into the app while waiting for another rate.

This could have important implications for Uber’s relationship with drivers. While drivers are likely to appreciate a guaranteed minimum income, it could also mean that Uber will restrict when drivers are allowed to work, as having too many drivers online during times of low demand could cost Uber more than it does. ‘it doesn’t win in tariffs.

According to the Financial Times, the move means Uber must set up a retirement program for its drivers. Thousands of drivers could be eligible for a wage arrears lawsuit as a result of the ruling.

A global battle

In recent years, Uber has battled for the same problem in jurisdictions around the world. California passed legislation in 2019 requiring Uber (and Lyft) to treat its drivers like employees. Uber and Lyft fought the law in court next year, delaying its implementation until voters overturned it in a November 2020 vote.

According to the Financial Times, UK law has three legal categories: employees, workers and independent contractors. UK workers have more rights than independent contractors, but not as many as employees. Labor law in the United States generally consists of only two categories: employees and independent contractors.

Last year, France’s highest court ruled that Uber drivers should be treated like employees. Spanish courts reached a similar conclusion in September. Uber is facing a class action lawsuit in Canada over the same issue.

Uber is also facing litigation in Massachusetts over the legal status of its drivers.

Of course, Uber can ultimately overturn some of these rulings in national courts or legislatures, or by referendum. But it seems unlikely that Uber will win in all of these fights. Which means that unless Uber wants to give up large swathes of hard-won territory, it will have to figure out how to make its business model work while treating drivers like employees.

This could mean higher prices for consumers and less flexibility for drivers. But advocates say drivers will ultimately enjoy the same legal protections as most other workers.