Uber is bracing for a long summer of legal battles that could see the end of its reign in London and entitle its drivers to a long list of workers’ rights.
Dispute over workers’ rights cut to the heart of Uber’s business model that classifies drivers as self-employed.
A dispute over whether its drivers should continue to be classified as self-employed begins Tuesday at the UK’s Supreme Court. In a second legal clash scheduled for September, Uber will appeal the loss of its operating license in the capital, its biggest European market.
The cases come at a time when the coronavirus pandemic has already reduced demand, and caused Uber to cut about a quarter of its workforce. It reported a first-ever decline in the gross bookings of rides last quarter and said business was down 80% in April. While the employment case could force it to reimburse drivers for unpaid holiday pay, the challenge to its license could push it out of London.
“It’s the end of the road for Uber as we know it if they lose,” lawyer Jolyon Maugham, who’s taken the company to court over its tax repayments, said about the employment case.
Uber argues that it is a middleman between its self-employed drivers and passengers, but is fighting similar cases elsewhere, including its home state of California. Two issues lie at the heart of the U.K. case, the first whether drivers are employed by Uber and the second, if they are workers, at what times they are working for Uber.
Three lower U.K. courts have found that Uber’s drivers are “workers,” meaning they’re entitled to benefits including minimum wage and holiday pay. They also found drivers were regarded as working for Uber whenever they had the Uber App switched on, in the area in which they were permitted to drive, and were “able and willing” to drive trips.
The rulings lead to the “absurd result” that drivers could switch on their Uber App and other driving apps, including competitors to Uber, and claim the national minimum wage from each of the app operators during the same period of time, Uber’s lawyer Dinah Rose said Tuesday in documents prepared for court.
If drivers are deemed workers, contrary to Uber’s case, they could only be working while actually driving passengers on confirmed trips, she said.
Chief Executive Officer Dara Khosrowshahi said in 2018 that the lawsuit covers a matter that’s “at the core of the service.” A loss may turn the company’s business in the U.K.’s burgeoning gig economy upside down, and also mean it has to pay value added tax to its fares.
“That will put their fares up and that’s pretty damaging for a business that competes on price,” Maugham said.
While Uber has introduced measures for drivers, including insurance and 14 days of sick pay for anyone with Covid-19 symptoms, Tuesday’s appeal will rest on facts from four years ago, when the case was brought.
“The vast majority of drivers want to work independently, and in recent years we’ve made significant changes to our app to offer more benefits with total flexibility,” Jamie Heywood, Uber’s regional general manager for northern and eastern Europe, said in a statement.
Uber has had setbacks in other European capitals, including France, where a criminal court fined the company and two executives a total of 850,000 euros ($972,000) in 2016. On Monday in Amsterdam, a group of British drivers filed a complaint that Uber violated its obligations under European data protection rules by not giving them access to their own data nor to the information used by the company’s app to make decisions.
A loss at the U.K. Supreme Court would send the case back to the Employment Tribunal in London, which could force Uber to pay a substantial bill to drivers. Lawyers for GMB, the labor union bringing the lawsuit, say tens of thousands of Uber drivers could be entitled to an average of 12,000 pounds ($15,200) each.
“Uber persists in using the legal system to avoid its responsibilities to our members,” Susan Harris, GMB legal director, said by email.
The case springs from a 2016 ruling by the tribunal, and Uber’s appeal is coming up against a difficult legal precedent.
Top U.K. judges ruled in 2018 that London-based Pimlico Plumbers Ltd. should have treated one of its tradesmen as a “worker,” giving him the right to vacation pay and to sue the company. That same year, taxi service Addison Lee Ltd. lost an appeal over whether drivers were independent contractors or employees with rights to benefits. A ruling on Uber’s case will likely come toward the end of this year.
The case over Uber’s license returns to court in September for the second time in two years. Transport for London stripped the company of its permission to operate in November on grounds that it failed to adequately verify drivers’ identities and safeguard the service for passengers.
In 2018, a London magistrates court granted a 15-month license with conditions. The license was far less than its previous five-year permit and shorter than the 18-month approval it requested at the hearing.
TfL said in an emailed statement that it will now be for a magistrate to determine if Uber is fit and proper.
Uber would be able to appeal a loss, a process that could take years while it continues operating. This time, Uber will have to prove to the same magistrate that it’s not a repeat offender, after she criticized the “gung-ho attitude” of the previous management team at the 2018 appeal.