Uber to overhaul London business model
Uber’s way of working is not only under pressure in Brussels. Less than two weeks after the Brussels Court of Appeal ruled that drivers can no longer work with the Uber app in the capital, a British court ruled against the American taxi service.
In London, a high court ruled against Uber on Monday, saying the vehicle platforms operating in the British capital are not mere “agents” for drivers but have a direct contractual relationship with customers.
The ruling, which affects all taxi operators operating in the UK capital, follows a landmark UK Supreme Court decision in February that forced Uber to give its drivers in the UK the hybrid status of an employee.
Transport service, no agent
Uber has always claimed it merely plays a facilitating role, and a contract binds only the customer and driver. Therefore, Uber can also pass on its responsibility if something goes wrong during a ride.
But the British judge saw no factual basis for this and ruled that Uber is an ordinary transport service and that it could not be viewed simply as an agent for drivers. It violates transport and employment law administered by Transport for London, the local government body responsible for most of the transport network in London.
The ruling comes after Uber sought clarification about an earlier ruling by the British High Court. It all started in October 2016, when former Uber drivers James Farrar and Yaseen Aslam took Uber to an employment tribunal, arguing they worked for Uber. Uber said its drivers were self-employed and it, therefore, was not responsible for paying any minimum wage or holiday pay.
The two won the case, but the company took the topic to the Court of Appeal, which upheld the ruling in December 2018.
The decision could impact the price of journeys in the British capital. According to Uber, the platforms of vehicles with drivers will have to integrate VAT into their rates, which could add up to 20% more to the cost of a trip.
In November, Uber already increased its rates by 10% in London to lure drivers back onto its platform. The taxi platform, which lost its taxi license in London last year because of repeated default, says it is currently analyzing the ruling but assures it will respect it.
Unions hailed the judgment to give drivers and passengers more protection by underscoring previous legal rulings that drivers are workers with rights and make firms responsible once bookings are accepted.
The whole London minicab industry affected
“Every operator (…) will be affected by this decision,” Uber said in a statement sent to the French press agency AFP, judging that if “Uber’s drivers are guaranteed a minimum wage, paid holidays and a pension scheme, its competitors will now have to “also ensure that drivers are treated fairly”.
After the change in status for its drivers, Uber announced an agreement in May with the British union GMB to represent its 70 000 drivers in the UK. Then in September, the company launched a pension scheme to which it will contribute 3% of driver’s earnings and invited rival platforms, such as Bolt, to participate.
On Wednesday, the European Commission will also present its proposal to improve working conditions in the so-called gig economy, De Standaard points out. According to a first version of the proposal, which the newspaper was able to look at, the Commission wants to put the millions of handypersons on payroll to have more social protection.
The platforms are already warning for massive job losses if the Commission pushes through its plans.