Uber and the Supreme Court - The knock-on effects

February 19th was the date the Supreme Court issued their landmark ruling stating that Uber drivers are workers and not self-employed contractors. Finally delivered after a 6-year battle, the court's decision was the latest blow to Uber, following similar court battles in France, Spain and the Netherlands.  

Watched closely by workers and employers alike, this decision has significant implications for the wider ‘gig-economy’. We breakdown what we think the biggest effects of this ruling will be for the sector.  

Being classed as workers  

There are three types of classification under UK employment law: Employees, who have the most rights; Workers, who enjoy some protections such as holiday pay and a minimum wage; and finally, the Self-Employed who have little to no protection under employment law.  

Up until last month, Uber drivers were classed as self-employed ‘partners’. This meant that drivers could not benefit from holiday pay and often worked long hours equating to less than minimum wage. This re-classification as workers means this is no longer the case, resulting in a much higher bill for Uber.  

While this doesn’t automatically mean all those involved in the gig economy are now workers, it provides a basis for further cases to be raised. Now there is a legal precedent, it also seems likely old cases against other gig economy employers, like Deliveroo will be reignited.  

Self-Employment Income Support Scheme (SEISS) Payments  

Considering their prior status as self-employed, many Uber drivers have applied for and benefited from this scheme. Similarly, to the furlough scheme, this initiative provides self-employed workers with a percentage of what their business would have made in an equivalent period.  

However, their change from self-employed to worker status cause alarm bells for some drivers. Considering the financial landscape for the industry, they feared they would suddenly have to pay back these grants.  

Fortunately, HMRC has issued a clarification on this. As long as the individual was eligible for the SEISS grants at the time then they will not be expected to pay any money back. The eligibility criteria for the next round of SEISS grant payments are yet to be announced, so it remains to be seen whether these drivers will still have access to the scheme going forwards.  

Tighter regulations of the labour market  

Digital technologies have been the foundation for companies like Uber and Deliveroo. But rapid digitisation of our economy has caused a significant rift in our legal systems ability to react. The legal ambiguity highlighted by this case has allowed these organisations to exploit workers on a never-before-seen scale.  

Having a resolution to this case is an important first step in combating these ambiguous employment practices. However, it took 6 years to close the case, demonstrating that UK employment law isn’t agile enough to deal with a rapidly changing sector. But Brexit could have the answer.  

Before leaving the EU, Uber would have had the ability to raise the appeal beyond the UK Supreme Court to the European Court of Justice. Potentially adding several more years onto the case. Brexit means the UK Supreme Court's decision is final.  

With this benchmark, legislators have a chance to begin the process of adapting UK law to the 21st Century. Over the next few years, we should start to see further classifications and protections being rolled out to help regulate the labour market.  

Raise prices or lose control?  

As one Guardian columnist so deftly explains, Uber are ‘pathologically unprofitable’. The last quarter of 2019, saw them lose $5.24 billion and this trend of losses continued throughout the 2020 pandemic. Rising costs could spell disaster for the platform.  

The Supreme Court’s decision to class Uber drivers as workers ultimately mean a much bigger wage bill. Holiday pay and minimum wage requirements certainly add up in the long run, but Uber could owe compensation as well. Legal representatives from the GMB Union suggest that thousands of drivers are also owed £12,000 in compensation based on the existing arrangement.  

Increased costs for Uber could lead to two possible outcomes. Raising prices or reducing control over driver-passenger relationships.  

Raising prices would allow Uber to continue operating in essentially the same manner with an adjustment to the relationship with their drivers. However, it would put them on equal footing with traditional taxi and private hire operators, making the market fairer.  

The other option would be to reduce the control that Uber has over its driver and the driver-passenger relationship. By giving drivers more freedom to control their prices, location and hours there is the possibility that the drivers could then be reclassified as self-employed contractors once again.  

The implications of this ruling are widespread and constantly evolving. To keep up to date with our coverage, make sure to sign up for our mailing list and socials!  

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