It's the beginning of the end of the 'Uberisation' of work

Last week the UK Supreme Court finally agreed that Uber drivers are workers, rather than self-employed independent contractors.

By Jeremias Adams-Prassl & Abi Adams-Prassl , written on March 4, 2021

From The Gig Economy Desk

Founded as an upmarket limousine service in California just over a decade ago, Uber today provides cheap taxi rides in thousands of cities across the world. The company has consistently maintained that it is merely a ridesharing platform – which, crucially, means that it does not employ its drivers. 

The freedom to choose when and where to work, Uber argues, trumps old-fashioned rights designed for an era of 9-5 jobs. It has gone to great lengths to avoid employment law: indeed, its contractual terms designate drivers as the app’s ‘customers’, to be introduced to potential passengers.

In the UK, a case brought by a group of test claimants led by two London Uber drivers,  Yaseen Aslam and James Farrar set out to challenge these assertions. Uber’s use of sophisticated algorithms to exercise tight control over driver and customer experience, they argued, was at odds with contractual arrangements designating them as independent contractors. Courts at all instances agreed. Detailed documentation drafted by ‘armies of lawyers’ , the London Central Employment Tribunal found, was replete with ‘fictions, twisted language, and even brand new terminology’ - yet still it could not distract from the fact that the platform was the drivers’ boss. Uber’s set-up, from punishing drivers who reject ride requests to withholding passenger details at all points, was a far cry from the promise of entrepreneurship.

‘The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common “platform” is to our minds faintly ridiculous’, a UK Employment Tribunal found in October 2016. More than four years later, the Supreme Court agreed last week: Uber drivers are workers, rather than self-employed independent contractors.

The ruling strikes at the heart of the firm’s business model: as independent contractors, Uber drivers had to supply their own cars and were not entitled to basic employment protection. From minimum wages to holiday pay, the ruling’s potential financial impact is hard to overstate. Overnight, the company might have gained tens of thousands of workers in the UK, leaving it exposed to significant claims for benefits and pay. And that is before tax authorities start to ask questions about national insurance contributions or VAT. 

That said, the Supreme Court’s ruling may not be the end of the road for Uber, at least in the short term. The company points to ‘significant changes’ to its app, arguing that many aspects of the judgment are therefore not applicable beyond the small group of drivers involved in the case. (Though, if anything, this is further evidence of the tight control it exercises over its workforce). It has promised to embark on a nationwide listening exercise. The share price took a small dip, but investors don’t seem too concerned. The cost of Uber rides might rise, but similar rulings by senior courts in France and Spain have not led to an immediate demise of the platform-based service economy.

The decision’s implications are by no means limited to cheap taxi rides. The ‘Uberisation’ of work has seen similar arrangements crop up across the socio-economic spectrum. App-mediated self-employment has become a feature of jobs from social care to lawyering. The Supreme Court’s focus on control over contractual terms gives a clear steer to future tribunals’ hearing claims brought by gig economy workers. Crucially, worker status does not just entail individual employment rights, such as the minimum wage: it is also the steppingstone to unionisation.

Pressure will also rise on the UK government. Labour MP Andy McDonald has called for all gig workers to get access to basic employment rights. A 2017 review of modern working practices sought to address many of the challenges of work in the gig economy; five years on, the Employment Bill designed to bring about (some) change has still not been passed. Enforcement is a major issue for businesses and workers: it took over five years and hundreds of thousands of pounds’ worth of litigation to settle a straightforward question. A dedicated employment inspectorate could help: but at current enforcement rates, chances of being caught even for egregious violations are slim. This does not just hurt workers: genuinely innovative companies will struggle to compete with ‘disruptive’ behemoths, if disruption means breaking the law. Taxpayers pick up the long-term bill.

Policy makers have to tread carefully in regulating the gig economy: there are plenty of benefits to be had for workers and consumers alike. Perhaps the most significant upshot of the Supreme Court’s ruling, then, is the reminder that there is no inherent trade-off between employment rights and flexible jobs. To ensure a sustainable future for gig work, remember that gigs, tasks, and rides are work. They should be regulated as such.

For more from Pando, sign up to our newsletter