Has London Uber

British Uber drivers are definitely not self-employed - now the business model is shaky

The transport operator has doggedly resisted and pulled the case to the Supreme Court of Great Britain - in vain: Uber drivers are not considered self-employed on the island. It will be expensive and it will send out a signal.

The transportation service provider Uber has to accept a defeat with potentially serious consequences for the business model in Great Britain, its most important European market. After more than four years of litigation that Uber had raged through all courts, the Supreme Court on Friday ruled in favor of a group of former drivers who had offered taxi services through the Uber app. As the court ruled unanimously, those drivers are not allowed to be considered independent providers, but are workers.

Uber is more than a platform

The verdict has a signal effect abroad and is in sharp contrast to the practices of the “gig economy”, in which operators of digital platforms take the position that they merely bring supply and demand for a service together and therefore have hardly any obligations towards the providers. The ruling now means the suing Uber drivers are entitled to benefits, including the minimum wage and paid vacation. In addition, this always applies as soon as they are logged into the Uber app and thus offer their services - and not only when they are actually transporting a passenger.

The financial implications are likely to be substantial. Not only are the drivers involved in the process demanding compensation, which will now be decided by a labor court. While the verdict itself only refers to the 25 drivers who went to court in 2016 and the circumstances at that time, the door will of course be opened to the claims of other British Uber drivers. In 2016, Uber had around 40,000 drivers in the UK. Union officials celebrate the verdict as an historic victory; an involved law firm believes compensation of up to £ 12,000 (CHF 15,000) per driver is possible. Furthermore, there is a threat of high tax demands.

The classification as workers ("workers") rather than as independent providers is justified by the tight control and strict requirements that Uber imposes on drivers when they want to use the app - among other things, by the company setting the fare. According to the court, drivers hardly have any room to do business independently. The lawyers of other digital platforms, for example for delivery services for food orders, will bow carefully over the verdict. An estimated 5.5 million people work in the British gig economy.

Is the secret of success in danger?

Uber wants to win back the initiative and is now consulting all drivers in the UK "to understand what changes they would like". It is said that one is ready to do more - before one is forced to do so, one could add oneself. With the help of the Uber app, around 60,000 drivers now offer taxi rides on the island, 45,000 of them in London alone.

Observers expect that Uber will pass on any higher costs to passengers. This is not without risk: Flexible, uncomplicated and inexpensive travel offers like those from Uber emerged in competition with the expensive, rigid offers of established taxi services and met with enormous demand. The drivers' joy of winning could be short-lived if price increases destroy the product or push some of them out of the market. Conversely, Uber and the new “workers” could benefit if a strategy that continues to be competitive is found - by consensus, not in court.

That will be a challenge of its own in every country. Numerous attacks against Uber are pending worldwide. In Great Britain, the American company was involved in a parallel legal dispute with the London Transport Authority over the safety of passengers for years. It was only last September that it received an operating license for the capital for a further 18 months.

You can follow Benjamin Triebe, business correspondent for the UK and Ireland, on Twitter.