This certainly doesn’t bode well for Uber’s prospects in the UK, it’s largest European market.
The ride-share giant suffered its latest serious setback, when its appeal of an unfavorable employment tribunal ruling was thrown out on Friday, increasing the possibility that Uber might be forced to pay its drivers in holiday pay and the minimum wage, expenses that Uber says would require it to make major changes in its business model.
The initial ruling, which was handed down in October 2016, will stand for now, but Uber still has an opportunity to appeal it again to the UK’s Court of Appeals, and then possibly one final time to the UK Supreme Court, the Financial Times reported. According to Bloomberg, the GMB union brought the claims on behalf of 25 of its members to the Central London Employment Tribunal in July 2016 and it decided that Uber drivers are entitled to receive holiday pay, a guaranteed minimum wage and an entitlement to breaks.
The decision by the employment tribunal appeal in London is a major blow to Uber, which has been embroiled in several battles in the UK, including its appeal of a decision by London’s taxi regulator to bar Uber from operating in London.
As the FT points out, “the ultimate outcome of the case is critical for Uber: if it was forced to treat its 40,000 UK drivers as “workers”, it would have to guarantee them minimum wage and holiday pay, and would also lead to the company paying a significantly higher tax bill. Uber says this would probably mean it would have to schedule drivers for shifts rather than allowing them to “log on” to work when they wanted to.”
Taken together, these factors could seriously threaten Uber’s ability to remain profitable, or even competitive in the UK. But there are also wider implications for the so-called gig economy.
The Uber case is the most high-profile test in the UK of the notion that people who work on “gig” apps are independent and not employed by anyone. The original tribunal found in October last year that Uber drivers were its “workers” because the company exerted too much control over their work to class them as independent. But Dinah Rose QC, the barrister who acted for Uber in the appeal hearing this September, had argued the gig company was not doing anything unusual by treating drivers as independent contractors. She said many traditional minicab companies also acted as the intermediary connecting self-employed drivers to customers.