Are Uber Drivers Employees? U.K. Tribunal Says Yes

Ride-hailing service Uber suffered another setback to its operations in the United Kingdom Friday when an employment tribunal in London rejected the company’s case that its drivers were self-employed, the New York Times reported.

The decision, which upheld a ruling made in 2016, will require Uber to make a number of changes to its operation in the UK, including ensuring its drivers are paid a minimum wage, given holiday pay, offered time off from work, and other benefits.

Uber will appeal the decision, according to Tom Elvidge, the company’s acting head in the U.K. The company’s challenge to the ruling will go first to the Court of Appeal, followed by the country’s Supreme Court if necessary.

“Almost all taxi and private hire drivers have been self-employed for decades, long before our app existed,” the company said in a statement. “The main reason why drivers use Uber is because they value the freedom to choose if, when and where they drive and so we intend to appeal.”

Even as Uber moves forward in its challenge, the decision from the employment tribunal represents a major blow not just to the company but to the “gig economy” business model that it popularized.

At the heart of the dispute between Uber and the employment tribunal is the question as to whether the person doing the work is directly employed by the company or is an independent contractor who is connected to a gig by the platform.

Uber and other gig-based companies have long held that they are simply connecting people who provide a service to those who need it. Such a model, the companies argue, increases the flexibility for employees and allows people to pick up extra work without the commitment of a full- or part-time job.

Uber's new CEO, Dara Khosrowshahi, said at a New York Times conference Thursday that the drivers were happy to be working as contractors.

“If you look at driver sentiment, it has been increasing dramatically,” he said, citing the company's new driver-focused initiatives, such as tipping. He also pointed to the flexibility associated with their contractor status, saying “They don't want to be employees.”

Others have argued the model simply gives companies the ability to exploit individuals by denying them benefits that would be provided to contracted employees — like unemployment insurance or the right to negotiate wages — leaving the workers beholden to the terms dictated by the company despite not working directly for it.

GMB, a union for professional drivers that launched the original case against Uber in London, celebrated the ruling handed down Thursday.

“This landmark decision is a yet more vindication of GMB’s campaign to ensure drivers are given the rights they are entitled to—and that the public, drivers and passengers are kept safe,” GMB Legal Director Maria Ludkin said. “Uber must now face up to its responsibilities and give its workers the rights to which they are entitled.”

The decision marks the second strike to Uber’s operation in the UK in the last several months. Earlier this year Transport for London (TfL) announced it would not renew the company’s license to operate in the city. The TfL said that Uber suffered from “a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications.”

Additional reporting from Lydia O'Neal