LONDON — The UK Supreme Court has ruled that Uber must classify its drivers as workers and not independent contractors, a decision that could deliver a major blow to the company’s business model in one of its most important markets.
The court said on Friday that an employment tribunal had been right to find that Uber drivers are workers, dismissing an appeal by the company. The decision was unanimous. Uber drivers are workers, the court said, because the company sets fares, and exercises significant control over drivers who use the app.
While the practical effects of the ruling are not yet clear, the decision could change how Uber does business in the United Kingdom. The company may be forced to grant additional benefits to drivers including paid time off and a minimum wage. The next step is for an employment tribunal to decide how to compensate dozens of claimants.
The case may also set a precedent for other workers and companies in the broader gig economy, which has thrived during the pandemic due to a sharp increase in demand for food deliveries and other services.
The suit against Uber was first filed in a British employment tribunal by Yaseen Aslam and James Farrar in 2016 when the two men were driving for Uber. Aslam used to work for another company, but said he was lured to Uber by lucrative pay and bonuses.
But Aslam claimed the perks quickly dried up as more drivers joined the platform, resulting in fewer rides and lower fares. The pair of drivers prevailed in the employment tribunal and then in two subsequent appeals by the company.
“I am overjoyed and greatly relieved by this decision, which will bring relief to so many workers in the gig economy who so desperately need it. During the six years of these proceedings, we have watched the government commission and then shelve a review of the gig economy yet do nothing to help us,” Aslam said in a statement on Friday.
The case now goes back to the employment tribunal, which could order Uber to pay compensation to about 20 original claimants. Thousands of other drivers have taken legal action against Uber, and the decision could be quickly applied to them. Drivers who used the platform at the time of the suit may also be eligible to make a claim for compensation.
A vital market
The decision is a significant defeat for Uber in the United Kingdom, where it has come under pressure from labor activists and transportation regulators. Much of the action has taken place in London, one of the world’s most important cities for the US tech company.
Uber said before the pandemic that 3.5 million Londoners regularly used its app and it claimed 45,000 drivers in the capital. But the company has repeatedly sparred with regulators in the city over safety issues.
The UK court decision comes just months after Californians voted to make Uber and other gig economy companies exempt from state laws requiring them to class their drivers as employees rather than independent contractors.
Being classified as employees would have entitled workers to a minimum wage and benefits like sick leave and unemployment insurance. Uber and other gig economy giants like DoorDash and Instacart spent more than $200 million to publicly advocate for the exemption.
Before the UK ruling was handed down, Uber said that it was committed to doing better for its drivers regardless of the outcome.
“We believe all independent workers deserve to earn a decent wage,” Uber CEO Dara Khosrowshahi wrote in a blog post.
“We’re calling on policymakers, other platforms and social representatives to move quickly to build a framework for flexible earning opportunities, with industry-wide standards that all platform companies must provide for independent workers,” he added.
