Landmark legal decision: Are the Uber app fares set to rise?

Many of you will be familiar with Uber, the hugely successful app which allows smartphone users to hail a driver using mobile location software. Millions of users have embraced the technology for the convenience it provides, satisfying an ever increasing demand for a quick and hassle-free way of arranging travel.

Last Friday afternoon (28 October 2016), an employment tribunal ruled that two Uber drivers in question are ‘workers’ as opposed to self-employed contractors.

The case was brought by the GMB trade union following claims that Uber disregarded the basic employment rights that should be afforded to its drivers. The tribunal heard from the two Uber drivers, whose case was that Uber failed to ensure its drivers were provided with the national minimum wage and the minimum amount of paid holiday.

Uber has always stood by its position that its drivers are self-employed contractors, as opposed to ‘employees’ or ‘workers’. The tribunal’s ruling that the drivers are workers means that certain employment related rights are triggered, including the national minimum wage, rest breaks and a minimum amount of paid holiday.

Needless to say, the decision is unwelcome news for Uber and others operating in the ‘gig economy’. Uber now faces having to fund these benefits for its drivers. The decision is also likely to be displeasing for users of Uber, who may well see prices rising (and a less stable service) as a result of the additional funding that is required.

Whilst some critics have supported the decision, especially with regard to the national minimum wage, it is worth noting the calculation of their hourly rate fluctuates and largely depends on how long the drivers stay logged in to the app and how many jobs they accept/cancel on a particular day.

The Regional General Manager of Uber in the UK confirmed that Uber will appeal the tribunal’s decision, stating, “Tens of thousands of people in London drive with Uber precisely because they want to be self-employed and their own boss … The overwhelming majority of drivers who use the Uber app want to keep the freedom and flexibility of being able to drive when and where they want”. Indeed, Uber has supported flexible working and does not require its drivers to log in for a minimum number of hours or require them to work solely for Uber.

The ruling of the hearing will only affect the drivers named in the case, however the challenge to Uber’s business model is likely to cast a shadow of uncertainty on drivers and users alike, for as long as what is widely thought to be a drawn out appeals process takes to run its course. In the meantime, we await with anticipation the outcome of what we think will be the first (but not the last) appeal in this case.

If you would like to discuss any issues arising from this article or indeed anything at all in connection with employment law, then we would love to hear from you. Click here to contact one of the employment team at Blaser Mills.