Uber Loses U.K. Ruling, Entitling Drivers to Minimum Wage

Uber Technologies Inc. lost a lawsuit over pay and vacation time for U.K. drivers at the car-sharing service in a ruling that could change how workers are treated in the country’s burgeoning gig economy.

Three London tribunal judges turned to “Hamlet” as they criticized Uber for "grimly" sticking to “faintly ridiculous" arguments that it is an application provider rather than a taxi service. The case, brought by two Uber cabbies, is the first against the company in Britain and could have ramifications for more than 40,000 people in the U.K. 

"We cannot help be reminded of Queen Gertrude’s most celebrated line: The lady doth protest too much," employment Judge Anthony Snelson said in the ruling in reference to one executive’s evidence. It’s "unreal to deny that Uber is in business as supplier of transportation services. Simple common sense argues to the contrary."

The San Francisco-based company has faced complaints about working conditions around the globe. A $100 million-settlement in a U.S. lawsuit with 385,000 current and former drivers in California and Massachusetts was rejected by a federal judge.

Freedom, Flexibility

Uber said that while the London ruling only affects two people, it planned to file an appeal. The company said that its UberX drivers in the country received an average of 16 pounds ($19.50) an hour after Uber had taken its service fee -- compared with the minimum wage of 7 pounds 20 pence for people over the age of 25.

"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," Jo Bertram, regional general manager of Uber in the U.K., said in an e-mailed statement.

Winnings at London’s employment tribunals are capped at about 80,000 pounds unless claimants can prove they’ve been victims of discrimination or were mistreated for blowing the whistle on corporate misconduct.

“This judgment acknowledges the central contribution that Uber’s drivers have made to Uber’s success by confirming that its drivers are not self-employed but that they work for Uber as part of the company’s business," Nigel Mackay, a lawyer at Leigh Day who represented the drivers, said in an e-mailed statement Friday.

The company was valued at $69 billion in its latest funding round in June, making it the world’s most valuable privately-held technology company. The ruling is bad for drivers and consumers, according to the Institute of Economic Affairs.

"It’s a mistake to think of Uber as an employer -- it is simply a platform that allows drivers and customers to meet and trade," Mark Littlewood, director general at the IEA, said in a statement.

"Uber is no different from the dozens of other sharing platforms, such as Airbnb and eBay,” he said. “It would be laughable to suppose that those who run their business through eBay should expect sick pay and holiday leave from the tech firm."

The decision could have wide-ranging impact for the group of technology companies that connect freelance workers with customers. Among these companies are food delivery services like U.K.-based Deliveroo and Berlin-based Foodora, a brand that is run by Rocket Internet’s Delivery Hero. 

‘Gig Economy’

"This decision will potentially open the floodgates for further claims, not just from Uber drivers but from thousands of others who work in the gig economy," said Lee Rogers, an employment lawyer at Weightmans, who wasn’t involved in the suit. "This is unlikely to be the end of the story – given what is at stake not just for Uber but for the industry as a whole."

Deliveroo declined to comment on Friday’s ruling when contacted for comment.

Uber has faced a wave of litigation around the world centering on the status of its drivers. In New York City earlier this week, the taxi drivers’ union and individual drivers sued Uber, claiming it engaged in "wage theft" by not paying minimum wage or overtime. Some of the same drivers and the taxi union had previously filed a different suit in U.S. federal court alleging Uber violates the U.S. Fair Labor Standards Act and New York labor law.

Uber has faced similar actions too in the U.S. states of Arizona, California, Florida. Maryland, Massachusetts and Ohio. In those cases, Uber has so far been largely successful in arguing that drivers must take their disputes with the company to private arbitration, which makes it more difficult for the drivers to pursue a class action lawsuit against the company.

Meanwhile, in Europe, Uber’s French subsidiary was fined 50,000 euros ($55,000) by a tribunal in Lille which ruled Uber engaged in deceptive marketing by presenting what was essentially a paid transport service as a peer-to-peer car-sharing marketplace. Uber’s low-cost UberPop service has also been banned in France and the Netherlands for using unlicensed drivers.