UK court finds Uber drivers are not self-employed, with major implications for on-demand economics
A UK employment tribunal has punctured the core premise of Uber’s working model, that Uber drivers are self-employed independent contractors and not employees.
The court directly castigated the company, stating Uber had twisted the reality of the situation to its own ends for the express goal of benefitting from misclassifying workers as self-employed:
resorting in its documentation to fictions, twisted language and even brand new terminology.
The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous. Drivers do not and cannot negotiate with passengers … They are offered and accept trips strictly on Uber’s terms.
The UK is becoming the nexus of growing alarm about pay and business practices in the ‘on-demand’ economy, with Theresa May’s government kicking off a review of these work practices and the Revenue and Customs agency is setting up a specialist unit to investigate companies that seek to categorize workers as ‘self-employed’, in order to deny them ‘employment rights and benefits they are entitled to’. That R&C unit was the outgrowth of a Guardian investigation into low pay at Hermes, the delivery company.
The implications of the recent Uber finding are stark, since it undermines Uber’s on-demand economic model, which rests on the classification of drivers as self-employed and therefore not receiving benefits, like paid holidays, and minimum wage. If Uber is in fact an employer and not a platform, the magic of its formula falls apart, and the valuation it has as a disruptor of the transportation market is at risk.
If similar results take place in the US, and Uber becomes the employer of its US drivers, the company might not only take on minimum wage requirements, but also social security, car insurance, maintenance, gas, and other expenses incurred by drivers. Basically, the bottom of the on-demand economy could fall out.
Uber plans to appeal the case, and it could wind up at the UK supreme court. 40,000 Uber drivers in the UK – and 420,000 other workers in the on-demand economy – could be misclassified as self-employed. Is ‘on-demand’ really just a Ponzi scheme, on the verge of collapse?
