Uber loses UK Supreme Court case on driver rights

WATCH: Uber loses court battle on drivers' rights

Uber (UBER) has lost a pivotal Supreme Court case on drivers' rights in the UK.

The Supreme Court on Friday ruled that UK Uber drivers qualify as workers rather than contractors. The verdict upheld the judgment of a lower employment tribunal in 2016.

"The Supreme Court unanimously dismisses Uber’s appeal," Lord Leggatt said during an online hearing on Friday.

Lord Leggatt said Uber's control over drivers meant they qualified for full employment rights. He cited the company's control over fees, a lack of say in contract term, effective punishments for failing to take jobs, and other forms of control.

"The transportation service performed by drivers, and offered to passengers through the Uber app, is very tightly defined and controlled by Uber," Lord Leggatt said.

"Drivers are in a position of subordination and dependency to Uber, such that they have little or no ability to improve their economic position through professional or entrepreneurial skill. In practice, the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance.

"For these and other reasons, set out much more fully in the judgment, the employment tribunal was right to find that Uber drivers are workers who are therefore qualify for the rights conferred on workers by legislation.”

The ruling means Uber drivers are entitled to minimum wage, holiday and sick pay, and rest breaks. Mark Rix, GMB National Officer, called it "a historic win." The GMB union supported the Uber drivers who bought the claim.

The judgment is a significant blow for Uber, which has 40,000 drivers in the UK. The test case is likely to lead to claims from other drivers and could pose a fundamental challenge to the ride hailing app's business model in the UK. Shares in Uber were down 3.8% in the pre-market in New York shortly after the verdict.

Jamie Heywood, Uber's general manager for Northern and Eastern Europe, said the verdict only affected "a small number of driver who used the Uber app in 2016" and argued that Uber had changed significantly since 2016, meaning the judgement should not apply to the current version of the app.

"We have made some significant changes to our business, guided by drivers every step of the way," Heywood said.

"These include giving even more control over how they earn and providing new protections like free insurance in case of sickness or injury. We are committed to doing more and will now consult with every active driver across the UK to understand the changes they want to see."

What do the legal experts say?

Legal experts disagreed. Beth Hale, a partner at employment law practice CM Murray, said the ruling was "hugely important for tens of thousands of Uber drivers and many others working the in the gig economy."

"This was a test case brought by a small number of drivers, but thousands of cases may sit on its heels," Hale said. "Uber drivers will be able to claim minimum wage and holiday pay (including back pay of both). They will also have other protections such as whistleblowing rights."

Law firm Leigh Day, which fought the case on behalf of union GMB, believes tens of thousands of Uber drivers could be entitled to an average of £12,000 each in compensation.

"Uber has consistently suggested that the rulings only affect two drivers, but Leigh Day will be claiming compensation on behalf of the thousands of drivers who have joined its claim," said Nigel Mackay, a partner in the employment team at law firm Leigh Day.

Rix said GMB would be consulting with its members about compensation claims.

The Supreme Court judgment is the culmination of a five year legal battle over whether drivers constitute workers, rather than independent contractors. Two drivers took Uber to tribunal in 2016, arguing they were de facto employees of the ride hailing company. Uber claimed it simply provided a platform for gig economy workers to find work.

UK courts have repeatedly ruled in favour of drivers and against Uber. Friday's ruling marks the fourth court decision that has gone against Uber in the case.

"Instead of accepting their responsibilities to their drivers, Uber has fought every step of the way," Rix said. "Now they have reached the end of the road.

“Uber must now stop wasting time and money pursuing lost legal causes and do what’s right by the drivers who prop up its empire."

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