2017-11-10 07:14:03
Uber Drivers Aren’t Independent Contractors, U.K. Tribunal Rules

LONDON — Uber suffered another blow on Friday to its operations in London — its biggest market outside the United States — when an employment tribunal rejected the company’s argument that its drivers were independent contractors.

The decision, which affirmed a ruling made last year, means Uber will have to ensure its drivers are paid a minimum wage and entitled to time off, casting doubt on the hiring model used by Uber and by other businesses in the so-called gig economy that rely on workers who do not have a formal contract as permanent employees.

Companies argue that such a system increases the flexibility for both workers and employers in the modern economy, but critics say it is exploitative and deprives employees of key benefits like unemployment insurance.

For Uber, the ruling is the second hit to its business in London in recent months. In September, the city’s transport authority issued a surprising decision to bar the ride-hailing service from operating in the British capital. Uber is appealing that ruling, which said the company was not “fit and proper” to operate in the city. It can continue offering its services until a final ruling is made.

In the case before the employment tribunal on Friday, two Uber drivers, James Farrar and Yaseen Aslam, had challenged the company on behalf of a group of 19 drivers, saying that the service had denied them basic protections by classifying them as self-employed. Uber relied on an argument it has used repeatedly around the world: Its drivers were independent contractors.

In a statement following the ruling, Uber’s acting head in Britain, Tom Elvidge, said the company would appeal the decision. Once it does so, the case would be heard by the Court of Appeal.It could eventually be referred to Britain’s Supreme Court.

The employment case is one of several challenges facing Uber. Though the service has expanded at a breakneck pace, growing into a behemoth valued at $70 billion, it has grappled with an array of issues, including allegations that it does not do enough to vet its drivers and revelations that it used software to evade the gaze of the authorities.

Complaints of an aggressive workplace culture, meanwhile, forced its founder, Travis Kalanick, to resign this year as chief executive. He was replaced by Dara Khosrowshahi, who has introduced a more conciliatory style. He sought to win over the London transport authorities with a charm offensive last month.

In an effort to win over customers and drivers concerned about its reputation, the company has introduced new measures and services, like allowing users add tips to their fares. Uber has also promoted its efforts, particularly in Britain, to provide drivers with benefits like access to a pension and insurance.

The company’s operations in London are crucial to its global expansion. Some 40,000 people drive for Uber in the British capital, and it claims three million customers have used the app at least once in London in the past three months.

The challenge over its hiring practices strikes at the heart of Uber’s business model. The company faces a similar challenge in Europe — the region’s highest court is expected to rule by the end of the year in a case over whether the company should be regulated as a taxi service, which would make it subject to rigorous safety and employment rules, or as a digital platform that simply connects independent drivers to passengers.