Uber Judgment - That’s Going To Hurt

The so-called Gig Economy impacts on us all, whether we order goods from companies like Amazon, call for take-away food, or use driver and rider matching services like Uber, the last-named returning to the news yesterday with a vengeance as the Supreme Court handed down a judgment that will echo around the Gig Economy for years to come.

Uber’s USP was, for many of its users, that it was inexpensive, and consistently so. In this way it undercut other private hire operators, and especially black cabs. This, it became increasingly clear, was achieved by treating drivers as independent contractors. Even so, the company was losing billions every year. How would it become profitable?

Simples. Drive competition off the roads, achieve a monopoly, then increase prices, which a now captive audience would have no choice but to pay. But what the Supreme Court decided unanimously was that those drivers are not mere contractors. They are, to all intents and purposes, employees. Uber’s subsequent bluster should convince no-one.

The BBC report tells “Uber drivers must be treated as workers rather than self-employed, the UK's Supreme Court has ruled”, then adds “Uber said the ruling centred on a small number of drivers and it had since made changes to its business”. But the Beeb then tells “When Uber listed its shares in the United States in 2019, its filing with the US Securities and Exchange Commission (SEC) included a section on risks to its business”.

And what might they have been?”The company said in this section that if it had to classify drivers as workers, it would ‘incur significant additional expenses’ in compensating the drivers for things such as the minimum wage and overtime … ‘Further, any such reclassification would require us to fundamentally change our business model, and consequently have an adverse effect on our business and financial condition,’ it added”.

Forget the braggadocio, this will hurt Uber. The FT has underscored this in a front page item which tells “The judgment is one of the most important defeats Uber has suffered in its global fight over the employment status of its drivers, who have come to symbolise the flexibility and stresses of gig economy work … Yesterday’s ruling in one of Uber’s biggest markets grants the drivers rights to holiday pay as well as UK minimum wage and imposes a duty on Uber to set up a workplace pension scheme”. And there is more.

“Lawyers predicted that the ruling would lead to higher prices, and would have ramifications across the gig economy”. That means not only that Uber and other similar set-ups, like Gett and Lyft, will suffer that “adverse effect on [their] business and financial condition”, it will also mean having - at last - to compete on a level playing field.

Those who look in regularly on Zelo Street will already be aware that the Uber app appears to bust private hire regulations (post HERE). There have been numerous instances of vehicles being used for illegal purposes, as well as multiple incidents of sexual assault (or worse). The concerns of the Met were laid out HERE. And the litany of crashed Uber vehicles in London has become so bad that it is beyond a joke (HERE).

Now has come the ruling that will push profitability so far into the future that all those Silicon Valley investors may stop and think before throwing any more money at the company. The time of Uber in London was for a time, but maybe not for all time.

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