A London employment tribunal has ruled that Uber drivers should be classed as employees rather than self-employed and should be paid the national living wage, a decision the firm has vowed to fight.
Earlier this year two drivers took Uber to court arguing that their terms of employment, including that they be available to take rides at pretty much any time, meant that they were effectively full-time employees rather than self-employed. This would make them entitled to the national minimum wage of £7.20 per hour. Uber had argued that its drivers are self-employed and were ineligible for this level of pay, as well as from other benefits such as holiday pay.
The two drivers and others who claimed at the same time could now be entitled to compensation for missed holiday pay and back payments for work paid at rates below the national living wage. Uber drivers who did not claim will not be recompensed.
"Uber drivers often work very long hours just to earn enough to cover their basic living costs," said Nigel Mackay, the attorney from the law firm Leigh Day that is representing the drivers.
"It is the work carried out by these drivers that has allowed Uber to become the multi-billion dollar global corporation it is."
Mackay went on: "This is a ground-breaking decision. It will impact not just on the thousands of Uber drivers working in this country, but on all workers in the so-called gig economy whose employers wrongly classify them as self-employed and deny them the rights to which they are entitled."
Uber, employs 40,000 drivers in the UK and says it will appeal the decision. If this fails it will have to change the terms of its drivers' contracts.
Jo Bertram, regional general manager of Uber in the UK, argued that drivers appreciate the terms offered.
"Tens of thousands of people in London drive with Uber precisely because they want to be self-employed and their own boss," she said.
"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. While the decision of this preliminary hearing only affects two people we will be appealing it."
The tribunal's decision was described by the GMB union as a "monumental victory" which would have an impact on thousands of workers in other industries "where bogus self-employment is rife".
The ruling, if it is carried, could have far reaching consequences for the casual workforce. Last year the legal advisory service Citizens Advice found that as many as 460,000 workers may be wrongly categorised as self-employed, 10 per cent of the UK's 4.8 million self-employed workers.
On average wrongly-classified self-employed workers miss out on £1,288 a year in holiday payments and are liable for an additional £61 in National Insurance contributions.
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