The UK supreme court has dismissed Uber’s appeal against a landmark employment tribunal ruling that its drivers should be classed as workers with access to the minimum wage and paid holidays.
Six justices handed down a unanimous decision backing the October 2016 employment tribunal ruling that could land Uber with a big compensation pay out and lead to better terms for millions of workers in the gig economy.
Uber, like many delivery and courier companies, has argued that its drivers are independent self-employed “partners” not entitled to basic rights enjoyed by workers, which include the legally enforceable minimum hourly wage and a workplace pension.
But the supreme court said any attempt by organisations to draft artificial contracts intended to side-step basic employment protections were void and unenforceable.
Judges criticised the controversial contracts Uber asked their drivers to sign, saying they “can be seen to have as their object precluding a driver from claiming rights conferred on workers by the applicable legislation”.
The court concluded that the drivers were workers because of Uber’s level of control over them, including setting fares and not informing them of a passenger’s destination until they were picked up.
It ruled that Uber must consider drivers as workers from the time they log on to the app, until they log off. Workers have more rights than independent contractors but fewer than employees, who are entitled to maternity pay and can challenge unfair dismissal, for example.
James Farrar, the co-lead claimant and general secretary of the App Drivers and Couriers union, said: “This ruling will fundamentally reorder the gig economy and bring an end to rife exploitation of workers by means of algorithmic and contract trickery. Uber drivers are cruelly sold a false dream of endless flexibility and entrepreneurial freedom.
“The reality has been illegally low pay, dangerously long hours and intense digital surveillance. I am delighted that workers at last have some remedy because of this ruling, but the government must urgently strengthen the law so that gig workers may also have access to sick pay and protection from unfair dismissal.”
Frances O’Grady, the general secretary of the TUC, said: “No company is above the law. Uber must play by the rules and stop denying its drivers basic rights at work.
“This ruling is an important win for gig economy workers and for common decency. Sham self-employment exploits people and lets companies dodge paying their fair share of tax.”
Uber will not be able to launch further appeals against the ruling.
The case will return to the employment tribunal, which will determine the level of compensation for the workers. Leigh Day, the law firm representing more than 2,000 workers with claims linked to the case, said they could each be due up to £12,000.
Uber has argued that the ruling applies to only a small number involved directly in the case and that it is not obliged to apply its findings to its other drivers.
Jamie Heywood, Uber’s regional general manager for northern and eastern Europe, said: “We respect the court’s decision which focused on a small number of drivers who used the Uber app in 2016. Since then we have made some significant changes to our business, guided by drivers every step of the way. 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.”
The case began when two drivers, Farrar and Yaseen Aslam, took Uber to court on behalf of a group of about 20 others who argued they were employed by the San Francisco-based company, rather than working for themselves.
It is one of about 1,000 cases challenging the self-employed status of gig-economy workers, including action against the minicab firm Addison Lee and the delivery groups CitySprint, Excel and eCourier.
Campaigners hope the Uber ruling will step up change in the gig economy.
Last year, the boss of one of the world’s biggest food delivery platforms, Just Eat Takeaway, said he wanted to end gig economy working at the business. The company began hiring UK riders as “workers” – either directly or through an agency – in November and now has 1,000 signed up in London and Birmingham.