Uber’s UK U-turn: the exploitative gig economy employment model is not dead but it may be at an inflection point

Uber's UK U-turn: the exploitative gig economy employment model is not dead but it may be at an inflection point

Uber drivers of the App Drivers and Couriers Union (ADCU), celebrate as they listen to the court decision on a tablet computer outside the Supreme Court in London on 19 February 2021. The UK Supreme Court ruled that Uber drivers should be classed as ‘workers’ and not self-employed.

(AP/Frank Augstein )

Under normal circumstances, any company making a bombastic declaration that it will partially respect a court decision would be met with a chorus of derision. Yet, Uber’s announcement on 16 March 2021 that it would treat its drivers in the United Kingdom as ‘workers’, albeit with caveats, was greeted with a mixture of incredulity, hope, and disdain. This is because for over a decade, Uber – the epitome of Silicon Valley exceptionalism – has deployed its PR lobbying machine to protect its exploitative business model based on employment status misclassification. The company’s sudden U-turn in the UK represents a significant shift in position, marking a possible inflection point for the gig economy. Does this spell the end of Uber’s predatory employment model and make it a good corporate citizen? Absolutely not, but context is everything.

Earlier this year, the UK Supreme Court unanimously ruled that a group of Uber drivers were workers rather than self-employed contractors. In doing so, the Supreme Court dismissed Uber’s appeal against the decisions of the lower courts, thereby ending a five-year legal battle. Worker status under English law is a form of self-employment, but one that guarantees basic rights like the minimum wage, holiday pay, and protection against discrimination. Crucially, this intermediate employment category also unlocks fundamental trade union rights.

In finding that the drivers were working for and under contracts with Uber, the Supreme Court’s purposive approach to interpreting employment protection legislation dealt a hammer blow to the gig employment model.

The Court concluded that no amount of twisted contract language describing drivers as ‘independent contractors’ should undermine the purpose of employment legislation, namely to protect vulnerable workers who have little or no bargaining power over an entity that exercises control over their work. It also confirmed that such legislation precludes employers in a stronger bargaining position from contracting out of these protections.

Uber’s initial reaction to the judgment was predictable. It dismissed the importance of the case claiming that it only applied to a “small group of drivers” despite thousands of other drivers waiting for their day in court pending the decision. However, within three weeks, Uber said that it would treat all UK drivers as workers and pay them the national minimum wage, pensions and holiday pay. Reading the fine print, it became apparent that they were not going to pay drivers in line with the judgment. The Supreme Court had ruled that a driver should be paid for the entire time they are logged into the Uber app and available for bookings. However, Uber will only pay drivers once they have accepted a trip, leaving some shortchanged to the tune of 40 to 50 per cent.

Challenging the false ‘flexibility vs rights’ dichotomy

Looking at Uber’s announcement from a global perspective, the dismantling of the flexibility vs rights argument is a real game-changer. For years, Uber has peddled the myth that there is a trade-off between the ability to work flexible schedules and employment protection. This of course is a false dichotomy. Employment rights do not mean the loss of flexibility. Also, gig work does not really provide full schedule flexibility when you consider surge-pricing and passenger trends. Nevertheless, this theory held Uber’s entire PR strategy together. Therefore, it was quite an about-face for Uber CEO Dara Khosrowshahi to concede that “UK drivers will now be able to earn with greater security, helping them to plan for their futures while maintaining the flexibility that is integral to the private-hire industry”.

Worker status in the UK provides access to trade union rights paving the way for drivers to engage in collective bargaining. Considering Uber’s aversion to independent trade unions, this is a big deal. Uber drivers now also have the right to be accompanied to grievance and disciplinary hearings and statutory protection for whistleblowing. They will also get legal protection for accidents at work. While Uber has spent years trying to avoid responsibility for these fundamental rights, their sudden U-turn in the UK has implications beyond the British Isles.

While it is true that the Supreme Court decision effectively forced Uber to change its business model in the UK, this was not a given. When California’s legislature passed Assembly Bill 5 (AB-5) making it harder to misclassify workers, Uber together with other digital labour platforms launched the ultimately successful Prop 22 plebiscite to reverse the law.

Thanks to one of the most brazen acts of corporate capture in California history, Prop 22 codified a sub-standard regulatory category for predominantly ethnic minority gig workers.

Among other things, these workers now make far less than employees do under AB-5 while at the same time not being able to enjoy the ability to set rates like genuine self-employed workers. Prop 22 has also allowed platforms to game the system in order to deny workers even the partial benefits available under the scheme.

In France, after the Supreme Court ruled that an Uber driver was an employee in 2020, Uber did nothing to change its employment practices. When the Geneva Cantonal Court held that UberEats was a hiring agency and had to employ its riders, Uber set up a third-party company to hire the riders, thereby outsourcing its employment obligations. There is a long list of similar examples from other jurisdictions where Uber has ignored regulations and court decisions.

In this context, Uber’s move in the UK is undeniably significant even though it continues to flout the law by failing to pay drivers in accordance with the Supreme Court ruling. Uber’s definition of working time will plague global policy debates in months and years to come. No company should be allowed to pick and choose which parts of the law they apply. Further, Uber has been suspiciously silent on voluntary trade union recognition. The fact that they have unilaterally developed a minimum wage calculation formula proves why good faith bargaining is essential to give workers a voice on terms and conditions.

The road ahead

Looking beyond drivers and worker status, Uber has not extended labour protections to riders on its UberEats platform in the UK. Food delivery riders have already been classified as employees in several jurisdictions and Spain has even passed a law that presumes rider employment status. Even if there were an argument about additional competition and multi-apping in the food delivery sector, these issues can easily be negotiated at the bargaining table. Not to mention that the entire phenomenon of multi-apping may even become redundant once workers can earn a fair wage on a single platform. Uber also continues to ignore several key worker issues, including its oppressive arbitration clause, the use of algorithmic decision-making, and the lack of transparency around worker data.

Perhaps of most concern is how Uber will use its worker status decision in the UK to lobby for a third employment category beyond the US. Although the UK ‘worker’ framework confers many employment rights, it does not incur the same labour costs as full-blown employee status (interestingly, the Supreme Court’ decision does not preclude a finding of employee status, but further litigation will be required to cross that hurdle). Uber is already claiming that UK ‘worker’ status supports its advocacy for an independent contractor plus (IC+) model of self-employment with limited social protections (even though until a few weeks ago they claimed the opposite). Of course, this is yet another cynical PR stunt because ‘worker’ status in the UK is nothing like IC+ as it grants employment, labour, and health and safety rights in addition to social protections. Just two weeks ago, Uber dressed up IC+ as Flexible Work+ in Canada, which the Canadian Labour Congress described as “dangerous, undermining and offensive to the rights and dignity of workers”. Uber is also promoting Prop 22-style standards in Europe in view of European Union plans to improve working conditions in platform work.

Another Uber ploy is its advocacy for ‘sectoral bargaining’, which in reality has nothing to do with sector-based collective bargaining in the strict sense of the term. Under Uber’s model, misclassified workers will be forced to negotiate up from zero to reach statutory minimums. Further, Uber has been conspicuously silent on the identity of the bargaining partners and the scope of bargaining. Uber embellishes the concept of sectoral bargaining for PR purposes while other platforms like JustEat and Foodora are entering into bona fide collective agreements with independent unions. Uber can do the right thing if it chooses to.

What this cat and mouse game with Uber highlights more broadly is the ever-widening imbalance between capital and labour.

Proper classification of workers determines the workplace protections an individual is entitled to and the nature of collective labour rights available to them. Yet, it is often left to workers and unions to fight for these basic rights in court against well-funded and belligerent companies.

Strategic litigation will always be necessary and it is heartening to see claims being prepared against Uber in Kenya, South Africa, and New Zealand, among other places. However, it is also sobering to think about the significant resistance these claimants will face in their legal battles.

The value of the employment relationship depreciates significantly when labour market institutions that prop it up, including inspectorates, the legal system, and collective bargaining machinery, are inadequate. Governments must invest in these institutions, stamp out misclassification, and reform competition law to allow all workers to enjoy the human right to collective bargaining, including the corollary right to strike. Employment status is the gateway to workplace rights. In and of itself employment status is meaningless if the rights that go along with it are not properly enforced. Recent action against platforms by prosecutors, labour inspectorates, tax authorities, and other agencies, in several jurisdictions point to a new era of enforcement. This is the right path.

The fact remains that over 60 per cent of the world’s employed population is in the informal economy and non-standard forms of employment continue to proliferate. Is it time to move on from the traditional employment relationship framework? There is no tension in advocating for the continued relevance of the employment relationship as a means of providing legal protection to workers, while also recognising the need for all workers to enjoy fundamental rights through a universal labour guarantee. In this regard, concepts such as the ‘personal work relation’, which attempts to capture a broad range of employment statuses for the purposes of labour protection should be seriously considered by policy makers. Digital labour platforms do not deserve or require special treatment. We must expose the fallacy of techno-determinism and build a new social contract based on the respect for workers’ rights and the rule of law.