Uber's Latest Court Date Gives Gig Economy Its Biggest Test

(Bloomberg) -- Just months after Uber Technologies Inc. persuaded a London judge to allow it to keep operating in the city, the ride-hailing company is back in court.

At stake during two days of hearings at the Court of Appeal in London is an issue that could strike at the core of the U.K.’s burgeoning gig economy: whether Uber’s drivers are really self-employed.

James Farrar and Yaseen Aslam, the Uber drivers spearheading the London case, say they should be classed as the company’s “workers,” meaning they’re entitled to the minimum wage and vacation pay -- though they don’t claim to be "employees," a category that would’ve given them even more rights such as parental leave.

The case could “have a big effect for everybody in the gig economy,” according to James Murray, an employment lawyer at Kingsley Napley in London, who isn’t involved in the hearing. If Uber is forced to treat drivers as workers, companies with similar models such as the Deliveroo food service may have to do the same, he said.

A lower court erred when it found drivers were working at Uber’s disposal just by being logged on to the app in the right place and ready and willing to accept trips, even if they aren’t on a trip, the company said in filings for Tuesday’s hearing.

Uber drivers “haven’t agreed to perform any work or services for Uber,” the company’s attorney, Dinah Rose, told the judges. The contract between Uber and drivers is essentially a licensing agreement that allows drivers to use the company’s app if they meet Uber’s conditions, she said.

At the Core

Uber Chief Executive Officer Dara Khosrowshahi told reporters at a briefing last week that the lawsuit covers an issue that’s “at the core of the service.”

“We think we’re in the right here” but “sometimes we’ll have to go to court to preserve our rights,” he said.

“If drivers were classed as workers they would inevitably lose some of the freedom and flexibility that comes with being their own boss,” the San Francisco-based company said in a statement.

Farrar, who’s now stopped working for Uber, says that’s a “false choice.” Setting up that distinction is “the neatest trick the gig economy has pulled off,” he said. “I don’t accept that trade-off and I don’t think anybody should.”

The case is “incredibly important” because it’s “going to be the case that sets the tone for the gig economy,” said Paul Jennings, an attorney at the London-based law firm Bates Wells Braithwaite, which is representing Farrar and Aslam on a pro-bono basis.

Mischief

Uber’s court filings said that if it had to recognize drivers as workers when they were logged on to the app, drivers could log on to rival ride-hailing firms’ apps at the same time as its own and “claim the minimum wage from two or more app operators in respect of the same period of time.”

The suggestion that drivers could carry out such “mischief” is “more theoretical than real,” lawyers for Farrar and Aslam said in their court filings.

If a driver tried to “play the system” by doing that, it should be treated as a discipline issue, they said. The risk that it could happen shouldn’t be used to deny worker status to “the vast majority of drivers who in good faith make themselves available to Uber.”

Two Defeats

Uber, which has already lost two U.K. lower court rulings in the case, said that the most recent defeat was due to a fundamental misunderstanding of “how we operate.”

Other lawsuits have found in favor of employment rights for those in the gig economy. The Uber case could be even more significant, however, because its app-based model is more typical of the industry, meaning the case could have wider consequences, according to Kingsley Napley’s Murray.

The U.K.’s top court ruled in June that Pimlico Plumbers Ltd. should have treated a tradesman as a worker, giving him the right to vacation pay and to sue the company. In May, the U.K. car service Addison Lee lost an appeal in a case over drivers’ rights and in 2017 a London employment tribunal found a cycle courier working for CitySprint UK Ltd. was a worker.

‘One Way’

“The mood is going one way with the courts, and that’s towards giving workers their rights,” Murray said.

Farrar and Aslam are what’s known as “test claimants” whose cases have been chosen to represent an estimated 150 other drivers who’ve brought similar lawsuits. If Uber loses the case, those drivers will automatically also be entitled to back-pay for the minimum wage, Jennings said.

On top of that, there could be class action-style cases by more drivers which “potentially could be very, very large and very, very valuable,” Jennings said.

©2018 Bloomberg L.P.