Uber is awaiting the UK Supreme Court ruling on whether drivers are employees

LONDON – Uber’s troubles in the UK are not over, despite regaining the license to operate London.

The ride-hailing company is awaiting a major ruling from the country’s highest court on whether its drivers should be classified as laborers rather than independent contractors.

It’s a case that mirrors Uber’s battle with California regulators over its drivers’ labor rights last year. A loss to the company can jeopardize its business model and have wider implications for the so-called gig economy.

Here’s What You Should Know.

It all started with a UK labor court ruling in 2016.

The tribunal ruled in favor of a group of Uber drivers, led by Yaseen Aslam and James Farrar, who claimed they were workers employed by Uber and therefore entitled to rights such as a minimum wage, vacation pay and rest breaks.

Uber insists that its drivers be self-employed, a rating that offers them minimal protection. It does not want them to be treated as employees as this would reduce the flexible work arrangements the service has become known for and lead to increased costs to the business.

The company lost every appeal against the original labor court decision in the lower courts of Britain, which is why it filed an appeal with the Supreme Court as a last resort.

Uber says it has improved over time with regard to the treatment of its drivers, introducing benefits such as sickness or injury insurance and maternity and paternity benefits. But attorneys representing the drivers say the company’s relationship with drivers means it has to pay them a minimum wage.

Uber isn’t the only ride-hailing platform to have trouble reclassifying its drivers as employees. Free Now, a taxi app jointly owned by Daimler and BMW, said most drivers use multiple services and “enjoy the flexibility that comes with it.”

“This, by its nature, would make it very challenging and not necessarily beneficial for them to change their status from contractors to workers or workers,” a Free Now spokesman told CNBC.

The Supreme Court will rule on Friday around 9:45 am London time. The ruling will be broadcast live on the court’s website.

Friday’s ruling could have huge long-term implications for Uber and the UK gig economy, which has an estimated workforce of 5.5 million people.

For Uber, a loss would mean that the company would have to go back to the UK labor court to determine driver compensation.

What is important in the judgment of the Supreme Court is not only whether drivers should be regarded as employees, but also in which scenarios they work. For example, does a driver work as soon as he opens his app or only after he has picked up his passengers? That is what the judges are debating.

Pinar Ozcan, a professor of entrepreneurship and innovation at Oxford University’s Saïd Business School, told CNBC last year that the case exemplified “a new confrontation of the power struggle between platforms and their members.”

The world has changed since Uber originally lost its case from the labor court. The coronavirus pandemic has taken its toll on drivers who drive, and demand has fallen amid the ongoing global health crisis. Meanwhile, couriers for Uber Eats and other takeaway apps are now seen by many as essential workers delivering food to people who stay at home.

The pandemic, Ozcan said, has “accelerated action”, with people losing their jobs as a result of lockdown measures.

“I think we’ll see more people wondering how we should redefine the terms of performances and make it so that it remains attractive to (platform) members,” she said.

“Of course the platforms are going to fight back because it really diminishes their earnings,” Ozcan said. “In any case, that power struggle will increase because more people will be attracted to performances.”

Last year, Uber won a battle with the state of California, which introduced new legislation in an effort to classify app-based taxi drivers as employees. But voters backed a voting measure called Proposition 22, which allowed companies like Uber and Lyft to continue treating them as independent contractors.

Uber is touting a “third way” for gig workers’ employment status, which would provide drivers with some protection, yet allow for flexible working.

The company shared proposals for such a model with the EU on Monday, pending a review from the European Commission to gig economy platforms. One measure that Uber has proposed is the idea of ​​benefit funds that can be used by employees for things like health insurance and paid time off.