UK Court Ruling on Uber will Mean Fewer, More Expensive Rides, and Fewer Jobs

Today, the Supreme Court of the United Kingdom ruled on an important question as to whether certain drivers who work with Uber are entitled to certain protections under British statutes. The court found that they were. The judgment is here; a (long) Twitter thread explaining it by an English employment lawyer is here.

While the judgment will mean some changes to how Uber operates in the U.K., it relies primarily on U.K. statutory law, so will not affect how Uber operates in the U.S. However, it is a warning to jurisdictions contemplating adding so-called protections for gig economy workers, including the U.S Congress and the provisions of the draft PRO Act.

The Court rejected Uber’s appeal against an earlier court ruling. Uber claimed it was a booking agent for the drivers, while the Court found that the drivers worked for Uber. Note that the Court did not find them to be employees—the U.K. has a separate category of “workers” who derive much of their income from a single source. This entitles them to certain things like an employer-provided pension, time off, union representation, and the national minimum wage. The reasoning behind the Court’s judgment can be found in the ruling and the Twitter thread referenced above.

One interesting facet is that Uber’s rules forbidding post-ride contact between driver and passenger, except for the purpose of returning lost property was part of the Court’s reasoning for worker status. These rules were put in place in order to stop things passengers found disconcerting, like harassment up to and including sexual harassment. If the U.K.’s laws forbid that sort of rule by a contracting party, they are surely ripe for change.

The ruling only affects a certain subset of drivers. Uber has actually changed its terms and conditions substantially since the case began. Moreover, at the time of the case Uber was essentially the only transportation network company operating in the U.K. Since that time, thanks in part to an ill-conceived ban on Uber in London, a slew of competitors has arisen. The Court found that having several different apps open would suggest against the classification as worker for Uber.

However, the ruling does call into question the business model in the U.K. not only of Uber, but for its new competitors and other gig economy firms like the delivery service Deliveroo. The likely result of the ruling will be similar to what CEI predicted would happen in California under the since-changed AB5 law—fewer drivers, fewer rides, higher prices. The higher prices will price people on the economic margin, such as the unemployed or students, out of private transportation options. For young women in particular, this could have serious implications for their safety. And at a time when the U.K. unemployment rate is rising again, making fewer jobs available to supplement earnings is unfortunate timing.

As Len Shackleton of the Institute of Economic Affairs points out, the U.K.’s trade unions are celebrating this ruling. He warns they should not:

A ruling which raises prices and inconveniences consumers, while cutting off earning opportunities for many thousands of workers, is hardly the great achievement hailed by the unions. When the logic is extended to other areas of the gig economy, we will see tens of thousands of young people unable to find any work at all at a time when conventional jobs will be very hard to come by.

Finally, the likely effect on other drivers has not been considered. About ninety percent of U.K. Uber drivers say that flexibility is the most important thing for them. Being forced into a worker relationship with Uber will necessarily reduce flexibility.

As this ruling derives from statute law, it is in the U.K. Parliament’s power to change things. The government should introduce a law that protects the promise of the gig economy and that reflects the desires of those who actually participate in that economy as drivers or as passengers. Such a law would probably look markedly different from the current law, which bows to much to powerful lobbies such as trade unions and London’s Black Cab drivers.