A landmark case in California that could hike Uber’s costs and handicap the company’s growth is being replicated in London.
Uber today faced a legal challenge from its London drivers who claim the ridesharing company doesn’t provide them with the workers’ rights to which they are entitled because they are classified as partners, not employees.
Back in June, the California Labor commission ruled that a Uber driver was an employee, not a contractor and liable for employee benefits. The company, however, is appealing the ruling in the California Superior Court. (RELATED: California Uber Ruling Is A Huge Win For Unions)
As a consequence, Uber drivers are not entitled to the range of benefits that are typically granted to full-time employees. These include the national minimum wage and holiday pay. The case is being brought by the GMB Union on behalf of British Uber drivers. GMB is a long-standing opponent of Uber and has joined mass protests against the company calling for greater regulation of taxi applications.
Law firm Leigh Day, which is representing GMB, argues Uber is breaking the United Kingdom’s employment laws by not ensuring drivers rest breaks or working a certain number of hours. Uber drivers are, however, not compelled to work a fixed number of hours or miss out on rest breaks. The decision of how long to work is up to the driver themselves.
“A successful legal action against Uber could see substantial payouts for drivers, including compensation for past failures by the company to make appropriate payments to who we argue are their workers,” said Leigh Day’s Nigel Mackay.
Uber’s relationship with its drivers is a crucial part of its business model and part of the reason it’s able to provide a cheaper service than the established taxi industry. As it stands, Uber provides the app and drivers who use it pay a percentage of their fare to the company. In London, this typically amounts to between 20 and 25 percent. This means Uber has massive cost savings, enabling rapid expansion and greater investment in the company.
A spokesperson for Uber gave a vigorous defense of the company’s practices, explaining that “one of the main reasons drivers use Uber is because they love being their own boss. As employees, drivers would drive set shifts, earn a fixed hourly wage, and lose the ability to drive elsewhere as well as the personal flexibility they most value. The reality is that drivers use Uber on their own terms: they control their use of the app.” Uber’s CEO Travis Kalanick plans to have 42,000 Uber drivers in London by 2016.
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