Uber's Independent Contractor Status Under Attack in the UK


(Brandon Bhangoo) #1

Uber came under attack in London Transport Authority when a group of 19 Uber drivers solicited the support of Yaseen Aslam and James Farrar to challenge Uber's employment contract.

A British employment tribunal reviewed the case last Friday, which essentially put forward the case that British law does not mandate "independent contracting" status of drivers and that drivers are in fact employees of Uber. The ruling accepted this argument, and this means that Uber must now assure drivers of a minimum wage and paid off time.

Since Uber is built on a specific business model that includes saving it from fakers and scammers that would abuse the system to receive a minimum wage without working and also build up enough time to abuse the unemployment insurance clause. It also requires that Uber rethink its price model for the UK.

This ruling comes after one that banned Uber from operating in the Greater London area and is just another instance where the government is fighting a natural, technological evolutionary tide by supporting one outdated service in favor of a new emerging service based on new technologies.

Mr. Aslam stated, after the ruling, "You can hide behind technology, but the laws are there, and they need to be obeyed and respected," and added "The impact of this ruling could affect thousands of drivers, and not just drivers but millions of workers across the U.K." concluding with, "It just means we can't be exploited,"

Tom Elvidge, Uber's UK acting COO stated that they would be appealing the decision either in the Court of Appeals or Britain's Supreme Court.

Uber has to consider all country-specific laws, so while it manages to increase its influence in the US, it has to deal with country-specific laws and regulations in every country it operates. The employment issue in the UK is only one of many issues that Uber has to contend with while it tries to survive. With a gross worth of around $70billion but with over $3 billion losses per annum, Uber now has to finalize another private equity investment challenge with Softbank (Japan) injecting a much sought after $10 billion, which will help it reach an IPO set for 2019.

The new CEO of Uber, Dara Khosrowshahi, formerly CEO of Expedia, has changed the entire tone of how Uber operates, and rather than flaunt disdain at country laws, Dara takes on a more pragmatic and diplomatic approach. He even managed to stay the ban on the Uber presence in London until a final ruling would be delivered.

The new shift from Uber's aggressive expansion to improving customer and driver satisfaction has been in effect since July 2017 and has introduced many new features such as in-app tipping for drivers and schedule ride requests for passengers.

With all these changes, Uber still has to contend with their past performance and a Professor at London's City University Cass Business School said "Essentially, Uber has been outrunning employment law and legislators, and is having to become more like a normal company, rather than one that was able to evade existing legal frameworks."

Uber's global operations have some crucial support pillars, and one of them is the UK. Uber started operations in London in 2012 and expanded all over the UK to dozens of cities. It now had around 40,000 drivers in London alone and had about 3 million customers.

The reason for the attack on Uber comes from its main competitor and one of London's oldest transport services, "Black Cabs." This old institution sets such high standards for its drivers that Uber has to contend with such features and "the knowledge" which is a test of 25,000 streets and over 100,000 landmarks that Black Cab drivers must pass. Another issue is that the Black Cab fare is regulated, which means that Uber is automatically cheaper, and this is one of the bases for the Black Cab attack, either regulate Uber or de-regulate Black cabs, but the London Transport Authority cannot allow such blatant disregard for regulations to enable a competitor free service to monopolize on the UK capitols public transport system.

The main argument against Uber is that it can undercut all competition due to its unique business model, which relieves it of owning fleets, requiring only basic car and driver requirements to start riding for Uber, using the Uber app. On the other side of the coin, modernists state that the world is constantly evolving, technologically as well, and the legislatures inability to accept change is a constant threat we have seen throughout history, starting with the Catholic Church's refusal to accept Galileo Galilei's theories on celestial bodies to the WWI generals to accept those old military tactics do not work well with machine guns, tanks, and airplanes. The new age of the internet has created a whole new set of business models that allow conventional or traditional models to become outdated. The UK's labor laws have not been reviewed or updated since 1996 when the internet and digitized world was only an infant. Now, after two decades, it's about time that the UK review its labor laws and contend with the issues that Uber has created with its sound independent contractor model.


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