The UK's gig economy Uber ruling is a car crash of digital denial

Stuart Lauchlan Profile picture for user slauchlan October 30, 2016
A London employment tribunal has come down against Uber's operating model in a ruling that poses considerable threat to the development of the gig economy in the UK. This is not good.

Last Friday Uber opened its door in my home town of Brighton on the UK south coast. This was a pretty big deal. The firm only won approval to set in the city after four days worth debate by local councillors.

The two resident taxi firms in the area are, naturally, livid and public notices have gone up for protest meetings to object further. That said, an initial 750 drivers have registered interest in signing up as Uber providers, so it’s clear there’s considerable interest in being an Uber driver.

Meanwhile In London that same afternoon, two Uber drivers won a significant ‘victory’ over the firm that threatens to drive a Hackney Cab through the growth of the UK’s gig economy, a ‘victory’ celebrated by cheerleaders whose reactions range from the astonishingly naive to the calculatedly politically motivated.

The two Uber drivers took the firm took the firm to the London Central Employment Tribunal and claimed that Uber acted unlawfully by denying them sick pay, a guaranteed minimum wage, holiday pay and breaks.

Uber’s business model is based on the idea that its drivers are "partners" and self-employed, meaning they are not entitled to holiday pay and other benefits. The drivers and their supporters on the other hand insist that they are actually employees of the organisation.

The Tribunal judges were having none of this, stating bluntly:

Any organisation...resorting in its documentation to fictions, twisted language and even brand new terminology, merits, we think, a degree of scepticism.

They add:

The absurdity of these propositions [Uber’s arguments on the contract between drivers and passengers] speaks for itself…We are satisfied that the the supposed driver/passenger contract is a pure fiction which bears no relation to the real dealings and relationships between the parties.

For its part, Uber intends to appeal the ruling. Uber's UK general manager Jo Bertram said:

The overwhelming majority of drivers who use the Uber app want to keep the freedom and flexibility of being able to drive when and where they want. While the decision of this preliminary hearing only affects two people we will be appealing it.

It’s good that Uber intends to fight as, two people or not, the ramifications of this dreadful ruling on the UK’s gig economy could be far reaching and well beyond Uber. Certainly Nigel Mackay from law firm Leigh Day, which represented the drivers, seemed happy to talk in terms of a wider consequence here:

(The ruling) will impact not just on the thousands of Uber drivers working in this country, but on all workers in the so-called gig economy whose employers wrongly classify them as self-employed and deny them the rights to which they are entitled.

He says, she says

Of course there’s the inevitable ‘he says, she says’ element to all of this. For example, one of the two drivers who brought the case stated that in August 2015 he earned less than the 6.70 pounds an hour, the UK minimum wage at the time. Uber countered that according to the data from his app, he had cancelled or not accepted a large amount of jobs.

So is there any basis to the ruling? Let’s start with the basic question of what Uber does as a company? As anyone who’s been at any industry conference for the past two years already knows, Uber is a technology company, not a cab firm. We can all recite the cliche by now - the cab firm without any cabs just like AirBnB is the hotel firm without any hotels, disruption, disruption, yada yada yada.

The Tribunal was having none of this, pointing to the fact that in order to operate in London Uber has to hold a Private Hire Vehicle Operator’s Licence for London. It also noted that the firm’s management has referred to “our drivers”, which it argues means that they are employing those drivers, a leap in logic that defeats me.

As for the Uber as technology platform company meme, the Tribunal dismisses that:

The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our minds faintly ridiculous.

It goes on to back up this ‘Uber as employer’ claim by noting that Uber interviews potential drivers and that it weeds out low-performing or poor drivers based on passenger ratings, which it says is a mirroring of a traditional employer-employee relationship when one can fire the other. That Uber’s interviewing of drivers isn’t a traditional hiring process, but rather a safety check on candidates which results in a check by the Disclosure and Barring Service (DBS), successor to the Criminal Records Bureau (CRB), doesn’t appear to be factored in. 

The Tribunal also insist that Uber drivers have no opportunities to grow their own business or negotiate a higher fare with customers outside of Uber’s terms and that Uber controls access to key booking information via its app. As such, drivers are not freelance as they only get this information when Uber provides it.

My take

Writing in The Guardian, senior economics correspondent Aditya Chakrabortty declares, with a potent combination of patronising and piousness:

The idea that the swelling army of self-employed Britons are all budding SurAlans and Bransons, swigging lattes and toting MacBooks, is for the birds…For some Britons, self-employment doubtless means freedom. But for others, it means the freedom to be exploited, deprived of rights – and to be underpaid.

As well as cheerily dismissing the idea that people might choose to work as self-employed, Charkrabortty states: 

[The ruling] poses an existential threat to Uber in Britain. It will also send shockwaves through a string of companies using the same business model to do everything from delivering takeaways to providing cleaners to couriering court documents. Most of all, it is a massive boost for all of us who want a fairer jobs market – and a big slap in the face for the government.

So no wider agenda there then.

Disclosure here - I’ve never used Uber. I’ve never stayed in an AirBnB. I’ve never ordered food from Deliveroo or JustEat. That’s my choice. I prefer to use black cabs and stay in hotel chains and pick up my own food.

I've also raised questions about the way Uber goes about its business when it comes to certain social attitudes.

But that said, I’m 100% a supporter of the idea of the wider gig economy and the use of  digital ‘sharing’ platforms to facilitate the self-employed to work as and when and how they choose.

In my 27 years as a journalist, I’ve been self-employed for 19 of them. That’s my choice. It’s the same choice as all of the other editors and contributors at diginomica. Journalism was the gig economy long before the term made it onto the technology conference keynote slides.

Being a gigging journalist means writing for different outlets. It means working from home or a cafe rather than sitting in an office. It means working when you like and for how long you like, prior to the inevitable panic when you realise your deadline is looming. It means charging a set rate to specific commissioners for individual projects and services and scaling that rate up or down according to circumstance.

Of course, there’s a price for the freedom that this affords. While the freelance model means being able to take as much holiday time as you want, there isn’t someone else to pay for that time off. Similarly, you take the risk that if you’re sick, there’s no sick pay to be had. But crucially most freelancers I know wouldn’t choose to go back into a 9-5, contract office job unless it was the proverbial offer you can’t refuse.

Clearly there will be some Uber drivers who are taking on the role through lack of choice, but to characterise, as one Labour Party MP did to me, Uber drivers as being akin to the Victorian poor queuing up at the factory gates in the hope of a day’s work is ludicrous.

I know a couple of putative Uber drivers in Brighton. They’re doing it for the flexibility it affords and because it fits in with their lifestyle. I repeat - I’m not saying that this applies to every Uber driver, but equally the characterisation of the Uber workforce as a uniformally exploited underclass is absurd.

If this ruling stays in place the ramifications are considerable. According to the Office for National Statistics in 2016 one in six of UK workers are self-employed, so we’re potentially talking about a lot of people. Just in my own game, would every freelance writer who works for us now be sending in invoices for their holiday time?  If so, could the tribunal judges please let me know the address to which I should send my bill?

In the new post-ruling Uber world, the drivers would have their holiday pay, but they’ll now have to book that in advance and be governed by statutory limits. They’ll get the minimum wage regardless of whether they pick up enough passengers or not to earn that. So Uber qua ‘employer’ will have to sort out National Insurance and take a higher commission and those costs will be passed on to passengers, so the consumer will lose out.

Uber has said it will appeal. I would hope it gets the ruling overturned. If not, it may well go back to its terms and conditions and find a form of wording that addresses the Tribunal’s ruling. In the worst case scenario, Uber pulls out of the UK. In the (unlikely) event of that, I hope its 40,000 drivers then looking for new sources of income, will remember that undermining the gig economy was all done for their own good and not just to shore up existing operating models and vested interests from the forces of digital disruption.

A grey colored placeholder image