What does the Supreme Court ruling on Uber mean for the gig economy?

  • By ITV News Multimedia Producer Kavita Patel

Uber must classify its drivers as workers rather than self-employed contractors, the UK's Supreme Court has ruled.

But lawyers have said the ruling could leave Uber facing a hefty compensation bill, and have wider consequences for the gig economy.

The gig economy, where people tend to work for more than one company as a contractor on a job-by-job basis, has faced fierce criticism from unions who say it is exploitative despite businesses citing flexibility as an advantage.

There is likely to be a knock-on effect for other companies within the gig economy, an economy thought to provide work for some five million people.

Managing partner at Lombards, Matt Gingell, told ITV News the Supreme Court ruling could prompt further cases.  

How could Uber's Supreme Court ruling affect the gig economy?

Deliveroo cyclist riding a bike Credit: PA

TUC figures reveal around 5,000,000 people in the UK were employed in the gig economy in 2019, a figure which is likely to have increased during the coronavirus pandemic.

Companies including Deliveroo, Addison Lee and Ola operate similar business models, where people are hired on a job-by-job basis.

While the Supreme Court ruling does not automatically mean everyone in the gig economy will now be classified as a "worker", it certainly opens the door for them to bring similar legal challenges for their statutory rights, and provides a precedent.

What have employment lawyers said?

Employment lawyer and managing partner at Lombards, Matt Gingell, told ITV News while the Uber case is in the limelight more people will fight for their statutory rights.

Mr Gingell said: "The decision today is helpful in that it re-emphasises that in determining worker status, the court must look at the reality of the relationship rather than focus on the contractual document.

"In the Uber case, the Supreme Court noted there were a number of key factors concerning control by Uber."

He added: "The problem, and it's important to stress, that this is based on Uber's specific operating model, each case is going to turn on its facts between the individual and the company."

When asked whether there could be more cases like this, Mr Gingell said: "There may well be more cases, you know people working for organisations may feel that given the outcome on this particular case the courts will be sympathetic to protecting their statutory rights such as the national minimum wage and paid leave."

"While the case is in the limelight, more people will come forward and of course there will be issues in bringing the claims and people who do have the support from unions will be more likely to bring claims, particularly if those claims will be decided over a long period of time."

So what does this mean for Uber drivers? Can Uber drivers get holiday pay?

Uber drivers took action against the company, with the legal fight going to the Supreme Court for judgement.

ITV News Business and Economics Editor Joel Hills said Uber "may also find itself presented with a large VAT bill", before adding there will be "implications here for whole gig economy."

Lawyers have said the ruling means at least 45,000 drivers in the UK will be entitled to basic rights, such as paid holiday, breaks and minimum wage.

Leigh Day, the law firm fighting the case on behalf of the GMB Union, said tens of thousands of drivers could be entitled to an average of £12,000 in compensation.

How has the GMB Union reacted to the ruling?

GMB Union described Friday's win as "historic" which marked "the end of the road for Uber’s mistreatment of drivers".

Mick Rix, GMB national officer said: "The Supreme Court has upheld the decision of three previous courts, backing up what GMB has said all along; Uber drivers are workers and entitled to breaks, holiday pay and minimum wage.

"Uber must now stop wasting time and money pursuing lost legal causes and do what’s right by the drivers who prop up its empire.

"GMB will now consult with our Uber driver members over their forthcoming compensation claim."

What have Uber drivers said about the ruling?

An Uber driver in London for five years, Mark Cairns said: "It’s been a long time coming but I’m delighted that we’ve finally got the victory we deserve.

"Being an Uber driver can be stressful. They can ban you from driving for them at the drop of a hat and there’s no appeal process.

"At the very least, we should have the same rights as any other workers and I’m very glad I’m part of the claim."

What has Uber said?

Lawyers representing Uber operating companies told Supreme Court justices that the employment tribunal ruling was wrong.

They said drivers did not "undertake to work" for Uber but were "independent, third party contractors".

Uber's regional manager for northern and eastern Europe, Jamie Heywood, said: "We respect the court's decision which focused on a small number of Uber drivers who used the Uber app in 2016.

"Since then we have made some significant changes to our business, guided by drivers every step of the way. These include giving even more control over how they earn and providing new protections like free insurance in case of sickness or injury."

Reacting to Uber's statement, ITV News Business and Economics Editor Joel Hills reports: "Uber’s statement plays down the significance of the verdict but the company will now face a series of claims for unpaid holiday and sick pay dating back to before 2016."