Uber
File illustration picture showing the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign in Frankfurt, September 15, 2014. A Frankfurt court earlier this month instituted a temporary injunction against Uber from offering car-sharing services across Germany. San Francisco-based Uber, which allows users to summon taxi-like services on their smartphones, offers two main services, Uber, its classic low-cost, limousine pick-up service, and Uberpop, a newer ride-sharing service, which connects private drivers to passengers – an established practice in Germany that nonetheless operates in a legal grey area of rules governing commercial transportation. REUTERS/Kai Pfaffenbach/Files (GERMANY – Tags: BUSINESS EMPLOYMENT CRIME LAW TRANSPORT)

Latest in the company vs everyone else saga is the Uber drivers debate, and a decision made by an employment tribunal in London today. According to the decision, Uber drivers in the UK will now be entitled to holiday pay, paid rests and the national minimum wage. Basically, it is now mandatory to consider drivers signed on to Uber’s platform as workers as opposed to self-employed contractors or freelancers.

Uber, based in San Francisco, has provided more than 20 million rides in London since it launched in the UK in June 2012 and expects to have 42,000 drivers on the capital’s roads by this year. It has the second highest valuation of any venture capital-backed start-up in the world, but has currently found itself in quite the sticky situation.

The ride-sharing giant had previously argued that its drivers, or ‘partners’, were self-employed contractors, not employees. This ruling is quite a monumental one, and the second one of its kind, having the potential to affect thousands of others working in similar roles across the gig-economy.

The nitty gritties of the case are thus: GMB, the trade union with more than 700,000 members, claims that Uber is not honoring the basic workers’ rights of its drivers, by failing to ensure that they are paid minimum wage or even receive the minimum amount of paid holiday.

The company’s repeated insistence of Uber drivers being independent contractors rather than employees has faced criticism in several markets already. But that is just how the company’s business model has been designed. At its very core, the company functions out of a principle of convenience and self-determination, for both the rider and the driver.

An Uber spokesperson explains this a little further:

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.

This is also why Uber remains resilient on this one point. Compromising on this would be tantamount to compromising on one of the foundational principles of its business.

However, the law doesn’t seem on their side thus far, with the company losing a similar lawsuit in California earlier this month. The ruling for that case determined that Uber drivers are employees, not contractors, delivering a significant blow to the company’s aforementioned operating model. The company however, appealed the decision. Today’s ruling puts it in the exact same situation yet again, with plans to appeal this ruling already being considered.

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