What’s Going On Here?Uber lost a major UK Supreme Court ruling on Friday, which isn’t the sort of service the ride-hailing giant’s grown accustomed to. What Does This Mean?Uber famously treats its drivers as freelancers, but this court ruling – which has been in the works for the last five years – means there’s no wiggle room any more: it’ll have to treat the 25 who brought the case as employees. See, Uber already dictates its drivers’ contract terms, remuneration, and ability to work, so the court figured it was only right they were given a regular salary, not to mention vacation time and sick pay.
Uber will now face a tribunal to decide how much it'll have to pay those drivers. And given there are around 1,000 others with identical complaints, it’s likely that the floodgates holding back similar settlements will open – though, for now, the company doesn’t have to reclassify all its British drivers. Why Should I Care?For markets: The costs might outweigh future opportunities.
Uber’s food delivery platform has benefited from the pandemic, sure, but its ride-hailing business has suffered. Investors, for their part, might’ve hoped its earnings would get a boost when economies reopened and cautious customers opted for private Ubers over public transport. But between these newly elevated costs in the UK – Europe’s largest ride-hailing market – and looming problems in California, profit could be a long way away – which might be why Uber’s stock dropped on Friday.
The bigger picture: This ruling is an issue for the entire gig economy.
The Uber case could also come back to bite other businesses reliant on gig economy workers. Take Deliveroo: the global food delivery service – whose biggest market is the UK – relies on freelancers to deliver its takeout, and it might face extra costs that could derail the profit it’s promised investors. Talk about bad timing: it’s reportedly planning an initial public offering before the end of March. | 