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Uber in ‘minicab company’ shocker

Summary:
Labour got one back at capital on Friday, after an employment tribunal in London found that Uber’s circa 30,000 drivers in the city are actually its workers after all, and accordingly deserve employment protection. With potentially epic consequences for its costs, its tax bill, and the entire gig economy, that would mean Uber is no longer a mere intermediary platform. At least in the tribunal’s eyes. The ruling might not bind other courts, and of course Uber is going to appeal. Still, on the other hand, there’s another interesting thread in the judgment: what Uber claims to be, and how that stands up in court. The next time someone says Uber isn’t a taxi or transportation company, but something much more wonderful — justifying its considerable valuation and explaining why Saudi Arabia is

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Labour got one back at capital on Friday, after an employment tribunal in London found that Uber’s circa 30,000 drivers in the city are actually its workers after all, and accordingly deserve employment protection.

With potentially epic consequences for its costs, its tax bill, and the entire gig economy, that would mean Uber is no longer a mere intermediary platform.

At least in the tribunal’s eyes. The ruling might not bind other courts, and of course Uber is going to appeal.

Still, on the other hand, there’s another interesting thread in the judgment: what Uber claims to be, and how that stands up in court.

The next time someone says Uber isn’t a taxi or transportation company, but something much more wonderful — justifying its considerable valuation and explaining why Saudi Arabia is pouring money into it — you might now direct them to paragraphs 85 onwards of the reasoning for the ruling, as written by Judge Snelson and members of the tribunal.

It is quite strongly worded, and worth quoting at length:

We have reached the conclusion that any driver who (a) has the App switched on, (b) is within the territory in which he is authorised to work, and (c) is able and willing to accept assignments, is, for so long as those conditions are satisfied, working for Uber under a ‘worker’ contract and a contract within each of the extended definitions…

In the first place, we have been struck by the remarkable lengths to which Uber has gone in order to compel agreement with its (perhaps we should say its lawyers’) description of itself and with its analysis of the legal relationships between the two companies [Uber B.V. and Uber London Ltd], the drivers and the passengers. Any organisation (a) running an enterprise at the heart of which is the function of carrying people in motor cars from where they are to where they want to be and (b) operating in part through a company discharging the regulated responsibilities of a PHV operator, but (c) requiring drivers and passengers to agree, as a matter of contract, that it does not provide transportation services (either through UBV or ULL), and (d) resorting in its documentation to fictions, twisted language and even brand new terminology, merits, we think, a degree of scepticism. Reflecting on the Respondents’ general case… we cannot help being reminded for Queen Gertrude’s most celebrated line:

The lady doth protest too much, methinks.

Second, our scepticism is not diminished when we are reminded of the many things said and written in the name of Uber in unguarded moments, which reinforce the Claimants’ simple case that the organisation runs a transportation business and employs drivers to that end…

Third, it is, in our opinion, unreal to deny that Uber is in business as a supplier of transportation services. Simple common sense argues to the contrary…

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. In each case, the ‘business’ consists of a man with a car seeking to make a living by driving it. Ms Bertram spoke of Uber assisting the drivers to “grow” their businesses, but no driver is in a position to do anything of the kind, unless growing his business simply means spending more hours at the wheel…

Many Uber drivers (a substantial proportion of whom, we understand, do not speak English as their first language) will not be accustomed to reading and interpreting dense legal documents couched in impenetrable prose. This is, we think, an excellent illustration of the phenomenon of which Elias J warned in the Kalwak case of “armies of lawyers” contriving documents in their clients’ interests which simply misrepresent the true rights and obligations on both sides.

Of course, that last part in particular suggests that Uber could indeed be no mere provider of transportation services in one way. Its true business edge is legal and regulatory arbitrage.

Or at least, it was.

Related Links:
Izzy’s one-woman war against Uber – FT Alphaville

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Joseph Cotterill
Joseph is the FT’s Southern Africa correspondent based in Johannesburg, after previous stints as private equity correspondent and on the Lex column. But he still writes for Alphaville, which he joined way back in March 2010 — right in the middle of the Greek bailout crisis. He has been very interested in all things credit and sovereign debt ever since…