Uber drivers in Britain should get paid vacation days and be guaranteed a minimum wage, a tribunal said Friday, in a ruling that tests the limits of the so-called "gig economy," in which companies rely on individual to work as self-employed contractors without safety nets.
The case, which the company plans to appeal, has wider implications for the British economy and could encourage similar labor actions by Uber drivers in other countries or companies with similar business models.
With so many people working in less than traditional arrangements, policymakers are certain to take note how the courts rule in regard to future policy on sick pay, pensions and other benefits.
"Uber drivers often work very long hours just to earn enough to cover their basic living costs," said Nigel Mackay, the attorney from law firm Leigh Day who is representing the workers. "It is the work carried out by these drivers that has allowed Uber to become the multi-billion-dollar global corporation it is."
Under the ruling, Uber drivers who brought suit in Britain should get paid vacation days and a guaranteed minimum wage. The GMB union says the decision will have a "major" impact on the drivers, who argued they should get the labor rights of employees, not self-employed workers.
The union says the Central London Employment Tribunal's decision Friday could affect as many as 30,000 drivers, but the company has underscored it only applies to those who filed suit.
The ruling and the suits certain to follow have the potential to affect tens of thousands of others who work as self-employed contractors for tech companies. Already, foster carers and couriers for delivery services are challenging their worker status.
Prime Minister Theresa May has ordered a study on the implications of the "gig economy" and the department of Business, Energy and Industrial Strategy has launched an inquiry into the future of work. Tax authorities are also beefing up their enforcement unit.
Sean Nesbitt, a partner at the International law firm Taylor Wessing argued the case was only the beginning of a vital debate on how the "gig economy" is affecting Britain.
"With conflicting data over the size and impact of the gig economy there is too much at stake for government business, unions and the individuals who work in the gig economy for this to be anything other than the first in a series of battles," he said.
Services like Uber have grown in popularity also because they offer lower prices and greater flexibility. A key question in the legal battle is whether having to recognize their drivers as employees—and pay for the associated costs like vacation days and minimum wage—might erode Uber's ability to provide low costs.
Uber argues it is a technology company that links self-employed drivers with people who need rides. It also says drivers should seek arbitration in the Netherlands, where Uber's European operations are based.
Jo Bertram, the company's regional general manager, argued that thousands of Uber drivers want to be self-employed and be their own boss.
"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," Bertram said. "While the decision of this preliminary hearing only affects two people we will be appealing it."
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