UK Supreme Court rules Uber drivers are workers

Uber drivers must be treated as workers rather than self-employed, the UK’s Supreme Court has ruled.

The decision means tens of thousands of Uber drivers are set to be entitled to minimum wage and holiday pay.

The ruling could leave the ride-hailing app facing a hefty compensation bill, and have wider consequences for the gig economy. 

In a long-running legal battle, Uber had appealed to the Supreme Court after losing three earlier rounds.

‘Massive achievement’

Former Uber drivers James Farrar and Yaseen Aslam, who originally won an employment tribunal against the ride hailing app giant in October 2016, told the BBC they were “thrilled and relieved” by the ruling.

“I think it’s a massive achievement in a way that we were able to stand up against a giant,” said Mr Aslam, president of the App Drivers & Couriers Union (ADCU).

“We didn’t give up and we were consistent – no matter what we went through emotionally or physically or financially, we stood our ground.”

Lord Leggatt said that the Supreme Court unanimously dismissed Uber's appeal
image captionLord Leggatt said that the Supreme Court unanimously dismissed Uber’s appeal

Uber appealed against the employment tribunal decision but the Employment Appeal Tribunal upheld the ruling in November 2017. 

The company then took the case to the High Court, which upheld the ruling again in December 2018.

The ruling on Friday was Uber’s last appeal, as the Supreme Court is Britain’s highest court, and it has the final say on legal matters. 

Delivering his judgement, Lord Leggatt said that the Supreme Court unanimously dismissed Uber’s appeal that it was an intermediary party and stated that drivers should be considered to be working not only when driving a passenger, but whenever logged in to the app.

The court considered several elements in its judgement:

  • Uber set the fare which meant that they dictated how much drivers could earn
  • Uber set the contract terms and drivers had no say in them
  • Request for rides is constrained by Uber who can penalise drivers if they reject too many rides
  • Uber monitors a driver’s service through the star rating and has the capacity to terminate the relationship if after repeated warnings this does not improve

Looking at these and other factors, the court determined that drivers were in a position of subordination to Uber where the only way they could increase their earnings would be to work longer hours.

Jamie Heywood, Uber’s Regional General Manager for Northern and Eastern Europe, said: “We respect the Court’s decision which focussed on a small number of 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. 

“We are committed to doing more and will now consult with every active driver across the UK to understand the changes they want to see.”

‘Drivers are struggling’

The Supreme Court’s ruling that Uber has to consider its drivers “workers” from the time they log on to the app, until they log off is seen as a key point.

Uber drivers typically spend time waiting for people to book rides on the app. Previously, the firm had said that if drivers were found to be workers, then it would only count the time during journeys when a passenger is in the car.

“This is a win-win-win for drivers, passengers and cities. It means Uber now has the correct economic incentives not to oversupply the market with too many vehicles and too many drivers,” said James Farrar, ADCU’s general secretary.

“The upshot of that oversupply has been poverty, pollution and congestion.”

Uber app on phone

However, questions still remain about how the new classification will work, and how it affects gig economy workers who work not only for Uber, but also for other competing apps. 

Mr Aslam, who claims Uber’s practices forced him to leave the trade as he couldn’t make ends meet, is considering becoming a driver for the app again. But he is upset that it took so long.

“It took us six years to establish what we should have got in 2015. Someone somewhere, in the government or the regulator, massively let down these workers, many of whom are in a precarious position,” he said.

Mr Farrar points out that with fares down 80% due to the pandemic, many drivers have been struggling financially and feel trapped in Uber’s system.

“We’re seeing many of our members earning £30 gross a day right now,” he said, explaining that the self-employment grants issued by the government only cover 80% of a driver’s profits, which isn’t even enough to pay for their costs.

“If we had these rights today, those drivers could at least earn a minimum wage to live on.”

Impact on Uber

When Uber listed its shares in the US in 2019, its filing with the US Securities and Exchange Commission (SEC) included a section on risks to its business.

The company said in this section that if it had to classify drivers as workers, it would “incur significant additional expenses” in compensating the drivers for things such as the minimum wage and overtime.

“Further, any such reclassification would require us to fundamentally change our business model, and consequently have an adverse effect on our business and financial condition,” it added.

Uber also wrote in the filing that if Mr Farrar and Mr Aslam were to win their case, HM Revenue & Customs (HMRC) would then classify the firm as a transport provider, and Uber would need to pay VAT on fares.

The company has long argued that it is a booking agent, which hires self-employed contractors that provide transport.

By Mary-Ann Russon
Business reporter, BBC News

Uber defends contractors ahead of EU law on gig workers’ rights

(Reuters) – Uber on Monday called on EU regulators to recognise the value of independent contracts in job creation as they consider new rules to protect gig economy workers.

The company has been criticised for classifying its drivers as independent contractors rather than employees entitled to rights, such as a minimum wage, paid holidays and rest breaks.

Uber has a mixed record in defending its business model. It scored a victory in California in November last year when voters passed a proposition allowing it to treat its drivers as contractors. One of its biggest tests so far will be on Feb. 19 when the UK Supreme Court will rule on workers’ rights.

Uber’s comments in a white paper to the European Commission precede a consultation on Feb. 24 when the EU executive will seek feedback from workers and employers’ representatives on gig workers’ rights before drafting laws on the subject by year-end.

“This standard (for platform work) needs to recognise the value of independent work, and be grounded in principles drivers and couriers say are most important to them,” Uber CEO Dara Khosrowshahi said in a blog post.

He said workers should have flexibility and control over when and where they want to work and that any changes should apply to the sector and not just one company.

“We believe a new approach is possible – one where having access to protections and benefits doesn’t come at the cost of flexibility and of job creation,” Khosrowshahi said.

The Commission said it will first seek feedback on whether a law is needed to improve the working conditions of gig workers, followed by a second consultation on the content of the law.

“As part of the social partners’ consultation, the European Commission is considering issues, such as precarious working conditions, transparency and predictability of contractual arrangements, health and safety challenges and adequate access to social protection,” a spokeswoman said.

Uber expands food delivery further: Sees ride demand pick up

Reuters – Uber Technologies Inc on Wednesday said revenue at its ride-hail and delivery businesses increased on a quarterly basis and said it was well on track to achieve its target for an adjusted profit by year-end.

Shares fell 2.4% in after-hours trading after gaining around 6% during the day in reaction to smaller ride-hail rival Lyft Inc saying on Tuesday it might become profitable during the third quarter, three months ahead of a previous goal.

Uber reported a loss on an adjusted basis before interest, taxes, depreciation and amortization of $454 million, significantly narrower than analysts’ average expectations for a $514 million loss, according to Refinitiv data.

Adjusted EBITDA, which excludes the cost of the company’s extensive stock-based compensation and other potentially significant items, is the profitability metric Uber uses.

Uber reported $3.17 billion in total revenue in the months from October through December.

Fourth-quarter mobility revenue, largely comprised of rides, declined by 52% from last year, but at $1.47 billion was up 8% on a quarterly basis despite new lockdown measures in the United States, Europe and the Middle East.

Lyft on Tuesday said it expected a rebound in demand in the second quarter and, in combination with further cost cuts, said it might now be able to turn a profit in the third quarter.

Orders at Uber’s food delivery platform, Uber Eats, further grew during the fourth quarter, as many countries and U.S. states issued new lockdown orders, closing restaurants and prompting many people to order in.

Delivery revenue more than tripled from last year and at around $1.36 billion, grew 19% compared with the third quarter.

Uber has expanded its footprint in the competitive space and acquired smaller food-delivery rival Postmates for $2.65 billion and alcoholic beverage delivery service Drizly for $1.1 billion.

Both deals were largely stock-based, with the Drizly deal expected to close later this year.

Uber also said it had further lowered costs in the fourth quarter, with total costs and expenses dropping 14% in that period.

Following a directive by Chief Executive Dara Khosrowshahi to focus on the company’s core businesses – rides and delivery – Uber has also slashed costs by selling adjacent units.

The company in December sold its self-driving Advanced Technologies Group (ATG) in a $4 billion equity deal at a steep drop in valuation. Khosrowshahi at the time said the deal would accelerate Uber’s profitability goal.

The same month, Uber also handed over the keys to its air taxi business Elevate, another cash-burning unit, without disclosing the terms of the deal.

Uber and Lyft’s long wait for a rebound in demand signals slow economic recovery

Investors are also hoping for more insight on Uber’s successful food delivery operations and Lyft’s efforts to set up a delivery business when the companies report fourth-quarter results this week.

Analysts generally do not expect ride-hail demand to rebound before the second half of 2021, when more people have been vaccinated and offices and businesses have reopened, which suggests a somewhat gloomy outlook for the broader consumer-based economy.

The sluggish recovery also complicates Uber and Lyft’s efforts to become profitable on an adjusted basis by the end of this year.

Lyft, scheduled to report results on Tuesday afternoon, already disclosed that rising COVID-19 infections have resulted in 47% and 50% fewer rides in October and November, respectively.

Analysts expect a similar trend for Uber, which reports results after market close on Wednesday. As a global player, Uber is also impacted by renewed lockdown measures imposed across its European markets.

“Cost-cutting is perhaps the main factor which investors watch these days when they decide to trade ride-hailing stocks,” analyst Haris Anwar said in a note.

Bernstein analysts cautioned investors to ignore the short-term volatility in the pace of recovery.

Unlike Lyft, Uber has been able offset its ride-hail losses with a surge in food-delivery orders at its Uber Eats business, where revenue has doubled during the pandemic.

Uber has expanded its footprint in the competitive space and acquired smaller food-delivery rival Postmates and alcoholic beverage delivery service Drizly.

The company has also launched grocery, package and prescription deliveries in some North American cities.

Lyft last quarter announced it was working to offer a delivery service for restaurants without launching a full-fledged consumer-facing platform for food delivery.

Asked about details during a December investor conference, Lyft President John Zimmer said the company was working on a white-label or non-Lyft-branded platform to allow deliveries between different businesses for groceries, food and packages.

Lyft has not provided further details and Zimmer in December said the company was still in the very early stages of the process.

Analysts on average expect Uber to post $3.58 billion in fourth-quarter revenue and a $949 million net loss, according to Refinitiv data.

Lyft is expected to post $562 million in quarterly revenue at a net loss of $226 million, Refinitiv data showed.

Groundbreaking biofuel rocket could be ‘Uber for space’

Snow swirled and a biting wind sent temperatures plummeting to several degrees below zero as the Stardust 1.0 made its debut at a former military base in Maine.

Strapped to a trailer and pulled by a pick-up truck along a runway once used by B-52 bombers in the Cold War, it wasn’t the most glamorous entrance for a rocket about to make history.

And it very nearly didn’t as the subzero conditions played havoc with the electronics and clouds moved in.

But after several delays and as the Sunday afternoon light waned, Stardust finally lifted off, becoming the first commercial launch of a rocket powered by bio-derived fuel.

Sascha Deri, who invented the biofuel, is cagey about what it’s made of, but says it can be sourced from farms around the world. The founder and chief executive of bluShift Aerospace, he and his team have spent more than six years refining the formula and designing a modular hybrid engine, which is also unique.

“We want to prove that a bio-derived fuel can serve just as well, if not better in some cases, than traditional fuels to power rockets and payloads to space,” he says.

“It actually costs less per kilogram than traditional rocket fuel and it’s completely non-toxic. And it’s a carbon-neutral fuel which is inherently better for our planet and more responsible.”

Stardust 1.0
image captionIt is the first commercial launch of a rocket powered by bio-derived fuel.

Stardust is a small rocket, just 20ft (6m) long and weighing 550lbs (250kg). But because it’s relatively cheap to fly and doesn’t need the high-tech infrastructure of larger rockets, it will help make space research accessible to more people. Students, researchers and businesses will be able to conduct experiments and test products with greater control and frequency.

“Right now there are freight trains to space like SpaceX and ULA – and there are buses to space, like medium size rockets,” says Deri. “They’re taking thousands of kilograms to space. But there’s no space launch service allowing one or two payloads to go to space. There’s no Uber to space. We want to be the Uber service to space.”

For the first launch, the payload included a high school experiment and tests on an alloy called nitinol made by Kellogg Research Labs in Salem, New Hampshire.

Founder Joe Kellogg says nitinol is a shape memory material that is used in medical devices such as stents. It is also used to protect rocket payloads from vibrations.

“We’re very heavily involved in space and trying to get into the larger missions like the lunar missions and the Mars missions that are coming up. Our long-term goal is to build whole rockets out of nitinol,” he says. “We think we can make them lighter and more energy efficient.”

Stardust 1.0
image captionA second planned rocket will be suborbital and a later version called Red Dwarf will enter polar orbit

While Stardust flew just one mile into the sky before parachuting back to Earth, a second planned rocket will be suborbital and a later version called Red Dwarf will enter polar orbit.

Polar orbits offer more exposure to land than equatorial orbits. And Maine is geographically suited to such launches which makes it attractive to the growing space satellite communication industry, says Terry Shehata, executive director of Maine Space Grant Consortium which is funded by the US space agency Nasa. 

By some estimates, small satellite launch services could generate $69bn (£50bn) within the next decade. bluShift alone expects to create 40 new jobs in five years through launching tiny satellites known as cubesats.

Maine already has the infrastructure to support the industry, says Shehata. At the height of the Cold War, Loring Air Force Base at Limestone was the nation’s front line of defence. B-52 bombers armed with nuclear warheads constantly circled the skies on high alert to deter any threat from Russia. Stardust launched from the base’s three-mile runway of reinforced concrete and was temporarily housed in a hangar built for fighter jets.

The base closed in 1994, with devastating economic effects on the region. 

Other former bases include Brunswick Landing which could become Mission Control for a statewide spaceport complex.

“Maine has the right resources, we have the people, we have the geographical advantage of being able to launch into polar orbit. All we need to do is believe in ourselves that we can do this,” says Deri.

Uber fined over withholding sexual assault records

Uber has been fined $59m (£43m) for refusing to hand over the details of more than 1,200 alleged victims of sexual assault involving its drivers.

The taxi app firm said providing the information would be a “shocking violation of privacy” for victims.

Its decision was supported by one victims’ rights group.

The California Public Utility Commission (CPUC), which imposed the fine, said it did not require a public disclosure of the information.

The assaults allegedly took place in California between 2017 and 2019.

Uber had argued that public disclosure may be traumatic for survivors, potentially putting them in danger and discouraging others from coming forward.

But it also stated, in a long-running case with the CPUC, that it might not have a complete account of the incidents.

In its most recent ruling the CPUC said it “requires only that the information regarding sexual assault and sexual harassment be submitted to the Commission under seal”, which would have kept the details of individual cases private.

It added: “Uber’s effort to frustrate Commission oversight of the particulars of sexual assault and sexual harassment claims is also troubling given Uber’s professed desire to provide the safest transportation services.”

RAINN (Rape, Abuse and Incest National Network) had, in an August filing on the case, defended Uber, saying the firm should not have to share victims’ names without their consent. 

According to the RAINN website, it is involved in a partnership with Uber to provide tips for “the best ways to respect others while driving and riding”.

Some pointed out that Uber had in the past shown little regard for user privacy. In November 2017 it concealed a huge data breach that affected 57 million customers and drivers.

And in 2016 it was revealed that an internal company tool called God View allowed employees to see the location of Uber vehicles and customers who had requested a car.

As a result of that, Uber was ordered by the Federal Trade Commission to bring in stricter controls, and agree to be assessed by an independent auditor every two years.

Uber has 30 days to pay the CPUC fine or face having its services suspended in California.