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Uber judgment is set to reshape the gig economy

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Move fast and break things, runs a Silicon Valley aphorism. In Uber’s case, one of those things turned out to be British employment law. The UK Supreme Court on Friday dismissed an appeal by the taxi booking app against a lower court’s judgment that its drivers should be classified as “workers” rather than self-employed. That grants them the entitlement to holiday pay, sick pay and the minimum wage. The decision strikes not only at the heart of the company’s business model but the gig economy generally.

This is by no means the first case that Uber has lost. In California, courts similarly backed the idea that drivers using the service ought to be classed as employed by the company rather than independent contractors — though this was weakened by a referendum. In the UK, the question rested on the degree of control the company enjoys over drivers. Lord George Legatt, who wrote the Supreme Court’s unanimous ruling, said “the question . . . is not whether the system of control operated by Uber is in its commercial interests, but whether it places drivers in a position of subordination to Uber. It plainly does.”

The judgment, however, rests on specific facts about the relationship between Uber and its employees. The court asserted that Uber set maximum fares, drivers had no say in their contracts and the application imposed penalties if drivers cancelled too many requests. This level of control meant drivers could not increase their income using “professional or entrepreneurial skill”, the court concluded, meaning they worked for Uber and not themselves.

It remains to be seen how Uber will react and whether it can tweak the platform so that it reduces this control, allowing drivers to be genuinely self-employed. If it does so, however, it will mean the taxi booking app will be less able to guarantee a uniform service. The alternative would mean raising prices to cover the additional costs associated with conforming to the law. Either way, the company’s business model in the UK — London is one of its few profitable markets worldwide — will have to change.

The principles behind the judgment should also worry other gig economy businesses and their investors. Start-ups that want to control their workers and guarantee a particular kind of service will in exchange have to provide them with sick pay, holiday pay and the minimum wage. That will raise costs and reduce returns. The days of profiting from ambiguity in UK employment law could come to an end. 

Ultimately, however, the judgment is an indictment not of UK employment law but its enforcement. It took five years for the drivers to get justice. In addition to the harm done to workers, potential competitors to Uber who played by the rules may have struggled in the interim — penalised by the unfair competition. The impact of the decision may be piecemeal too: workers at other companies will have to bring their own cases and cite the decision as precedent. In the short term, many will not enjoy all their legal rights.

Britain needs to take a wider look at how it regulates the labour market as novel forms of work proliferate — delivery drivers have been one of the few professions to see their ranks swell during the pandemic. It also needs to take a more proactive approach to enforcing the laws that exist; every court has agreed with the Supreme Court’s interpretation but no agency proactively sought to enforce it. The government’s recently created position of director of labour market enforcement is soon to be vacant. The government must move fast to fill it.

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How the Gig Economy Helps American Workers, Explained

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Sure, you know that being an Uber driver is great for someone who wants to make their own hours. But did you know that many Americans are choosing freelance work because they need flexibility because of family or other responsibilities?

Did you know that small businesses rely on independent contractors? Or that Americans who were once discouraged because they couldn’t make a job work with their lifestyle are now able to work?

But unfortunately, the gig economy is under attack by leftists. In California, a new law has made many such flexible jobs illegal.

In this “Policy Lab” episode, posted above, we have the facts on the gig economy. Check it out—and if you’re interested in watching more “Policy Lab” episodes, you can view them here.



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Gig economy musn’t push labor back into 19th century – Deutsche Welle

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Gig economy firms ordered to give 60,000 riders contracts in landmark Italian ruling

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FOUR major gig economy firms in Milan have been ordered to employ 60,000 delivery riders and pay €733 million (£635m) in fines in a huge victory for workers’ rights.

The decision follows last Friday’s landmark Uber ruling in the British Supreme Court that found drivers for the company were workers and not self-employed.

Authorities in Italy’s largest city gave Deliveroo, UberEats, JustEat and Foodhino-Glovo 90 days to comply with their order.

Deputy Prosecutor Tiziana Siciliano said: “The vast majority of these riders are employed with occasional self-employment contracts … but it emerged without a shadow of a doubt that they are fully included in the organisation of the company.”

Ms Siciliano also said an IT platform that managed the workers, ranking them according to performance, forced them to labour like slaves without basic employment rights.

“This system actually forces the rider to accept all orders in order not to be demoted in the ranking and get less work,” she said. “This is the reason why it is impossible to take holidays or sick leave.”

Prosecutor Francesco Greco declared that the ruling meant “it is no longer the time to say that they are slaves. It’s time to say that they are citizens.”

The order also places obligations to provide safe bicycles, accident compensation and training to the riders.

 JustEat said it was launching an internal investigation into its workers’ safety and said it had made changes to its business model to “introduce a safer, more controlled and direct system with our workers — as employees.”
 
 But UberEats, Deliveroo Italy and Foodhino-Glovo said they did not agree with the order.
 
“The online food delivery is an industry that operates in full compliance with the rules and is able to guarantee an essential service,” they said.

A worldwide boom in food delivery because of lockdowns imposed by coronavirus has put the spotlight on the plight of couriers worldwide who often lack proper employment rights.

The European Commission launched a public consultation on the rights of gig economy workers on Wednesday. The standing committee of China’s National People’s Congress also began consideration of a draft law strengthening legal protections for workers in “flexible” employment last month following protests over the mistreatment of gig economy workers.

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