Uber Employment Tribunal decision a wake-up call for the gig economy
The decision in the Employment Tribunal claim highlights the risk inherent in many sharing economy business models.
The Employment Tribunal found that the Uber drivers who had brought the claims were workers and so were entitled to the National Minimum Wage, paid holiday and to be enrolled in a pension scheme.
Alex Mizzi, a Senior Associate in the Employment Law team at Howard Kennedy, says:
This case highlights the key commercial dilemma for sharing economy businesses which connect labour supply and demand: labour pool flexibility vs quality/service control. The more control they exercise over pricing and terms, or penalise users for turning down jobs, the greater the legal risks – and the greater the costs.
This is unlikely to be the end of the road. The law in this area is unclear and case results hard to predict, so it seems quite likely that the judgment will be appealed.
Entrepreneurs and investors in platforms operating along these lines need to be very aware of this issue as a business-critical risk. The potential additional costs from the national minimum wage alone can be very significant. Uber's H1 losses for 2016 were believed to be at least partly due to the impact of similar litigation in the US.
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