The changes that lie ahead for Uber could be indicative of a bigger shift for the gig economy at large. Photo: Reuters
The changes that lie ahead for Uber could be indicative of a bigger shift for the gig economy at large. Photo: Reuters

The (possible) end to gig economy model

By Farah Khalfe Time of article published Feb 28, 2021

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CAPE TOWN - EVERYONE’S favourite transportation service just lost a major legal battle.

A week ago, former Uber drivers James Farrar and Yasseen Aslam achieved the outcome of their desire – a court ruling citing that drivers for the taxi company should be treated as workers rather than independent contractors.

This slight distinction could be the catalyst for major implications and come at a heavy cost to the firm.

Aslam and Farrah first took on Uber in 2016, contending that they were workers and should be entitled to minimum wage and paid leave.

Uber then lost a string of subsequent appeals, resulting in the latest judgment by the UK’s Supreme Court.

The basis of this ruling rests on five key reasons: First, the drivers have no say over their fares. Second, Uber imposes a standardised written agreement on its drivers. Third, they exercise extensive control over the drivers, including penalising drivers whose acceptance rates do meet Uber’s expectations. Fourth, Uber uses a rating system to dictate how drivers should deliver their service, and fifth, Uber restricts communication between driver and passenger, preventing the formation of any future relationship.

This led the Supreme Court to deduce that there is an imbalance of power in the firm.

The increasing hours spent on the platform along with the below-minimum pay means that drivers have no opportunity for entrepreneurship and improving their financial position. Farrar and Aslam are “thrilled and relieved” with this ruling.

“This is a 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.

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

Uber also commented on the ruling, saying: “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.”

The changes that lie ahead for Uber could be indicative of a bigger shift for the gig economy at large, encouraging similar claims from freelancers, online teachers and drivers from rival transport companies.

In fact, as of Thursday, South African human right’s attorneys have followed suit by filing a class action claim against Uber SA to have their drivers declared as employees in the Johannesburg Labour Court. The application will seek compensation for unpaid overtime and holiday pay. The case is being presented by Mbuyisa Moleele Attorneys, assisted by Leigh Day.

“Uber operates a similar system in South Africa, with drivers using an app, which the UK Supreme Court concluded resulted in drivers’ work being “tightly defined and controlled” by Uber,” the attorneys said.

This posed the key issue of whether drivers contract with passengers using Uber as an agent, or alternatively that drivers are working for Uber, given they do not have the autonomy of a contract worker.

If the lawsuit is successful, there are approximately 12 000 to 20 000 drivers who will benefit from this outcome.

One thing is for certain, this court ruling definitely hones in the message that the misclassification of workers in the online and gig economy will no longer be tolerated, and the nature of modern working practices has to change.

BUSINESS REPORT

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