Drivers for the ride-hailing service Uber are set to receive benefits such as holiday pay and pensions after a court ruled that they should be classed as company employees rather than self-employed contractors.
Uber drivers in the UK could also see their earnings increase as the landmark employment tribunal ruling means they will be eligible to receive the national living wage. The firm, which is thought to use around 40,000 drivers in Britain, said it plans to appeal the judgement.
The tribunal case was brought by a group of Uber drivers who may now be entitled to claim compensation for any periods of unpaid holiday as well as any hourly earnings below the living wage or minimum wage levels.
The drivers who were not involved in the claim will not be entitled to back pay, but Uber will be obliged to improve their contracts from this point onwards.
The ruling looks set to have a significant impact on a number of “gig economy” businesses in the UK, many of which treat workers as self-employed or contractors rather than staff.
One of the most significant costs such businesses will face regards pensions: by next year, practically all UK employers will have to have a pension scheme in place into which staff are automatically enrolled. Employees who choose to remain in these pensions are entitled to monthly contributions from their employer.
Tom McPhail, head of retirement policy at investment firm Hargreaves Lansdown, said: “This is great news for anyone working in the gig economy as it means they are more likely to be eligible for a workplace pension, with all the attendant benefits and in particular the highly valuable employer contribution.
“It is also going to be a challenge for Uber and employers like them, in deciding what specific pension terms they want to offer their employees. But however they deal with this, it is going to cost them time and money.”
Jo Bertram, Uber’s UK manager, said: “Tens of thousands of people in London drive with Uber precisely because they want to be self-employed and 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. While the decision of this preliminary hearing only affects two people, we will be appealing it.”
The tribunal’s ruling comes at a time when the working practices of gig economy firms are under increasing scrutiny from the Government. Earlier this month, prime minister Theresa May announced a review of modern employment which aims to address issues such as job security, low pay, and erosion of workers’ rights.