Uber’s share price retreats as it loses UK legal fight but ruling may accelerate self-drive plans

by | Feb 19, 2021

‘’Uber’s share price retreated in opening trading on Wall Street, falling 1%, as investors digested the implications of the UK ruling that drivers should be classed as workers, and not self-employed contractors.

The UK Supreme Court decision steers Uber into a dead end in its legal fight and now the ride-hailing service will have to incur significant additional costs in the UK, to pay drivers the minimum wage and overtime and potentially also compensation.

The ruling is the latest to chip away at the gig economy model upon which the transport and delivery companies have developed sprawling and lucrative businesses.

Uber had warned investors when it listed in 2019 that a reclassification of drivers as employees instead of independent contractors would adversely affect the business. Although this ruling relates only to the UK, Uber faces challenges in other parts of the world to drivers’ self-employed status, so a significant rethink of its labour policies is likely to be on the cards.

The action taken against Uber wasn’t the first and won’t be the last by drivers and couriers paid by the ride or delivery, yet penalised if they don’t adhere to strict company rules governing how they operate.

The argument that these platforms are simply booking agents, linking companies and customers, no longer washes if contracts signed by drivers limit their ability to work elsewhere due to detailed clauses on availability.

It may end up following the example of the delivery firm Hermes, which lost a similar ruling in the UK in 2018. It came up with a compromise deal with union leaders, offering its couriers a self- employed plus’ status. Workers who opted in can get annual paid leave and earn above the national minimum wage, but new couriers had to follow routes specified by the company.

Deliveroo is another platform which is being put under the self-employment test, with couriers arguing in court that they should be entitled to collective bargaining rights.

For Uber this is another set-back at a time when it’s been left reeling from the effects of the pandemic.  Although demand for Uber Eats deliveries continues to rise, it’s still not offset the sharp decline in driver bookings. However it’s not Uber’s short term profitability, but its vision for the future that appears to have kept significant interest in owning the stock through the crisis.

Uber is navigating spaghetti junction and shifting gears all over the place as it aims to use its technology to corner the markets in everything from food and freight deliveries to green transport and even access to healthcare via its ride service for patients.

This UK ruling may prove to be a set back on its ambitious road map, but it might accelerate Uber’s plans to bring in self drive cars to eliminate the headache and cost of human labour.’’

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