Uber’s share price has been “sent into reverse” thanks to a “landmark” judgement over the employment status of the ride-hailing app’s UK drivers, says Simon Freeman in the Evening Standard. The UK Supreme Court has decided to uphold a 2016 ruling by an employment tribunal that drivers on its platform should be classified as Uber workers rather than self-employed. This means that Uber’s drivers in the UK are entitled to “a minimum wage, overtime, sick pay, holiday pay, pensions” and possibly retrospective compensation.
The ruling is definitely bad news for Uber, as it threatens its entire business model, says Morgan Schondelmeier in The Daily Telegraph. Not only will drivers be entitled to rights such as paid holidays and regular breaks, but the Supreme Court has also ruled that a driver is “considered working any time they are logged into the app, not just when on an active trip”. As a result, Uber will have to pay for any downtime as well. All this will “drastically raise employment costs” – and prices for customers. There is even a chance that Uber could reach a “tipping point” and decide to leave the UK.
Further trouble ahead?
Not so fast, says Sam Schechner in The Wall Street Journal. Uber argues that the ruling will only set a “limited” precedent as it “has changed how it handles its relationships with drivers since 2016”. It has given them more flexibility, including the right to turn down fares repeatedly. According to the judgement, the lack of such flexibility played a key part in the Court’s original decision to rule against them. In any case, the effect on costs will be lessened by the fact that Uber has already “increased benefits for its drivers” and the fact that other places in the world, such as California, have voted to classify Uber drivers as independent contractors.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Still, the UK isn’t the only place in the world that is thinking about regulating employment platforms, such as Uber, more closely, says Natalia Drozdiak on Bloomberg. The European Union is working on proposals to “improve the working conditions of platform workers”, including strengthening their right to bargain collectively, while even the recent Californian law sponsored by the company forces Uber to provide more benefits. Besides, even Uber’s CEO Dara Khosrowshahi has admitted that the company needs to “do more and go much further” if it is to pre-empt additional regulation.
Overall, there’s no hiding the fact that the ruling is a “kick in the tyres” for Uber, says Lex in the Financial Times. Investors who have “already borne the cost of regulatory battles from New York to Hong Kong”, must be wondering how long it will be before the technology platform finally turns a profit. Still, they are not alone in their misery. You can expect “potential litigation and labour policies” to rate a mention or two in Uber Eats rival Deliveroo’s prospectus when it floats in a few weeks’ time.
-
UK blue chips offer investors reliable income and growthOpinion Ben Russon, portfolio manager and co-head UK equities, ClearBridge Investments, highlights three British blue chips where he'd put his money
-
Rightmove: Asking prices set to rise 2% in 2026 after post-Budget market reboundBuyers and sellers who held off in anticipation of the Budget will come back to the market and contribute to asking prices increasing next year, according to Rightmove
-
British blue chips offer investors reliable income and growth
Opinion Ben Russon, portfolio manager and co-head UK equities, ClearBridge Investments, highlights three British blue chips where he'd put his money
-
Coreweave is on borrowed timeAI infrastructure firm Coreweave is heading for trouble and is absurdly pricey, says Matthew Partridge
-
Renewable energy funds are stuck between a ROC and a hard placeRenewable energy funds were hit hard by the government’s subsidy changes, but they have only themselves to blame for their failure to build trust with investors
-
Profit from document shredding with RestoreRestore operates in a niche, but essential market. The business has exciting potential over the coming years, says Rupert Hargreaves
-
The war dividend – how to invest in defence stocks as the world arms upWestern governments are back on a war footing. Investors should be prepared, too, says Jamie Ward
-
Literacy Capital: A trust where great returns fund a good causeThere’s plenty to like about specialist private-equity trust Literacy Capital, says Max King
-
An AI bust could hit private credit – could it cause a financial crisis?Opinion Private credit is playing a key role in funding data centres. It may be the first to take the hit if the AI boom ends, says Cris Sholto Heaton
-
8 of the best ski chalets for sale nowThe best ski chalets on the market – from a traditional Alpine-style chalet in Switzerland to an award-winning Modernist building in Japan’s exclusive ski areas
