The Uber verdict

An employment tribunal ruled that transportation service provider Uber must pay drivers who work with the service as employees, rather than self-employed, as is currently the case. The company is likely to appeal the decision.

With around 30,000 drivers and 2 million users in London alone, Uber has completely transformed the private hire vehicle business, making taxis a viable transportation option for many people for whom it previously was not one.

And while private hire license laws mean that becoming a driver in the UK is not as easy as it is in some other countries, and not as easy as both drivers and the company would have liked, this ground-breaking app has provided a source of full or part-time income for so many. As is always the case when people engage in honest transactions, both drivers and passengers have benefitted greatly from Uber.

Enter unions and government. The idea of people dealing with each other, in the words of Ayn Rand, “by mutual consent to mutual advantage”, is unacceptable to central planners, who wish to control every aspect of every individual’s life. But in this scenario, where passengers benefit from cheap rides, drivers benefit from a source of income, and Uber benefits from both, becoming a multi-billion dollar business in the process, we’d be hard pressed to find a victim, on whose behalf government needs to step in. And yet, such “victims” have managed to find us.

The two Uber drivers listed as claimants in the tribunal had signed a contract with the company of their own volition. They were paid 75% of what they earned according to that contract. Such a deal insures that drivers get paid for their actual work, and that Uber doesn’t lose money employing them. The only reason for them to demand government intervention forcing Uber to pay them a minimum (or, as it’s now called, “living”) wage is if they don’t believe they can actually create a value equal to or greater than the one they’re demanding. The issue of how they expect Uber to pay them while operating at a loss (as the very fact of their claim would suggest is the scenario they foresee) has yet to be addressed.
Self-assessed incompetent Uber drivers won’t be the only ones thrilled with this verdict. Drivers of over-priced black cabs have been complaining about Uber since the service was first introduced in London. The realisation that if passengers can get the same exact service for a third of the price they’re likely to choose to do so, served as an immediate call to action for these drivers.

But the action taken by black cab drivers wasn’t to lower their prices or improve their service; instead, they have been lobbying government to intervene in a way that would severely limit Uber, thus raising the company’s prices. The fact that this would put drivers out of work and would force passengers into longer and less safe journeys does not concern protesting black cab drivers, who want to bully customers into using their service by removing the competition.

This verdict could negatively impact other service providers who are self-employed. Where the less competent among them would try to claim they should be considered employees, this decision by the tribunal would serve as precedent. Much like in the case of private hire vehicles, the effect would be less work for the competent self-employed, fewer options for the companies who use their services, and lower quality / higher priced goods and services for the end customer. When that day comes, possibly much sooner than we anticipate, remember who to thank.

Image © David Holt