Will the shutting down of Uber in London be a blow to the wider gig economy?
On Friday, TFL announced that it would be revoking Uber’s licence to operate in London, citing that Uber’s approach and conduct demonstrates a lack of corporate responsibility.
TfL concluded the ride-hailing app firm was not fit and proper to hold a London private hire operator licence, claiming that it took the decision on the grounds of “public safety and security implications”.
At present, Uber does not class drivers who use the app as employees but as self-employed, meaning they are not legally entitled to the minimum wage, sick pay or holiday pay.
Uber has launched an appeal against the ruling, but this latest development has rekindled debates surrounding the UK’s growing gig economy and employment rights.
TfL’s concerns include Uber’s approach to carrying out background checks on drivers and reporting serious criminal offences.
Uber’s current licence is due to run until 30 September. The taxi-hailing app has 21 days to appeal against TfL’s decision and can continue to operate while any appeals are ongoing.
The Uber chief executive, Dara Khosrowshahi, has since said in an open letter that Uber would appeal against the city’s decision, but accepts it “must change”.
Uber has been the centre of a media storm as the result of multiple Uber controversies over the past year or so.
Chief executive Travis Kalanick, resigned in July amidst multiple controversies and criticism of his management style.
In June, 20 staff were sacked after a law firm investigated specific complaints made to the company about sexual harassment and bullying within the company.
In October 2016 Uber lost a landmark employment tribunal in the UK which ruled drivers should be classed as workers rather than being self-employed.
The ban by Transport for London over “public safety and security” raises questions about the future of the gig economy.
‘Uberisation’ has come to mean the turning of traditional service industries on their head, by providing a technological platform to appease users on a massive scale.
Gig economy staff are not classed as employees and so have no right to redundancy payments or consultations.
If no agreement is reached, the company faces being barred from servicing its 3.5 million customers, threatening the livelihoods of its massive fleet of drivers.
Some will see it as an important halt to a revolution that threatens the pay and conditions of flexible workers.
Labour MP Frank Field, who led the enquiry, said yesterday:
“This could be a game changer for the gig economy.
“Uber must now respond to TfL’s decision by totally resetting its business model. This will need to be built upon two foundations – a safe and reliable service for every passenger and a living wage and fairer conditions for every driver who makes themselves available.”
Paul Kelly, Employment Partner at Blacks Solicitors LLP added:
“The imminent threat to Uber’s operations in London probably represents one of the biggest setbacks the gig economy has faced in recent years. But the main reasons given for the refusal to renew its London licence are a perceived lack of corporate responsibility and how it deals with its drivers’ background checks. So where is the connection with the gig economy? Conspiracy theorists claim that the move to close down Uber in London comes as a direct result of the simmering debate about employment/self-employment status which continues to dog this “disruptive” taxi hailing app – as well as other gig-based operations such as Deliveroo and Hermes. In fact, those conspiracy theorists may unwittingly be close to the practical reality of the situation.
“Uber’s claim that it is not an employer controlling and directing employees, but rather a platform to connect drivers with passengers, has sparked substantial litigation over the years. But it is one of the main factors in its success – it allows flexibility and low overheads in a market dominated by Black Cabs. However, Uber operates in a regulated market that requires licencing, if for no other reason than to ensure public safety. It’s a problem Uber has faced in other cities – notably in Austin, Texas where a similar argument over driver background checks led to a year-long hiatus in Uber’s operations in that city.
“So here is the problem – if Uber is not an employer, how can it adequately manage its drivers and so comply with the rules and standards set down by the licencing authorities whilst at the same time maintaining that its drivers are genuinely self-employed? Uber wants to have its cake and eat it. On the one hand, it wants to regain its licence to operate in London, so it will need to get its act together in relation to matters such as driver background checks. However, in order to do that it will have to find a way of exerting more control over its drivers without blowing its gig business model out of the water.”