News & Views

The Uber Economy


Following a recent case brought to the High Court by Transport for London (“TFL”), which sought to clarify the legality of Uber in the UK, it has been confirmed that the “ride-sharing app” does not breach the law.

  1. What is the current legal status of Uber in London/the UK? Is the company exploiting legal loopholes?

The argument centred on whether the app functioned as a taxi meter, which is currently not legal for private hire vehicles in the UK.  It could be argued that the app does in fact act as a metred pay system in the way in which it functions, however, as a direct result of the ruling Uber can continue operating as is; remaining unbound by the rules and regulations to which the traditional Black Cab drivers are bound.

Furthermore, as a multinational company, Uber, appears to be transferring some of its profits to the Netherlands (where the company has its head office) where corporation tax is lower, meaning that Uber pays a minimal amount in tax to HM Revenue and Customs.

  1. Whilst Uber may be operating outside of its local licensing and regulatory obligations – are there other legal areas where Uber is/has been under scrutiny, such as employment law?

Whilst the app seem to be testing the legal loopholes in the UK, all cab drivers (including Uber drivers) are required to hold a Private/Public Licence issued by TFL for which various tests need to be passed including an enhanced background check, medical check and topographical assessment. The way in which Uber is structured in the UK allows any driver (known as “Partners”) to go to a one-day licensing session, after which they are deemed “qualified” to work. That means potentially, a driver can be ready to start working within a few months. This is arguably a point of contention with Black Cab drivers who are required to pass The Knowledge and undertake intensive training and testing over a typical period of 2-4 years before they are qualified to operate.

However, the real scrutiny currently appears to lie in the legal classification of Uber drivers. According to Uber, their Partners are classified as self-employed contractors. However, only as recently as July 2015, the first group of Partners have brought formal legal proceedings against the company complaining of a lack of basic worker rights.

Arguably, however, it is the flexibility of work that makes it so appealing – workers set their own hours and shifts and basically work when they want to work. That flexibility would be lost if they were classified as employees.

  1. What are their long-term prospects for continuing in business in its current format?

Uber seems to have enjoyed a fast expansion across the UK, possibly due to its focused use of technology and its purported “transparency” over fares, which are significantly cheaper than that of a traditional black cab. It seems to cater to its customers’ needs well by allowing them the quickest pickup – wherever they may be, meaning those late night struggles to catch a black cab are fast becoming a thing of the past. In response, Black Cab drivers have launched an offensive with their new app “Cab:app” which aims to rival Uber. How this will play out over time is uncertain at present.

In terms of Uber’s overall long-term prospects, The London Central Employment Tribunal ruling will no doubt affect the way in which the app operates. Should Partners be classified as employees, Uber will arguably have to look at the way in which its current business model operates and look to make changes in order to continue making a profit in the way it has been to-date.

Uber

A High Court judge has ruled that the way the taxi hiring app firm Uber calculates fares based on a “meter-like” system is not illegal.


Editorial Comment

Technology is fast taking over the way in businesses operate and Uber has embraced this. Rather than seeking to oppress it, it is time the stringent regulations shifted in line with the times. At the end of the day, companies like Uber are not cab firms, they are purely a technology driven business and they appeal to consumer interest creating some healthy competition in the market place.

 

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