Friday 28 October 2016 2:25 pm

Employment tribunal ruling could cost Uber over £17m, says employment lawyer

Today's landmark ruling by an employment tribunal that Uber drivers are not self-employed but entitled to basic workers' rights such as holiday pay, could cost the company in excess of £17m, according to an employment lawyer.

Sean Nesbitt, partner in the employment team at law firm Taylor Wessing, said: "It is economically significant to Uber. With 40,000 drivers, statutory holiday pay rights which go with worker status could be as much as £13.88m pa." 

Read more: Amazon and Uber business models threatened by today's employment rulings

He said that's around ten times Uber's after tax profit of £1.415m. "Add statutory auto-enrolment pension contributions at three per cent (£3.45m) and there are ongoing annual costs of some £17.33m, not including sick pay.

"This takes no account of the minimum wage elements or back-pay aspects to the claim."

Uber has immediately responded by saying it will appeal the ruling, which will likely delay the process.

Additionally, the taxi-hailing firm points out that many of its drivers enjoy the arrangement precisely because it's flexible. A study commissioned by the firm and carried out by ORB said just over three-quarters of 1,000 Uber drivers polled preferred being self-employed and choosing their own hours.

Nesbitt said: "If the judgement is upheld, Uber's options are limited."

It could pass costs to drivers, swallow them (though it already subsidises driver costs), or pass them to riders.

Read more: All London Uber drivers will now have to prove their English skills

There are potentially much wider consequences too. "It affects over 100,000 UK workers in related industries," said Nesbitt. "There are a growing number of similar cases regarding the status of "workers" from other courier companies."

On 22 November, one of four legal cases against courier companies begins in the same employment tribunal that heard the Uber case.