The court again forces Uber to abide by the rules

UBER HAS repeatedly tried to convince others to see it the way he sees himself. The car finder giant said its drivers are independent contractors who are not eligible for minimum wages, vacation pay, or pensions. Drivers, for their part, point out that they are algorithmically driven and cannot set prices or routes. The courts sided with them. In 2016, the Labor Court ruled that Uber drivers are entitled to minimum wages and vacation pay. Uber has lost three appeals, the most recent of which was in February in the Supreme Court. On December 6, he was dealt another legal blow when the High Court, in effect, ruled that his entire business model was in violation of the rules.

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This is the last judgment Uber has made. During a Supreme Court hearing, the presiding judge suggested that the firm may have violated the rules governing car rental in London. Uber has asked the High Court to declare this is not the case. Instead, he agreed and said the rules require Uber, not drivers, to enter into contractual agreements with passengers. London’s transport authority, the Metropolitan Transport Regulator, has ordered all taxi operators to queue.

The change likely means that Uber is responsible for anything that goes wrong, such as no-shows, and that it is entitled to value-added tax on tariffs. This can be obtained retroactively. Some estimates put the potential bill at £ 2 billion ($ 2.6 billion). It looks like the rides will get 20% more expensive.

Uber’s position in London was already precarious. Initially, he subsidized tariffs with venture capital to dominate the new market. The same tactic has paid off in America, where Uber and Lyft form a duopoly, but in London, Uber is just one of many on-call services, including Free Now, Bolt and Ola, and must also compete with black taxis and the general public. transport network. This does not always meet the requirements. Drivers complain that Bolt, the Estonian clone of Uber, pays better; the customers that licensed black taxis called by Free Now often arrive faster.

This created negative feedback. Fewer rides available meant that passengers were less likely to use Uber, making it even less attractive to drivers. Then came the pandemic, which reduced the demand for rides and provided new ways to make money while driving, delivering food and parcels to closed homes. The opening of Britain led to a shortage of drivers. In November, Uber raised rates by 10% to try to lure them back.

The firm is likely to continue poking around in London; leaving one of the largest markets could be an extremely negative signal for investors. But for London’s 2-meter Uber passengers, the future will be more expensive and slower. The days of cheap travel and a two-minute pickup truck have passed with the venture capital that paid for them. For the 45,000 Uber drivers in London, the future is harder to predict. The courts ruled in their favor, but Uber’s profitability hinges on cost cuts, of which they are the largest.

This article appeared in the UK section of the print edition under the heading Cost Factors.

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