Courts close in on gig economy firms globally as workers seek rights

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Gig economy companies, including Uber and Deliveroo, have faced at least 40 major legal challenges around the world as delivery drivers and riders try to improve their rights.

The analysis of 39 employment cases, and seven linked cases on matters such as competition law, covers legal action in 20 countries including Australia, Chile, Brazil, South Korea, Canada and across Europe.

The cases have been brought by gig economy workers seeking access to basic rights, such as minimum wages and sick pay.

Put together by the International Lawyers Assisting Workers Network of more than 600 lawyers from at least 70 countries, the report highlights a string of court rulings in favour of drivers including in Italy, where authorities have fined Uber Eats, Glovo, Just Eat, and Deliveroo €733m (£628m) for misclassifying 60,000 couriers. That case is being appealed against.

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A court in Spain ruled last year that drivers for food delivery firm Glovo were employees and the government in Madrid has since announced legislation confirming delivery riders’ status as salaried staff. In South Korea, a driver working via the Tada van hailing app was also ruled to be an employee.

Last month, the UK supreme court dismissed Uber’s appeal against a landmark employment tribunal ruling that its drivers should be classed as workers with access to the minimum wage and paid holidays.

On Tuesday night, Uber announced it will guarantee its 70,000 UK drivers a minimum hourly wage, holiday pay and pensions, in a dramatic u-turn which could put pressure on other gig economy firms to change tack.

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Jeff Vogt, at the Washington DC based Solidarity Center workers rights group, said there was a clear trend towards recognising improved rights and employment status for those working for gig economy companies dealing with food delivery and taxi hire. “The courts are closing in on them,” he said.

However, the report also warns that not all claims are successful and states must act to enforce the regulations as gig economy firms use their considerable resources to defend their practices.

Tactics include contracts with mandatory arbitration clauses, which fend off legal action by forcing those with a grievance to pay costly administration and filing fees in the preliminary stages. This has proved a particular problem in the US.

The report also warns that after losing cases in jurisdictions with “weak or non-existent enforcement regimes”, companies have forced drivers to sign new contracts. The gig economy companies then claim that the court findings relate only to the old contracts. This has happened in the UK, when drivers for delivery firm City Sprint went back to court over new contracts after winning an initial action.

“These companies have gone to great lengths to insulate themselves from responsibility and have put an extraordinary burden on workers to claim their basic rights at work. Governments must step in now and enact legislation that protects the rights of all workers providing labour to a digital platform company,” Vogt said.

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In California taxi hailing firms Uber and Lyft spent more than $200m (£144m) on a referendum campaign to exempt their businesses from the newly introduced AB5 law which would categorise their drivers as employees. The proposition 22 measure won the vote in November last year.

Nigel Mackay, a lawyer at Leigh Day which is representing thousands of Uber drivers who wish to claim holiday pay, said: “In Europe it does seem the direction of travel is towards more rights for those who work in the gig economy.”

However, he added that legal success was only part of the solution: “There’s a problem in the system at the moment that the only way to enforce the rules is to bring claims. It isn’t right that low paid workers have to bring claims about being low paid.”