Courts in European countries are recognizing labor rights for professionals from companies such as Uber or Deliveroo
Europe is becoming the main front in the war on the status that workers in the gig economy or gig economy should be recognized for. The tightening of rules in Britain, Spain and other countries means that the path to profit will be a bit longer for companies like Uber Technologies (with an annual turnover of 111,000 million euros), and prices are somewhat higher. for the consumers.
Last Friday, the UK Supreme Court classified a group of Uber drivers as employed. This means that the 25 people who sued will have benefits such as minimum wage, and it sets a precedent for the roughly 60,000 drivers that the group has in Britain, as well as others who work for rival food delivery companies such as Deliveroo.
It is difficult to calculate the direct cost to Uber, as a labor court will determine the exact details. Of course, the new regime seems expensive. The judges decided that the drivers’ working day begins the moment they turn on the app and are willing to accept rides. In practice, this may mean that Uber has to pay them for hours worked rather than rides completed, resulting in a more rigid cost base.
This is part of the general tightening of measures across Europe. Courts of Spain. Italy, the Netherlands, France and Belgium have all ruled in favor of increasing the rights of these workers on demand. In Spain, the Minister of Labor Yolanda Díaz wants a law that establishes the principle that food delivery companies have to hire their carriers, instead of acting as intermediaries. In the coming months, the European Commission will make recommendations on legislation relating to this bolus economy, which would serve as a model for the entire EU.
The outlook for the industry is bleaker than in the United States, where a recent vote in California provided companies like Uber with the roadmap to reach a compromise with workers in the rest of the country. Home delivery apps will have to pay part of the costs of healthcare in the state, but the measures are far from guaranteeing full benefits. Uber could lobby for similar legislative treatment in Europe, but governments in the region have traditionally been stronger when it comes to protecting labor rights.
The consequence of higher costs is that Uber, Deliveroo and other companies will have a longer road to profit. Europe, the Middle East and Africa accounted for 21% of Uber’s revenue in the final three months of 2020. London-based Deliveroo may have to answer questions from investors about the Supreme Court ruling as it has scheduled to go public this year. Finally, consumers will have to bear part of the cost if services go up in price. After all, in all wars there is always a loser.