Could Uber’s UK Supreme Court gig economy ruling impact the US food delivery industry – even after Prop. 22 victory in California?

Mar 1, 2021

It sounds inconceivable that a ruling against Uber by the Supreme Court in the UK – which found in favour of gig economy drivers who claimed they should be classed as workers and are therefore entitled to minimum wage and paid holiday – could have a knock-on effect on the US restaurant and food delivery sector. But the global groundswell around the gig economy could reshape the US food delivery market, says VROMO CEO Alan Hickey.

The UK Supreme Court unanimously dismissed Uber’s appeal in a long-standing legal battle after former Uber drivers took the company to an employment tribunal in 2016. They argued that they worked for Uber, but the company said that its drivers were self-employed and it therefore was not responsible for paying minimum wage or holiday pay.

The Supreme Court – which is Britain’s highest court and has the final say on legal matters – found in the case with Uber that the company set the fare – which meant that it dictated how much drivers could earn. It also set the contract terms, and drivers were penalised if they rejected too many rides. The court therefore determined that drivers were in a position of subordination to Uber.

This is very different from the outcome of the Proposition 22 vote in California. Back in November, the vote passed by 59%, giving exemptions for some major tech firms (such as Uber, Lyft and Instacart) from fully complying with labour laws. However, this isn’t home and dry as it is now subject to a lawsuit from Labor unions who argue that Prop 22 “limits the power of elected officials to govern” and “takes away workers’ rights.”

Although the UK ruling won’t directly affect the US market, it could force marketplace apps to rethink their business models because, as it stands, their global growth ambitions (and their ability to maximise profits around the world) could be stunted.

If more countries follow suit with the UK and Spain and rule that drivers and riders in the gig economy aren’t self-employed (and therefore should be classed as employed and enjoy benefits including minimum pay levels, statutory holiday pay and even sick pay), this could potentially cause issues such as market and global territory consolidation and takeovers.

This makes the impending IPO of Deliveroo – which is scheduled for the first quarter of this year – very interesting indeed. The global factors at play could shape how investors are feeling about the organisation’s ability to generate the optimum level of revenue in territories around the world if it doesn’t come up with answers to issues like the gig economy conundrum.

You can read the BBC’s reporting here https://www.bbc.co.uk/news/business-56123668