Uber will be forced to change its business model in London to contract directly with passengers who book, after a High Court ruling that will affect all private rental operators in the capital.
The judgment was hailed by unions for giving more protection to drivers and passengers, highlighting previous legal rulings that drivers are workers with rights and holding companies accountable once reservations are accepted.
The move could indirectly result in higher prices, with Uber and others now subject to VAT, which could add up to 20% more to the cost of a trip.
The High Court case was brought by Uber after Supreme Court justices suggested, in this year’s case where it ruled that the drivers were workers, not contractors, that Uber could not be seen as just an agent.
Uber asked for clarification on this, hoping to keep its existing model, but in a ruling on Monday, judges said the law requires a contractual obligation between operators and passengers after the reservation is made, adding: “To interpret acting in this manner gives effect to the statutory objective of ensuring public safety.
“If the passenger’s only contractual relationship is with a driver he has never heard of and who is probably not worth claiming anyway, any claim is likely to be virtually worthless. “
Transport for London has written to larger operators to review their contracts to ensure compliance. A spokesperson for TfL said: “All operators will need to carefully review the court ruling and take steps to ensure they comply with it, including determining whether changes in the way they work are necessary. “
Others said it was a “damning” verdict for TfL, as well as Uber. Sian Berry, a member of the Greens’ assembly in London, said that TfL, since the emergence of Uber, “has not properly used the powers at its disposal to regulate and protect private rental operators and drivers. from London “.
She added: “In the interest of passenger safety, they must now follow the court ruling and ensure that all operators comply without delay with the right legislation. “
The GMB union said the ruling confirms that London private drivers are legally considered workers and should be treated as such under the law, adding: “This means TfL’s guidelines are now incorrect and it means that most operators are acting illegally and have to tidy up their homes. ”
James Farrar, general secretary of the Drivers and Couriers Union App, said the move “would transform London’s minicab industry for the better,” adding: “Uber was determined to double classification errors at the expense of rights of workers, passenger safety and VAT avoidance.
While Uber lost the case, a spokesperson for the company said the case would ensure that other operators could not avoid the decisions by which it was now bound over paid leave and pensions. “Every private rental operator in London will be affected by this decision and should fully comply with the Supreme Court’s verdict,” he said. “We’re not the only player in town. Other operators must also ensure that drivers are treated fairly.