Uber is a transport services company, the European court of justice (ECJ) has ruled, requiring it to accept stricter regulation and licensing within the EU as a taxi operator.
The decision in Luxembourg, after a challenge brought by taxi drivers in Barcelona, will apply across the whole of the EU, including the UK. It cannot be appealed against.
Uber had denied it was a transport company, arguing instead it was a computer services business with operations that should be subject to an EU directive governing e-commerce and prohibiting restrictions on the establishment of such organisations.
Quick GuideWhat are the implications of the Uber ECJ ruling?
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What does it mean for drivers?
Because the European court of justice has ruled that Uber must be treated as a taxi company, not a digital service, unions argue the courts will be more inclined to define drivers as conventional workers, rather than accepting the arms-length relationship the company currently operates. The test case on Uber drivers’ employment status is due in the UK court of appeal in 2018.
How does it affect passengers?
Uber maintains its is already operating as a licensed taxi service in the UK so the ECJ ruling will have little impact. However, the decision could undermine some of its defences in employment cases, opening it up to extra liabilities, such as insurance. If so, such costs would inevitably be passed on to passengers.
Does it change Uber's business model?
While there are unlikely to be any immediate changes to the way it operates, the ruling will allow local authorities across the EU to regulate the US-based business more like a traditional taxi firm. This will reduce Uber’s competitive edge by making it more expensive to run a business that already pours billions of dollars worth of subsidies into its operations.
Lawyers for Barcelona’s Asociación Profesional Elite Taxi argued that Uber was directly involved in carrying passengers. EU rules on the freedom to provide services expressly exclude transport.
In its ruling, the ECJ said an “intermediation service”, “the purpose of which is to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys, must be regarded as being inherently linked to a transport service and, accordingly, must be classified as ‘a service in the field of transport’ within the meaning of EU law”.
“Consequently, such a service must be excluded from the scope of the freedom to provide services in general as well as the directive on services in the internal market and the directive on electronic commerce,” the ruling said.
“It follows that, as EU law currently stands, it is for the member states to regulate the conditions under which such services are to be provided in conformity with the general rules of the treaty on the functioning of the EU.”
The ECJ found Uber’s services were more than an intermediation service. It observed that the Uber app was “indispensable for both the drivers and the persons who wish to make an urban journey”.
The court also pointed out that Uber exercised “decisive influence” over the conditions under which drivers provided their services. Such an intermediation service, the ECJ concluded, must be regarded as forming an integral part of an overall service, the main component of which was transport.
Within the UK, it may be noted that the ECJ, repeatedly derided by Brexit supporters, appears to have come to the rescue of hard-pressed taxi drivers across Britain and Europe.
Uber said: “This ruling will not change things in most EU countries, where we already operate under transportation law. However, millions of Europeans are still prevented from using apps like ours.
“As our new CEO has said, it is appropriate to regulate services such as Uber and so we will continue the dialogue with cities across Europe. This is the approach we’ll take to ensure everyone can get a reliable ride at the tap of a button.”
Responding to claims that the ECJ decision would damage its stance in other employment cases, an Uber spokesperson said: “Uber in the UK has always operated and been regulated under transportation law as a licensed private hire operator so this ruling does not change things here. The ECJ case is about how individual EU member states regulate peer-to-peer services, not about employment law.
“Almost all taxi and private hire drivers in the UK have been self-employed for decades, long before our app existed. With Uber, drivers have the freedom to choose if, when and where they drive. The recent employment appeal tribunal relied on the assertion that drivers are required to take 80% of trips sent to them when logged into the app. As drivers who use Uber know, this has never been the case in the UK.”
But Jason Moyer-Lee, the general secretary of the Independent Workers Union of Great Britain, which represents Uber drivers, said: “Today’s judgment made clear, as a matter of law, what everyone already knew as a matter of common sense: Uber provides transportation services, not technology services.
“This is one more nail in the coffin for Uber’s argument that it is simply an agent acting on behalf of drivers, and therefore not liable to pay them minimum wage and holidays.”
Maria Ludkin, legal director of the GMB union, which is involved in multiple legal actions against Uber, said the ECJ decision would have significant consequences across a series of court challenges, undermining the Californian company’s previous legal defences.
“Uber have been arguing in the employment tribunal cases that there’s no employer,” she said. “That’s now been shot down in flames. This could open Uber up to huge bills for holiday pay. All the drivers have been saying is that they want a level playing field and fair treatment.”
The TUC’s general secretary, Frances O’Grady, welcomed the decision. “Uber must get its house in order and play by the same rules as everybody else,” she said.
“Their drivers are not commodities. They deserve at the very least the minimum wage and holiday pay. Advances in technology should be used to make work better, not to return to the type of working practices we thought we’d seen the back of decades ago.”
Steve McNamara, the general secretary of the Licensed Taxi Drivers Association, said: “Uber has been ducking both regulations and its responsibilities to its drivers by claiming to be a technology platform that simply connects drivers and riders.
“This false classification has allowed Uber to exploit its workers by forcing them to work long hours on low wages, putting passenger and public safety at risk.”
Last week, York council decided not to renew Uber’s licence to operate. In a separate development, the GMB union has been granted permission to intervene in Uber’s appeal against the decision by Transport for London (TfL) not to renew its private hire vehicle operator’s licence.
At a Westminster magistrates court hearing on Tuesday, lawyers for the union argued it should be allowed to raise allegations of excessive hours worked by Uber drivers and its impact on public safety.
GMB claims Uber encourages and incentivises drivers to work excessive hours, and that its business model puts public safety at serious risk. The full appeal hearing is due to be held in summer 2018.
In announcing the decision in September not to renew Uber’s licence, TfL said: “TfL has concluded that Uber London Ltd is not fit and proper to hold a private hire operator licence. TfL considers that Uber’s approach and conduct demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications.”
Rosa Curling, a solicitor at Leigh Day law firm who is acting on behalf of GMB, said: “We are delighted that the court has agreed to allow GMB the chance to present its evidence on the safety concerns it has regarding Uber drivers in London so that any decision to grant a licence can be made after hearing all the relevant evidence to ensure correct regulations and safeguards for all.”