Uber looks for a London plumber to help plug its leaks
San Francisco: Uber Technologies Inc. flushed $4.5 billion down the drain last year as it spent heavily on expansion and battled the missteps of founder Travis Kalanick. Oddly, a British plumbing firm may give it a sense of whether it can plug some unwanted future outflows.
Pimlico Plumbers Ltd., whose vans are ubiquitous in west London, is a fellow traveller of Uber in the ongoing battle over how employers should treat “gig economy” workers.
The UK firm says it has a 270-person workforce but refuses to describe them all as employees. Many of its plumbers are classified as “independent contractors”, much like Uber drivers. Both Pimlico Plumbers and Uber assert that they’re not on the hook for worker benefits such as parental leave, a minimum wage and paid holidays.
That assertion is being tested rigorously in the British courts, as it is elsewhere. This week, it’s the turn of the plumbing company to try to convince a judge that its arms-length relationship with staff is okay. If it wins, that will be positive for Uber. But even if it loses, it wouldn’t be the end of the world.
Back in April 2012, a British employment tribunal ruled that Pimlico was in fact employing its plumbers. That case arrived on Tuesday at the UK Supreme Court, where it’s being appealed. Such is Uber’s common interest that it asked to join the Supreme Court hearing, only to be told that it would have to wend its own way through the judicial thicket.
You can understand the skittishness. Drivers already make up 80% of Uber’s costs. In the three months to December, the ridehailer raked in fares totaling $11 billion. After giving drivers their cut, Uber netted revenue of $2.2 billion. But with the company still subsidizing fares in growth markets, it posted a fourth-quarter net loss of $1.1 billion.
Should courts around the world decide that Uber’s drivers are in fact employees, those costs will no doubt surge again. Tax lawyer Jolyon Maugham estimated in 2016 that it would cost Uber £13 million a month to fund the national insurance for 40,000 UK drivers. It now has that many drivers in London alone.
Should the court overturn the earlier Pimlico Plumbers judgment (a decision isn’t expected for a few months) it would be easier for Uber to fend off claims for worker rights in the UK. If the ruling is upheld, Uber needn’t sink into despair. That’s because Pimlico’s contracts stipulated its plumbers “should complete a minimum of 40 hours” a week. Uber doesn’t impose working hours.
Uber is embroiled in two British court battles. In the first, the city’s transport authority is trying to impose new rules on private hire taxi companies, such as limiting working hours for drivers. In the second, an employment tribunal ruled that drivers deserved more rights. Uber wants to take that case to the supreme court.
But Uber’s new CEO Dara Khosrowshahi needs to tread carefully here. He’s been on a global tour to mend some of the ill will generated under his predecessor Kalanick. While Londoners love their Ubers, there’s growing concern about treating workers fairly. Given Uber’s monumental labour bill, and $54 billion mooted valuation, you can see why its legal campaigns continue. But the PR effort matters too. Bloomberg Gadfly
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