Another legal setback for Uber: Dutch court rules that drivers are employees

In yet another setback for global ride-hailing giant Uber, the Amsterdam District Court on Monday ruled that Uber drivers are employees rather than independent contractors and are entitled to greater workers’ rights in the country.

The judgement came after the Federation of Dutch Trade Unions (Federatie Nederlandse Vakbeweging, FNV), a national trade union center in the Netherlands, filed a lawsuit against Uber stating that it is a taxi employer and demanded it applies the taxi collective agreement to its drivers. Uber defended itself by claiming it is just a technology platform that works with independent taxi drivers.

The court also ordered Uber to pay €50,000 to FNV for failing to comply with the Collective Labor Agreement for Taxi Transport.

This victory for unions fighting for the rights of workers in the gig economy comes after a similar decision reported in the United Kingdom.

The ruling

According to the judgement, as soon as drivers use the Uber app, they are subject to the operation of the algorithm designed by Uber and unilaterally to be changed by it. The drivers, therefore, fall under the ‘modern employer authority’ that Uber exercises via the app.

As such, all drivers who transport passengers via the Uber app are covered by the Collective Labor Agreement for Taxi Transport. The legal relationship between Uber and these drivers meets all the characteristics of an employment contract – labour, wages, and authority.

Right after the judgement this morning, Zakaria Boufangacha, Vice-President FNV, said  “this statement shows what we have been saying for years: Uber is an employer and the drivers are employees, so Uber must adhere to the Collective Labor agreement for Taxi Transport. It is also a signal to The Hague that these types of constructions are illegal and that the law must therefore be enforced.”

Uber said it will appeal the decision and has no plans to employ drivers in the Netherlands.

According to a report, Maurits Schönfeld, Uber’s general manager for northern Europe says, “We are disappointed with this decision because we know that the overwhelming majority of drivers wish to remain independent. Drivers don’t want to give up their freedom to choose if, when, and where to work.”

What does this mean for Uber drivers?

With the judge’s ruling, Uber drivers are now automatically employed by Uber and the taxi company must pay and treat the drivers in accordance with the Collective Labor Agreement for Taxi Transport. 

They will now receive more wages and more rights in the event of dismissal or illness, for example. Additionally, in certain cases, these drivers can also claim overdue salaries.

About FNV

The Netherlands Trade Union Confederation (FNV) has 1.1 million members, making it the largest trade union in the Netherlands. The union plays an important social and political role in the Netherlands, standing up for the people who work, who want to work, or have had long working lives. 

The FNV wants decent work and a good income for everyone. It supports and facilitates members to develop their skills as much as possible and take their careers into their own hands, regardless of the type of contract under which they work. 

The FNV is affiliated to the European Trade Union Confederation (ETUC).

Uber’s past encounters

Explaining why trade unions have a problem with platform companies like Uber, the European Trade Union Confederation (ETUC) says, “Over the last decade, platform companies like Uber and Deliveroo have exploited loopholes in the law to make big profits through falsely self-employing their workers, allowing them to avoid obligations to proper pay and working conditions.”

According to ETUC, this means workers often don’t earn the minimum wage, don’t have any paid holidays, don’t have the right to paid sick leave or any social security contributions. It’s not only unfair to workers, but to the vast majority of businesses who play by the rules and to all citizens because these practices rob public services of funding.

“Trade unions are successfully challenging platform companies in the courts across Europe, winning important judgements that prove the business model of these companies is not only unethical but illegal,” says ETUC.

Here are some of the major legal setbacks faced by Uber in different countries: 

United Kingdom

In 2017, Transport for London removed Uber’s license in the capital after the company failed to report serious criminal offenses and to run background checks on drivers. Once the company improved the situation and relations with the city authorities, it was given a 15-month license in London in 2018. However, in November 2019, the company was banned for operating in London as the city’s regulator said the app had put passenger safety at risk.

In March 2021, Uber confirmed to give its 70,000 UK drivers a guaranteed minimum wage, holiday pay, and pensions after a Supreme Court ruling. 

Following this ruling, drivers were given the status of a “worker” instead of “self-employed”. This helped them work in a flexible manner, and in a way that they have been, since Uber’s launch in the UK in 2012.

In May 2021, the GMB trade union in the UK and Uber announced a trade union recognition deal. Under the agreement, Uber will formally recognise GMB, which will now be able to represent up to 70,000 Uber drivers across the UK. The Guardian reported, “GMB will have access to drivers’ meeting hubs. It will also be able to represent drivers if they lose access to the Uber app, and it will meet quarterly with management to discuss driver issues and concerns.”

Germany

In 2019, a German court banned Uber services in the country stating that the US-based company lacked a necessary license to offer passenger transport services using rental cars.

Unlike in other countries, Uber in Germany is not allowed to let nonprofessional drivers offer rides in their own cars. A regional Frankfurt court found that Uber’s business model in Germany, which relies on the use of vehicles from local car hire companies, violated several anti-competition laws.

Netherlands

In March 2019, Uber had to pay approx €2.3M to settle a case that found it had offered unlicensed taxi services in 2014-2015. In 2020, British and Dutch regulators fined Uber for failing to protect customers’ personal information during a 2016 cyber attack involving millions of users.

United States

In September 2019, an Uber driver sued the company for misclassifying its drivers as independent contractors. In March 2019, the company had to pay a settlement of $20M for a lawsuit brought by drivers claiming they were employees and entitled to certain wage protections.