The European Court of Justice (ECJ) has ruled that Uber is a transport company, and not a digital service. The decision, which could have implications for the gig economy, opens the ride-hailing app up to tougher national regulation across Europe.
The EU’s highest court decided that Uber operates in the EU like a traditional taxi firm and officially recognises it as such, rather that being a technology company, as Uber had argued it was.
The ECJ ruling says that a service whose purpose was “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 classified as “a service in the field of transport” in EU law.
The decision in Luxembourg – which is final – comes after a challenge brought by taxi drivers in Barcelona. The decision will apply across the whole of the EU, including the UK. It means that Uber will have to start treating drivers more like taxi chauffeurs/cab drivers, rather than self-employed workers with no link to the company apart from a smartphone app.
An Uber spokesperson 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.”
The decision is unsurprising, according to Rachel Farr, Senior Employment Lawyer at international law firm Taylor Wessing, as it follows not only the Advocate General’s opinion earlier this year (in this case and another, involving Uber France), but also the reasoning in Uber’s UK worker status case.
Farr points out that the court has said that the most important part of Uber’s business is the supply of transport – connecting passengers to drivers by their smartphones is secondary. Without transport services, the business wouldn’t exist.
“The decision will not directly affect Uber’s UK Court of Appeal case appealing the finding that drivers are workers. That decision is not dependent on what the business does but whether the tests (such as control of drivers, and the obligations of both Uber and drivers to the other) are met,” says Farr.
To date, Uber has argued both that it is a technology company putting consumers in touch with one another, and a traditional minicab business operating as an agency, but both have been rejected by the tribunals.
“However, practically, it is bound to make the forthcoming appeal harder for Uber by removing one possible argument it may choose to run,” says Farr.