Uber is suffering another setback in the U.K., where a panel ruled Friday that its drivers are workers with labor rights like paid time off.
The decision has broad implications for the so-called gig economy, and adds to the challenges the ride-hailing service is facing in Britain. London authorities in September said it, citing safety and security concerns. Uber has appealed that decision, which it said would harm the roughly 40,000 people who drive for the service in London.
Uber said it plans to appeal the labor ruling. Employment lawyers expect the case will be heard by the Supreme Court next year. The company is facing similar questions in the U.S., where drivers have sued the company over their employment status.
Claimants Yaseen Aslam and James Farrer sought minimum wage and paid holidays in line with U.K. employment law. Uber argued its drivers are independent contractors who would lose the "personal flexibility they value" if the suit was successful.
Friday's ruling by the British employment appeals tribunal came after San Francisco-based Uber appealed a previous ruling in favor of the drivers. Though Uber argued that the case applies to only two drivers, it could affect as many as 40,000 Uber drivers in the U.K. who would argue they faced the same terms.
Uber's problems in the U.K. add to the mounting issues facing the ride-sharing company, which earlier this year tapped former Expedia CEO Dara Khosrowshahi to lead the business following a series of scandals over a sexist workplace and the antics of ousted CEO Travis Kalanick.
The panel's ruling also has implications for more than 100,000 independent contractors in Britain's so-called gig economy, where people work job-to-job with little security and few employment rights. Such employment, often for companies that use mobile phone apps to provide everything from food delivery to health care, has surged as the Internet cuts the link between jobs and the traditional workplace.
The case is just one of many focused on the rights of British workers in both the new and old economies - from Deliveroo food delivery drivers to foster carers and plumbers. The decision reflects a general trend for the courts to step in situations in which "the individuals involved are in a position of substantial inequality and in that case merit protection," said employment attorney Susannah Kintish of Mishcon de Reya, which is not involved in the Uber case.
"There's a definite sentiment that the law needs to step in and protect them," she said.
While the case is separate from London's decision not to renew Uber's license, observers are likely to watch Uber's response to see if a company known for hard-hitting tactics is willing to change. Following the licensing decision, new CEO Dara Khosorwshahi acknowledged that Uber "got things wrong" as it expanded around the world and said the company would change as it moves forward. Uber is also appealing that decision.