by In Switzerland Uber grew 30% in the last year, reaching 400,000 active users. It’s not the first time Uber has faced some bumps on the road in canton Geneva. But the latest move requiring the ride-hailing company to treat drivers as employees could spell big changes for the company. Will Uber call it quits or set a precedent for other cities? The thousands of diplomats, business travellers and tourists arriving at Geneva airport every month may soon need to return to hailing a taxi or hopping on a train to get to the city centre. Last week, the Geneva cantonal authorities determined that based on the law on taxis and transport, Uber drivers should be Uber employees. Hence, they are entitled to social benefits including paid holidays, sick leave and pensions. For
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In Switzerland Uber grew 30% in the last year, reaching 400,000 active users.
It’s not the first time Uber has faced some bumps on the road in canton Geneva. But the latest move requiring the ride-hailing company to treat drivers as employees could spell big changes for the company. Will Uber call it quits or set a precedent for other cities?
The thousands of diplomats, business travellers and tourists arriving at Geneva airport every month may soon need to return to hailing a taxi or hopping on a train to get to the city centre.
Last week, the Geneva cantonal authorities determined that based on the law on taxis and transport, Uber drivers should be Uber employees. Hence, they are entitled to social benefits including paid holidays, sick leave and pensions.
For Roman Künzler of the trade union Uniaexternal link, this decision is a long, hard-fought success. “We hope that the precarious conditions for drivers come to an end now and Uber complies with the law,” Künzler told swissinfo.ch.
Battling the behemoth
Uber faces a long list of legal battles as cities revisit and rewrite the rules to rein in the company and ensure protections for drivers. In some cases, the company has complied as in Londonexternal link where it agreed to meet certain safety standards. In other cases, it called it quitsexternal link and left the city entirely.
Since launching five years ago in Switzerland, the company has faced strong pushback, particularly in the French-speaking part of the country. In 2015, Uber faced a provisional ban in Geneva for violating taxi regulations. A year later, drivers and taxi companies demonstrated in the streets accusing the company of undercutting wages and unfair competition. Last year, the city of Lausanne recognised Uber as a “call centre” and required drivers to have professional licences.
The company has always bounced back though and is now stronger than ever, posting 30% growth in Switzerland in the past year, reaching 400,000 active users and 3,200 drivers in four Swiss cities (Zurich, Geneva, Basel and Lausanne).
Through all of this, Uber has continuously deflected responsibility for drivers, claiming they are self-employed, independent contractors and that the company is simply a technology business that develops tech applications that match supply and demand.
As the company has grown though, the argument has become less convincing to many city authorities including in its home city of San Francisco. The company has been fighting against a recently passed law (Assembly Bill 5external link) calling for the ABC test, already in place in a few other US states, to determine whether someone is a contractor or employee. Similar battles are being fought in other US states and the European Union.
The Brazilian Supreme Courtexternal link and a labour court in Lyon, France recently ruled in the other direction, arguing that Uber drivers are not Uber employees.
Setting a precedent
Künzler believes that the Geneva decision is a major step for workers in the gig economy not just in Switzerland but in other cities. “The decision strikes at the core of what Uber does: transport people all over the world without taking responsibility for the people making the business possible.”
Uber estimates that driversexternal link in Switzerland earn on average CHF26.81 per hour ($27.05) and some 30% use the app at least 40 hours a week. Drivers on average use the app for 33 weeks a year according to the company.
However, Künzler doubts the math, stating that he has never met a driver who earns that much. Unia’s interviews with drivers have found that when all costs such as car purchase, maintenance, and insurance are included, the hourly rate is much more like CHF10-15.
“Uber saves around 60% by not employing people. The authorities have allowed workers to be cheated for years and has sent a signal to other tech companies that this model is acceptable,” says Künzler.
In some cities, there are drivers who have expressed concern that employment could compromise some of their flexibility and independence. Uber cites a study from 2018 that 75% of drivers would prefer to be independent than tied to an employment contract.
To this, University of St Gallen law professor Thomas Geiser told swissinfo.ch that the issue is not a zero-sum game. “The business model also works if Uber adheres to the usual rules. Of course, this means that Uber has to keep a larger part of the fare itself and can only pay a smaller part to the drivers.”
The worst-case scenario is perhaps if Uber decides to quit the canton altogether. An Uber spokesperson told swissinfo.ch that “if Uber were to be classified as a transportation company, it would make it impossible for us to continue operating in Geneva”. If this happens, Künzler says, “the company will face massive driver layoffs in Geneva. We will fight to ensure that workers are protected in such a case”.
In an emailed statement, an Uber spokeswoman said that the company plans to appeal the decision and that until the administrative court decides (in a few months), Uber will continue to operate in Geneva. She added that the company will continue to defend its legal status under the current transport regulations.
About Uber
Uber differs from traditional taxi firms primarily in that it does not own cars or have an employment contract with drivers, but connects passengers and vehicles via its app. The company offers the UberX and UberBlack services but had to abandon its UberPop peer-to-peer budget service in Switzerland after running into regulatory trouble. Uber has considered expanding beyond its four cities of Zurich, Geneva, Basel and Lausanne.
Labour unions have accused Uber of undercutting fare prices, lacking adequate insurance cover, employing non-professional drivers and failing to enforce the type of quality controls that standard taxi firms are subjected to.
Tags: Business,Featured,newsletter,Roman Künzler,Uber