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Uber Shares Drop 3% Premarket After the UK Supreme Court Ruling About Its Drivers.

Updated: 19 Feb 2021

Shares of Uber Technologies Inc (NYSE: UBER) were down almost 3% premarket after the UK’s Supreme Court delivered its ruling on whether Uber’s drivers are workers or unemployed. The court ruled that the drivers are workers.

The ruling could significantly impact the ride-hailing company’s operations in the UK and Europe, where it could be required to provide a minimum wage and other employment benefits to its workers, such as overtime pay.

Uber has struggled to reduce its debt burden via various asset disposals to turn around its struggling business. Today’s ruling could significantly balloon its compensation budget, adding more pressure to the firm’s finances.

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The Supreme Court is the highest court in the UK, which means that Uber has exhausted its options to appeal after losing the same case three times in the past, which means that the taxi company now has to implement today’s ruling.

Uber may now have to pay Value Added Tax (VAT) on fares generated on its platform since it will now be classified as a transport provider, and this would be in addition to the minimum wage and overtime pay it would have to incur.

The company had warned that such an outcome would force it to fundamentally change its business model given the additional financial costs it would have to incur. It will be interesting to see what the company does next.

The case was brought by two ex-Uber drivers, James Farrar and Yaseen Aslam, who first won against Uber at the employment tribunal in October 2016, before the company launched multiple appeals and lost each time leading up to today’s Supreme Court ruling.

Uber share price.

Tradingview chart of Uber share price 19-02-2021

Uber shares were down 2.98% premarket after the UK Supreme Court’s ruling that its drivers are workers.

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