French labor court backs Uber in driver contract dispute

PARIS (Reuters) - Uber [UBER.UL] won a rare French victory on Thursday against attempts to force the ride-hailing operator to recognize its drivers as employees, a prospect that would undermine its entire business model.

In a decision likely to bring sighs of relief among gig-economy firms and investors, the Paris labor tribunal rejected former driver Florian Menard’s demands that the court award him holiday and severance pay for his two-year Uber stint and rule that their service agreement was in fact an employment contract.

Instead it agreed with Uber that Menard was a self-employed driver who was put in touch with clients through its app.

“Uber’s business is intermediation rather than transportation, as the service contract clearly stipulates,” the tribunal said. Menard now has one month to appeal.

The decision is a welcome reprieve for San Francisco-based Uber, banned from cities including Vancouver and pushed out of countries from China to Denmark.

It is also battling to keep its cars on the streets of London where it is appealing against a decision not to renew its operating license. The company is also challenging a London employment tribunal ruling that its drivers were entitled to the minimum wage and other workers’ rights.

In a separate French setback, however, thousands of licensed seven-seater minivan drivers have been barred by a new law from working as ride-hailing chauffeurs unless they pass additional tests. Uber says it has lost a quarter of its Paris drivers as a result, pushing up waiting times and prices.