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An Uber driver holds his cell phone showing the queue to pick up passengers departing Guarulhos International Airport in Sao Paulo, Brazil, February 13, 2017. REUTERS/Nacho Doce

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SAO PAULO (Reuters) - A judge in Brazil's biggest city ruled this week that a driver using the Uber [UBER.UL] ride-hailing app is an employee of the San-Francisco-based company, threatening its business model in one of its biggest markets.

Uber said it would appeal the decision on Tuesday by Judge Eduardo Rockenbach Pires at the regional labour court in Sao Paulo, which was made public in recent days.

"By connecting drivers and users, Uber creates thousands of flexible opportunities for generating income," the company said in a statement.

Pires ordered Uber to pay the driver 80,000 reais ($25,000), including compensation for holidays, contribution to a severance fund and 50,000 reais in "moral damages" related to attacks from taxi drivers upset with Uber's competitive pricing model.

The decision follows a similar ruling in a labour court in Minas Gerais state, along with parallel cases in the United States, Britain, Switzerland, and Europe's highest court threatening to subject Uber to higher costs and regulation.

The lower house of Brazil's Congress has also threatened Uber's business model with a bill requiring it and other ride-hailing apps to register with city authorities as conventional taxi services. President Michel Temer has pledged to veto parts of the legislation if it passes the Senate.

Adding to Uber's challenges, a Reuters investigation found a ten-fold increase in attacks on drivers in Sao Paulo last year, including several murders, after the start of cash payments on its platform at the end of July.

($1 = 3.14 Brazilian reais)

(Reporting by Brad Haynes, editing by G Crosse)

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Reuters