Major development for gig economy after Uber agrees to minimum wage, holiday pay and pensions for its ‘self-employed’ drivers
Uber is to reclassify all 70,000 of its British drivers as workers, which will entitle them to the UK minimum wage, holiday pay and a pension.
It comes after a ruling last month by the UK supreme court which dismissed Uber’s appeal against a 2016 landmark employment tribunal ruling that its drivers should be classed as workers.
The decision is a major u-turn for the firm, which like many other delivery and courier companies, has previously insisted that its drivers are not workers but rather self-employed freelancers or partners, who were not entitled to same worker rights as those enjoyed by regular staff.
The u-turn was confirmed on Tuesday evening when Uber said that drivers would get at least the legal minimum wage, after expenses and holiday time at 12.07 percent of earnings, paid out on a fortnightly basis, the Guardian newspaper reported.
Drivers will also be automatically enrolled in a company pension plan with contributions from Uber alongside their own.
Uber drivers will also continue to have access to free insurance in case of sickness or injury as well as parental payments, which have been in place for all drivers since 2018.
“This is an important day for drivers in the UK,” Jamie Heywood, Uber’s regional general manager for northern and eastern Europe was quoted by the Guardian as saying.
And he addressed the fact that this change is a significant development for other workers in the so called ‘gig economy.’
“Uber is just one part of a larger private-hire industry, so we hope that all other operators will join us in improving the quality of work for these important workers who are an essential part of our everyday lives,” Heywood added.
And the decision has been welcomed by a number of trade unions.
“Other gig economy companies should take note – this is the end of the road for bogus self-employment,” Mick Rix, national officer of the GMB union, was quoted as saying.
“Uber had to be dragged kicking and screaming to do the right thing, but finally they’ve agreed to follow the ruling of the courts and treat their drivers as workers,” said Rix. “It’s a shame it took GMB winning four court battles to make them see sense, but we got there in the end and ultimately that’s a big win for our members.”
But it seems that not everyone is happy.
The App Drivers & Couriers Union headed by James Farrar and Yaseen Aslam, who were the lead claimants in the successful Uber tribunal case, said that drivers were still being short-changed.
“While we welcome Uber’s decision to finally commit to paying minimum wage, holiday pay and pensions we observe that they have arrived to the table with this offer a day late and a dollar short, literally,” they noted.
They said that Uber had said minimum wage and holiday pay would activate from when a trip was accepted to when a passenger was dropped off, not the whole time drivers were logged on to its app – the working time laid out by the supreme court.
They said this meant that Uber drivers could miss out on up to 50 percent of potential earnings.
In addition, there is a concern that Uber will now increase ride-hailing prices in the UK, as it also increased prices in California after a similar ruling.
In the United States, an Appeals court in California unanimously ruled in October 2020 against Uber Technologies and Lyft.
It backed the San Francisco Superior Court that in August 2020 had ruled that drivers for Uber and Lyft were employees, and not freelancers or contractors.
As a backgrounder, “the Gig Worker Bill,” California Assembly Bill 5 (AB5) went into effect on 1 January, 2020.
That bill required companies that hire independent contractors and freelancers to reclassify them as employees if their jobs and duties meet certain conditions.
Both Uber and Lyft threatened to withdraw from California over the matter.
Then Uber and others funded a ballot initiative, Proposition 22, to exempt both ridesharing and delivery companies from the AB5 requirements, while also giving drivers some new protections, including minimum wage and per-mile expense reimbursement.
But drivers won’t get the full protections and benefits that come with employment,
Proposition 22 passed in November 2020 with 59 percent of the vote.