Uber’s decision to change its business model and give benefits such as minimum wage, holiday pay and pensions to its drivers appears to have given the ride-hailing giant a first-mover advantage in the sector.
And the decision to change its employment terms means Uber appears to have complied with most – but not all – of the recent Supreme Court ruling that its drivers are “workers” rather than self-employed contractors.
Uber will also be contacting drivers in coming days with “settlement offers” to make up for shortfalls in past pay – which is likely to be a bill running into hundreds of millions of pounds. Earlier speculation had suggested a sum of £12,000 per driver might be owed.
But the decision, which was hailed by the GMB Union but criticised by the IWGB-backed App Drivers and Couriers Union, which brought the initial case against Uber, still leaves much unanswered.
In particular, Uber is only proposing to pay its workers from the time they accept a job to completion, and not for waiting time, The court ruling had stipulated that the “worker” was working from the moment the driver turned on the app and was available to take on jobs.
However, with many London Uber drivers also signed up to other ride-hailing services such as Bolt, Ola and FreeNow, the question remains as to who would be responsible for paying them while they are waiting, with a number of apps turned on, for a job from any of the companies.
Industry consultant Dr Mike Galvin, who works for Bolt, said the ruling, and Uber’s subsequent decision, might not be in the drivers’ interest. “It’s a solution looking for a problem,” he said. “It’s not mission impossible to work out how to apportion waiting time among companies, but it’s pretty clear that a driver with three or four apps on the go is definitely an entrepreneur, not a dependent contractor.”
Galvin believes the majority of drivers do not want to be considered as “workers” and prefer the flexibility of self-employment, though he wondered whether the effects of the Coronavirus pandemic might have changed attitude.
“I don’t believe there is any appetite for worker status among private hire drivers, though it is possible that Covid has changed things, and drivers might prefer to have some employment protection,” he said.
Uber said it had consulted “thousands” of its drivers over the changes, which are now in force, and the drivers said they wanted these additional benefits “but without any loss of flexibility”.
The changes affect more than 70,000 drivers in the UK who have signed up to the Uber app. All – whether in London or elsewhere – will be treated as workers, earning at least the National Living Wage “when driving with Uber”.
In a statement, Uber said this was “a floor and not a ceiling, with drivers able to earn more, as they usually do”. Drivers will be paid for holiday time, and those eligible will be automatically enrolled into a pension plan.
“This means drivers will earn with greater security, helping them to plan for their futures while maintaining the flexibility that is integral to the private-hire industry,” said Uber’s statement.
By moving quickly, Uber is now calling on the rest of the private hire sector to follow suit. Jamie Heywood, Uber’s regional general manager for northern and eastern Europe, said: “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.”
The response is likely to be mixed. Uber had argued that the Supreme Court ruling affected only the 25 drivers named in the original 2016 Employment Tribunal case, and its decision to change the status of all its drivers to “worker” is a way of heading off a number of further scheduled court cases on the same issue.
The other ride-hailing app companies, including Bolt, Ola, FreeNow and Via, have yet to respond. Likewise, large fleets such as Addison Lee, which operate a different business model, will also take a stance. It is clear that the Supreme Court ruling does not automatically make all private hire driver workers.
Indeed, Uber has excluded Uber Eats delivery drivers from the new arrangements, and the rest of the gig economy – from food delivery drivers to couriers and other “freelance” workers – are likely to have to fight individual court battles on the worker status issue. Courier firm DPD offered its drivers the opportunity to become “workers” in 2018.
James Farrar, the former Uber driver who brought the case against Uber in 2016 and now runs the App Drivers and Couriers Union, said minimum wage, holiday pay and pensions were a step in the right direction but drivers were still being short-changed.
Farrar maintained drivers should accrue minimum wage and holiday pay from when they log in not just from when a trip is accepted, saying about 40-50% of drivers working time was still not being paid or protected.
“If you go to work for Starbucks and no customers come into the shop should you still be paid, of course you should,” Farrar said. Uber simply has to do this, this is not difficult to understand. Waiting is working. This is a step in the right direction but we are not there yet.”
The GMB is also claiming victory: “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,” national officer Mick Rix told reporters.
“Uber’s announcement should mark the end of the road for bogus self-employment,” Rix continued. “GMB’s battle with Uber now opens the door for workers, and their unions, to win the fight for better pay and conditions at companies across the gig economy.”
Matthew Taylor, author of the Government-funded Taylor Report into the gig economy, called on the government to introduce legislation to clarify the grey area of employment status for gig workers at all companies.
He supported the Uber decision, but added a note of caution, telling the Evening Standard: “On balance it is better that people have worker status and lose some flexibility, but some people will not agree.”
In the longer term, the decision could accelerate a move away from direct driver recruitment and toward greater use of its recently-acquired dispatch system provider Autocab’s technology. In particular, Uber announced last year it planned to use Autocab’s iGo platform to give Uber jobs to private hire operators in towns where Uber is not present.
Doing this takes Uber out of the employment equation, as the drivers would be employed by local operators that agree to take on the work. It looks likely that Uber will move away from direct recruitment outside London, though it is so well entrenched in London with a direct recruitment model that that is unlikely to change.
Such a move is dependent on another legal ruling, from the Competition and Markets Authority, as to whether the Uber purchase of Autocab creates a monopoly. This ruling is due on March 29.
Uber’s new deal: driver benefits in full
- When driving with Uber in the UK all drivers will receive:
- At least the National Living Wage after accepting a trip request and after expenses. On average, drivers earn £17 per hour in London and £14 in the rest of the UK on the same basis when driving on Uber.
- All drivers will be paid holiday time based on 12.07% of their earnings, paid out on a fortnightly basis.
- Drivers will automatically be enrolled into a pension plan with contributions from Uber alongside driver contributions, setting drivers up over the long term.
- Continued free insurance in case of sickness or injury as well as parental payments, which have been in place for all drivers since 2018.
- Continued support from Uber’s Clean Air Plan in London, which has so far raised over £120m for drivers switching to an electric vehicle.
- All drivers will retain the freedom to choose if, when and where they drive.