LONDON – Ride hailing giant Uber says it's giving U.K. drivers benefits like minimum wage and pensions, after losing a yearslong court battle to prevent them from being classified as “workers." It's an early sign of what companies like Uber face as authorities get to grips with regulating the app-based gig economy.
Starting right away, Uber's more than 70,000 U.K. drivers will get the minimum wage, equivalent to about $12 an hour for people aged 25 and up, plus pension payments and holiday pay. The company made the changes after the U.K. Supreme Court rejected its appeal against an employment tribunal ruling that drivers should be considered workers, not independent contractors as Uber insisted. That doesn't mean they're considered full-time staff employees, but under U.K. employment law, they fall into a middle category of “workers” who have more casual work terms but are also entitled to benefits and protections.
IS IT GOOD FOR DRIVERS?
Yes and no. San Francisco-based Uber Technologies Inc. says a driver's minimum wage will be calculated based on the time they accept a trip through the app. The drivers union behind the legal case said it's a step in the right direction but not good enough because drivers should be paid for time spent waiting for rides after logging on to the app, as the court ruled, otherwise they'll be shortchanged by up to 50%.
“If you go to work for Starbucks and no customers come into the shop, should you still be paid? Of course you should," said James Farrar, one of two former Uber drivers who filed the initial claim. “Uber simply has to do this, this is not difficult to understand."
But it may not be so simple. The company has argued that drivers could be logged in to the app while they're sitting at home, and not actually driving.
THE BOTTOM LINE
Will these changes mean passengers pay more and hurt the company’s profitability? Uber revealed little in a U.S. Securities and Exchange Commission filing announcement, saying only that it’s not making any changes to previously announced quarterly or full year earnings forecasts.
Experts said the company may end up making other adjustments to afford these new policies and shore up its chances of turning a profit, but they could end up limiting flexibility for drivers - one of the big selling points of working for Uber.
One big possibility is restricting the number of drivers on the platform, said Matthew Taylor, who carried out an independent review of working practices for the U.K. government in 2017.
To properly comply with the court ruling, Uber “probably are going to have to move to a system where they say to drivers you can only log on at certain times," Taylor told the BBC.
THE GIG ECONOMY'S FUTURE
The Uber case is part of broader efforts to rein in the gig economy that are gaining traction, at least in Europe. Spain last week unveiled legislation classifying food delivery riders as employees of the digital platforms they work for, not self-employed.
CEO Dara Khosrowshahi has been a dvocating for reforms to what he called outdated labor laws that force gig workers to choose between flexibility and social protections. His proposals could find a receptive audience in Brussels, where the European Union's executive Commission is looking at how to improve conditions for platform workers.
Meanwhile, Uber's U.K. case could act as catalyst for wider change, by inspiring further legal challenges and influencing courts elsewhere that are wrestling with the issues. It all means that other gig economy companies, which are often accused of exploiting workers, will face growing pressure to make improvements for them.
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