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Uber Under Pressure on UK Minimum Wage in Test of Gig Economy

By Costas Pitas

Following a UK Supreme Court defeat last month, the Silicon Valley-based company reclassified its more than 70,000 drivers in Britain as workers, meaning they are guaranteed entitlements such as holiday pay.

Uber said drivers will be at least 15% better off, if they opt into the pension plan.

On the minimum wage, which stands at 8.72 pounds ($12.13) per hour for those aged 25 and over, Uber said it would apply “after accepting a trip request and after expenses” and that on average drivers earn an hourly 17 pounds in London.

Drivers will not receive it while waiting for a passenger request, which can account for as much as a third of the time drivers are behind the wheel with the app turned on, according to several U.S. studies.

James Farrar and Yaseen Aslam, the two lead drivers in a 2016 employment tribunal case that Uber unsuccessfully contested all the way to Britain’s top court, criticised the move.

“Uber drivers will be still short-changed to the tune of 40-50%,” they said.

“Also, it is not acceptable for Uber to unilaterally decide the driver expense base in calculating minimum wage.”

Uber said it has consulted with thousands of drivers who do not want to lose the flexibility they enjoy of “if, when and where they drive.”

Workers are entitled to fewer rights than those classed as employees, who also receive sick pay and parental leave. Uber in California pushed and won a similar compromise on drivers’ status.

GIG ECONOMY SHAKE-UP?

Uber has been forced to pull out of some markets after opposition from regulators and operators.

France’s top court in 2020 recognised the right of an Uber driver to be considered an employee while European Union regulators are considering new rules to protect gig economy workers.

Drivers in the British litigation were working for Uber during “any period when the driver was logged into the Uber app within the territory in which the driver was licensed to operate and was ready and willing to accept trips,” according to a Supreme Court press summary.

Farrar suggested there may be more legal action.

Uber’s Northern and Eastern Europe boss Jamie Heywood defended the firm’s plan.

“If we decided that logged-on time on the app was also working time, that would mean that we would need to introduce shifts telling drivers when they can work, which most drivers don’t want to do, and we’d also need to introduce exclusivity terms,” he told Sky News.

He declined to say what the total cost would be to the firm but said they are committed to remaining competitive on pricing and would be communicating with drivers in the next few days over settlements for historic trips.

Morgan Stanley said it estimated the hit to core earnings at around $300 million in 2021/22, as it assumed that the cost will not be passed onto consumers in the near term.

Uber’s announcement could also put pressure on others in the gig economy, where millions of people tend to work for one or more companies on a job-by-job basis.

Rival taxi service Addison Lee and food delivery firm Deliveroo have both been subject to legal action over workplace rights.

“The new phase of our economy should be about protecting workers’ rights, driving higher standards, driving new technologies,” British business minister Kwasi Kwarteng said.

(Reporting by Costas Pitas; editing by James Davey, Louise Heavens and Toby Chopra)