Uber has agreed to do something many thought it would never do — pay drivers a minimum wage and offer them traditional benefits — in the United Kingdom.
The ride hailing giant said this week it planned to pay drivers a minimum wage of a bit more than $12 per hour and offer benefits, including holiday pay and a pension plan into which the company and individual drivers will pay.
The announcement comes on the heels of a decision by Great Britain’s top court a few weeks ago, which sided with drivers, who sued the company. The court’s decision requiring Uber to follow a more traditional plan for compensating drivers follows a monthslong argument with British authorities that, at one point, pushed Uber off the streets of London, the foremost city in the British Isles.
Uber’s announcement said it is extending the benefits immediately to its more than 70,000 drivers in the United Kingdom, who will continue to work largely on a part-time basis.
The company, however, made an important concession in a filing with the U.S. Securities and Exchange Commission, describing the drivers in the United Kingdom as “workers” rather than contractors.
Uber reclassifies its UK drivers
“Uber Technologies, Inc. (“Uber”) issued a statement announcing that effective as of March 17, 2021, private-hire drivers using its Mobility platform in the United Kingdom (“UK”) will be treated as workers.”
A “worker” is a unique classification under UK employment law.
“Workers are not employees (and remain self-employed for tax purposes) but are entitled to the minimum wage (generally called the National Living Wage in the UK), holiday pay, and, if eligible, a pension. A copy of the statement is furnished herewith as Exhibit 99.1,” according to the 8-K Uber filed with the SEC.
The filing notes an “estimated” 99% of its UK drivers earning more than the National Living Wage, getting approximately £17 hourly in London and £14 hourly in the rest of the UK. It also noted that driver will be paid holiday time, based on 12.07% of their earnings. The drivers get paid bi-weekly.
Eligible drivers in the UK also will automatically be enrolled into a pension plan with contributions from Uber, the company wrote in the filing. “These contributions will represent approximately 3% of a driver’s earnings. Uber’s UK Mobility business represented about 6.4% of global Mobility Gross Bookings in Q4 2020,” the filing said.
The announcement in the United Kingdom is certain to have an impact elsewhere in Europe where Uber has pushed its business model, describing drivers as contractors in the face opposition from traditional cabbies and their unions.
Drivers still dissatisfied
Meanwhile, drivers in the United Kingdom are not satisfied. Uber “arrived to the table with this offer a day late and a dollar short, literally,” the App Drivers and Couriers Union said in a statement. The union added the changes stopped short of the Supreme Court’s ruling that pay should be calculated from when drivers log on to the app until they log off.
Nor should the company decide by itself the expense base for calculating the minimum wage. The wage rate should be based on a labor contract or established laws and regulations rather than Uber’s dictates, the drivers argue.
San Francisco-based Uber, despite its popularity with city dwellers before the pandemic, which dazzled tech-oriented analysts, has never made a profit. It reported a net loss of $6.8 billion for 2020. Uber and its rival, Lyft, just combined to spend $200 million to pass a referendum in California that effectively overturned a state law that made drivers employees rather than contractors.