Uber drivers in the U.K. will receive the minimum wage, pensions and holiday pay, following a recent court ruling that said they should be classified as workers and entitled to such benefits.
The ride hailing giant’s announcement Tuesday comes after it lost an appeal last month at the U.K. Supreme Court following a yearslong court battle. The court’s decision holds wider implications for the country’s gig economy.
Uber said it’s extending the benefits immediately to its more than 70,000 drivers in the U.K. Drivers will earn at least the minimum wage, which currently stands at 8.72 pounds ($12.12), after accepting a trip request and expenses, and will still be able to earn more.
Drivers will also get holiday pay equal to about 12% of their earnings, paid every two weeks. And they’ll be enrolled in a pension plan that both they and the company will pay into.
“This is an important day for drivers in the U.K.,” Uber’s regional general manager for Northern and Eastern Europe, Jamie Heywood, said in a filing to the Securities and Exchange Commission. He noted that drivers will still be able to work on a flexible basis. “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 U.K. is one of Uber’s five largest markets, representing about 5% of bookings globally, and the move could have ripple effects in other European countries, Wedbush analysts said in a note. “There’s likely further legal battles ahead both in the UK and in other geos or jurisdictions that will look at this ruling,” they said.
“A day late and a dollar short”
The drivers who filed the case welcomed the news but said it’s not enough.
Uber has “arrived to the table with this offer a day late and a dollar short, literally,” James Farrar and Yaseen Aslam of the App Drivers And Couriers Union said in a statement. They said the changes stopped short of the Supreme Court’s ruling which held that pay should be calculated from when drivers log on to the app until they log off. And they said the company can’t decide by itself the expense base for calculating the minimum wage, which should be based on a collective agreement.
Farrar and Aslam had taken their case to an employment tribunal, which found drivers are not independent contractors, but should be designated workers, which under British law means their work terms are more casual than employees but still come with some benefits. Uber lost two rounds of appeals before the Supreme Court decision.
Providing more benefits for its drivers is likely to raise costs for San Francisco-based Uber, which already was struggling to make a profit and had previously run into regulatory trouble in London, where authorities had sought to revoke its license. It said, however, that it wasn’t adjusting its earnings forecast for the year. Wedbush estimated the added benefits will cost Uber about 3% of what it today pays drivers and predicted the company would scale back its U.K. operations over the next year.
The move in the U.K. contrasts with the outcome of a November ballot proposition in California that Uber bankrolled heavily. Voters passed Proposition 22, which exempts workers on app-based transportaion and food delivery services from most labor protections and cements their status as independent contractors.
Uber CEO Dara Khosrowshahi pitched the change as a victory for Uber, which has long pushed to alter labor law and transfer more of the costs and responsibilities of work onto its drivers.
“A growing number of people are choosing this type of work because of the flexibility it provides—the ability to choose if, when and how to work. That level of freedom is not available with traditional employment,” Khosrowshahi wrote in a commentary in the Evening Standard, adding, “We know there is a better way and we intend to use our leadership position to advocate for reform.”