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After five years of legal battles and intense lobbying to stop it, Uber has sent a message to its 70,000 drivers in the UK, saying that they are all being reclassified as workers. But thousands of drivers still plan to take the company to court.
At first glance, it looked like Uber had finally accepted defeat. Drivers can now claim minimum wage, holiday pay and accrue pension contributions. The ride-hailing platform said it would recognise all drivers as workers, as dictated by the Supreme Court judgment last month. But it’s not that simple.
In a message to drivers, Uber promised that it will guarantee they are paid “at least” the minimum wage of £8.72 per hour from the time they accept a ride to drop-off, will pay 12.07 per cent of drivers’ wages every two weeks (after vehicle running costs) towards their holiday time, and set up a pension scheme for all “eligible drivers”. The average earnings for Uber drivers are £17 an hour in London and £14 an hour for the rest of the UK, but the company will now top up their pay to meet minimum wage if they do not earn that amount.
All this may sound like a definitive victory for thousands of drivers who joined group action last month, to sue the company and demand it recognise them as workers. But it isn’t. Unions claim that Uber has twisted the Supreme Court ruling, which said that workers are entitled to minimum wage as soon as they log on to the app, not just when they are driving people around. They argue this dilution will mean that drivers could miss out on 40 to 50 per cent of their entitled pay while they are logged on to the app, waiting to be assigned a passenger trip.
“It comes back to a certain amount of arrogance, that [Uber] feel that they can make a decision based on their interpretation and hope that they can get away with it, and nobody will challenge it,” says Steve Garelick, regional organiser at GMB Union. “And it’s sad and disappointing, really that it’s gone that way.”
The concern isn’t just that drivers could be shortchanged by this deal. It’s also about what Uber might do next. In its message to drivers, Uber said it plans to “share details over the next few days on how to express interest in a compensation payment for historical trips if you are eligible”, opening the door for workers to circumvent the need for group action. But if its calculations are based on its own criteria for minimum wage, and not the Supreme Court’s, drivers could be getting a basement-bargain compensation cheque rather than the amount they are entitled to.
Lawyers representing 4,000 of the current and former drivers suing Uber said that their group action will go ahead despite the announcement. Nigel Mackay, partner at law firm Leigh Day, says that claims will continue unless Uber guarantees drivers the full compensation they are entitled to. “Until yesterday, they [Uber] were denying that it [the judgment had any impact at all, is difficult to accept what they say or trust that they’re going to fully comply with driver rights,” he says.
The Independent Workers of Great Britain union has urged HMRC to launch an investigation into back-pay and force Uber to guarantee minimum wage as soon as drivers log on to the app, and obey the Supreme Court’s ruling. So far, no investigation has been launched. The Department for Business, Energy and Industrial Strategy, which is handling the government’s response to the Uber employment case, said it is awaiting the full details of Uber’s plan, but sees driver’s reclassification as workers as a “positive step”.
Writing in the Evening Standard, Uber CEO Dara Khosrowshahi painted the decision to reclassify its drivers as something that the company arrived at independently, helped along by the Supreme Court decision, rather than something it fought against for years and only implemented when there was no other viable option.
“I will be the first to admit that we’ve struggled to identify solutions that work for Uber and for those who earn on our platform,” he says. “I know many observers won’t pat us on the back for taking this step, which comes after a five-year legal battle. They have a point, though I hope the path that we chose shows our willingness to change.”
But no one acting on behalf of drivers believes that Uber has changed. “Every time Uber says it’s turning over a new leaf. They have more leaves turned over at this stage now than an autumn in Hampshire.” says James Farrar, one of the lead claimants of the original case against Uber. “It’s the same old Uber, and it is frustrating to have to go back to court again and again and again, but we have no choice. I’m not letting go until we have everything that the Supreme Court told us we were entitled to. And that’s not much, by the way.”
The suggestion that the Supreme Court judgement gave Uber a new method of complying with the law really doesn’t stand up to any scrutiny, says Mackay, because the Supreme Court judgement simply confirmed other judgments that have been handed down over the years. “They simply ran out of avenues of appeal,” he says. In his op-ed Khosrowshahi says that Uber wants to provide drivers with rights while maintaining flexibility, but Mackay says that was never an either-or choice. “We’ve been saying that from day one. There was never any reason for them to end flexibility,” he argues. “This is a complete u-turn from Uber because all along they said, we’re fighting this because we want to carry on with flexibility.”
Uber hasn’t changed at all, says Garelick. “You’ve got to engage with people to show willingness, if they were talking to us and sitting around the table and saying, ‘What we’ve offered isn’t enough, you’re right’, there would be that,” he says. “We applaud the fact that they’ve kind of done the right thing – they haven’t done the full right thing.”
This isn’t just about Uber, it’s about the entire gig economy, Garelick argues. But in the short term, Uber is still very much a target. “It’s laudable that they’ve started down the road,” Garelick says. “They’ve just got to be nudged over the edge of the precipice. But I suspect that if there’s enough pressure they will.”
Uber is offering a pension facility, but for Uber to pay in a three per cent quota, drivers have to pay five per cent from their own pockets, which Garelick says many drivers can’t spare. “It’s so nice to be offering it but a lot of drivers won’t take it up,” he says.
Another unanswered question is one of simple economics. Uber has not sidestepped costly legal action, but has encumbered itself with guaranteeing minimum wage to 70,000 people. There was no mention of how it was going to pay for the extra cost of making drivers workers, nor the ongoing group action to claim compensation for backdated pay.
Uber has made clear that it will keep fares competitive. It has also told drivers that there are no changes to service fees or the way it calculates fares. However, the company pushed up prices in California last year to help cover new benefits for drivers imposed by gig economy laws, which ranged from $0.30 to $2 depending on the service and location.
When the Supreme Court decision was handed down, the hope was that other companies would voluntarily recognise drivers and couriers as workers. When Uber refused to capitulate and accept that drivers are workers, some companies may have felt safe, Mackay says. All that is over. “It [Uber] appeared to have endless avenues for arguing that it didn’t have to do this. Uber is probably the biggest name in the gig economy. That would have probably been a persuasive effect on other companies. They may now feel a bit more exposed.”
Natasha Bernal is WIRED’s business editor. She tweets from @TashaBernal
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