LONDON (Reuters) – Uber’s proposal to expand benefits to British drivers following a court defeat last month has not put an end to the fight for better gig-worker pay in the UK and around the world, an issue that has become a flashpoint for the labor movement.
On Tuesday, Uber Technologies Inc said it would offer guaranteed entitlements to its more than 70,000 UK drivers, including holiday pay, a pension plan and limited minimum wage.
Uber has said it wants to expand limited benefits similar to those offered to drivers in the UK across all of Europe and the United States.
But British driver activists who brought the legal challenge said the proposal did not fully comply with the court ruling and vowed to keep up the pressure.
Uber shares were down 4.7% at $56.08 on Wednesday afternoon, with analysts at Morgan Stanley projecting a hit of up to $300 million to Uber’s core earnings to finance the added benefits.
Uber declined to comment on the total costs for implementing the measure.
The UK skirmish is the latest in a line of challenges over the rights of gig workers that could reshape the on-demand ride-hail and food delivery industry, in which most workers are considered independent contractors with few legal rights and benefits.
Worker groups, labor activists and some legislators across Europe and the United States, including U.S. President Joe Biden, have pushed for drivers to be recognized as employees instead, at times winning in court.
Uber, for many years staunchly opposed to changing workers’ independent contractor status, in recent years began to advocate for a new compromise model under the leadership of Chief Executive Dara Khosrowshahi. Under that proposal, gig workers would maintain their flexibility as independent contractors but be provided with additional benefits – a model that in many countries would require updates to existing labor laws.
The so-called third way model had its first success in California last year, when voters approved a gig company-sponsored ballot measure that cemented app workers’ contractor status with additional benefits. The company has offset at least some of those costs with fare increases.
Khosrowshahi in an op-ed in British newspaper the Evening Standard on Wednesday said the new UK framework was in line with the company’s U.S. and European Union-wide advocacy for changes to existing labor laws, despite concrete benefits not necessarily serving as a blueprint for everywhere else.
The UK announcement follows a ruling by the country’s Supreme Court last month, which found that Uber drivers had to be classified as “workers” – a unique status available under UK employment law that situates drivers between independent contractors with no benefits and full-fledged employees with vast benefits.
Uber said drivers will be at least 15% better off, if they opt in to the pension plan under the new scheme.
But 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, said the company’s minimum wage proposal violated the court’s ruling.
Uber said minimum wage, which stands at 8.72 pounds ($12.13) per hour for those aged 25 and over, would apply only “after accepting a trip request and after expenses.” It also said that drivers on average earn an hourly 17 pounds in London.
Farrar and Aslam said the decision to not pay drivers for the time they spend waiting for a passenger would short-change them “to the tune of 40-50%.”
“We cannot accept anything less than full compliance with legal minimums,” the drivers said in a statement.
Cruising around while waiting for a trip accounts for as much as a third of the time drivers spend behind the wheel with the app turned on, according to several U.S. studies.
Uber’s Northern and Eastern Europe boss, Jamie Heywood, in an interview with Sky News defended the firm’s plan and said the company would remain competitive on pricing.
“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.
(Reporting by Costas Pitas in London and Tina Bellon in Austin, Texas; Editing by Toby Chopra and Matthew Lewis)