Uber drivers in Britain should receive the minimum wage the whole time they are logged onto the app, two former drivers said on Wednesday after winning a court battle which could reshape the gig economy.
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 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.
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.
Uber’s Northern and Eastern Europe boss Jamie Heywood defended the firm’s plan.
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.