A smartphone displaying the Uber app in London.
Oli Scarff | Getty Images
Shortly after losing a major labor dispute in the UK, Uber will classify all UK based drivers as workers.
Under the new designation, more than 70,000 drivers will receive some benefits, including minimum wage, vacation time and pension contributions, but will not receive full employee benefits.
Uber announced the change to an SEC filing, adding that UK ridesharing accounted for 6.4% of all gross bookings for mobility in the fourth quarter of 2020.
While the move will increase Uber’s costs in the UK, the company continues to aim for adjusted EBITDA profitability through the year-end.
Earlier this year, Uber lost a major legal battle in the UK over the issue. The country’s Supreme Court upheld a ruling that a group of drivers were workers and not independent contractors. While the decision was made with a small group of drivers, thousands more have taken action against the company.
In a comment in The Evening Standard, Dara Khosrowshahi, CEO of Uber, wrote that following the Supreme Court ruling, “we could continue to challenge drivers’ rights to any of these protections in court. Instead, we decided to turn the page.” “”
Khosrowshahi admits, “I know many observers will not pat us on the back if we take this step, which comes after a five-year legal battle. They are right, although I hope the path we have chosen will change our willingness to change shows. “”
Meanwhile, Uber and the gig economy as a whole are facing regulatory challenges around the world. Uber has spent millions addressing these challenges in other regions.
In California, Uber pushed back against Assembly Bill 5, a gig economy bill passed by law in 2019 that tightened the rules for classifying workers as independent contractors.
After a widespread campaign that cost over $ 200 million – the most expensive election campaign in the state’s history – Uber and a handful of other gig economy companies used Uber to convince voters to support an election campaign called Proposition 22 and other gig economy platforms have been exempted from state labor law.
In return, gig workers received some benefits without full employment status. Some of the additional cost of providing benefits has been passed on to carpooling.
