Uber said on Tuesday that it was granting its British driver status, with benefits including a minimum wage – a world prince for the American giant.
Weeks after a Supreme Court ruling that could shake up Britain’s broader “gig economy” of 5.5 million people, Uber said its drivers would also receive holiday pay and pensions.
It is a massive change in the business model for a company that had argued before the UK’s Supreme Court that its drivers were self-employed.
As of Wednesday, “more than 70,000 drivers in the UK will be treated as workers, earning at least the national living wage when driving Uber,” the taxi app said in a statement.
“This is a floor and not a roof, with drivers who can earn more.”
The court ruled last month that Uber’s drivers are entitled to workers’ rights.
The decision limited a long-running lawsuit between British drivers and Silicon Valley taxi and delivery companies.
Uber said its actions over workers’ rights “mean that drivers will earn more security, helping them plan for their future while maintaining the flexibility that is an integral part of the private rental industry.”
The higher costs for Uber come when they face slippery driver bookings due to the Covid-19 pandemic, despite strong demand for Uber Eat’s food delivery service under national lockdown.
Uber did not expect the change in driver compensation to affect its net profit this year, the company said in US legislation.
“We have realized that platforms like ours will work differently in different countries,” said Uber CEO Dara Khosrowshahi in an editorial published in the Evening Standard.
“The future of work is too big an issue for a solution that suits everyone, and that’s OK.”
Khosrowshahi has argued for a new third option, to avoid drivers being classified as either employees or independent contractors.
The British decision follows California’s Supreme Court last month, which refuses to consider a legal bid to invalidate a referendum passed by voters that allows “gig workers” like Uber to be treated as entrepreneurs.
Drivers for ride-sharing and meal delivery applications filed the lawsuit directly with the California Supreme Court in January to track voter-backed labor laws known as Bill 22.
Bill 22 – approved in November and heavily supported by Uber, Lyft and other app-based delivery services on demand – effectively repealed a state law requiring them to reclassify their drivers and provide employee benefits.
The vote in November came after a controversial campaign with working groups claiming the initiative would undermine workers’ rights and benefits, and with supporters arguing for a new, flexible economic model.
The victory for the “gig economy” in California has ignited fears that large companies are writing about labor laws.
According to the proposal, drivers remain independent contractors, but Uber and Lyft must pay them a number of benefits, including a minimum wage, a contribution to health care and other forms of insurance. Critics of the measure said it did not take into account the total cost to drivers.
In a first for the EU, the Spanish government earlier this month announced an agreement that will recognize riders working for food delivery companies such as Deliveroo and Uber Eats as officials following complaints about their working conditions.
In Italy, prosecutors have told Uber Eats and other food delivery platforms that their couriers were employees and not independent workers, fining them € 733 million for violating occupational safety rules.