Mar 16, 2021 - Economy

Uber to reclassify 70,000 drivers in U.K. as workers

Photo of the left side of the car, which has an Uber sticker on it

Photo: Matthew Horwood via Getty Images

Uber announced on Tuesday it will reclassify over 70,000 drivers across the United Kingdom as workers who will receive benefits including a minimum wage, vacation pay and access to pension plans, effective Wednesday,

Why it matters: It's the first time the ride-hailing giant has agreed to classify its drivers accordingly, and it follows a landmark ruling from Britain's Supreme Court last month that said Uber drivers are entitled to greater protections.

  • Treating gig companies' workers as employees presents an existential threat to the firms' business models, Axios' Kia Kokalitcheva writes.
  • "The changes are limited to the U.K.," Bloomberg writes, "but raise questions about whether management is willing to consider adapting its business model in other countries."

Yes, but: British labor rules offer a "middle ground" between freelancers and full-time employees that doesn't exist in other countries, which makes it unclear whether Uber will back down on its position outside of Britain, the New York Times writes.

Details: Drivers will now receive minimum wage — 8.91 pounds, or roughly $12.40, starting April 1 — between the time they accept a ride request and a passenger's drop-off. That does not apply to the period when the driver is waiting for a request.

  • The minimum wage is the floor, so at a minimum drivers will earn those amounts — but can and likely will earn more.
  • Uber will pay drivers on vacation 12% of their earnings, a value that is set by the government.

What they're saying: The Supreme Court decision "provides a clearer path forward as to a model that gives drivers the rights of worker status — while continuing to let them work flexibly, in the same way they have been since Uber’s launch in the U.K. in 2012," Uber said in a statement to NYT.

The big picture: London is one of Uber's five biggest markets globally, with Britain accounting for roughly 6.4% of the company's total gross bookings, per NYT.

  • More labor battles are expected across the European Union, where policymakers are looking at stricter labor regulations for gig-economy companies, the Times writes.
Go deeper