Khan backs drivers union in Uber pay dispute

Sadiq Khan, London’s mayor, has taken the side of the App Drivers and Couriers Union in its ongoing dispute with Uber, which has said that it will start providing its UK drivers with a minimum wage, holiday pay, and pensions, following a Supreme Court ruling in February.

The ACDU branded the changes “a day late and a dollar short” – accusing Uber of not fully complying with the court’s ruling when it came to the conditions under which it would pay its drivers a wage.

Khan agreed, saying: “This announcement by Uber is certainly a step in the right direction. However, it’s not enough – Uber must ensure it fulfils its legal obligation to give drivers full workers’ rights. Uber drivers have been let down and that needs to change.”

In 2019 Khan backed Transport for London’s move to briefly revoke Uber’s license to operate in part due to the company’s failure to report criminal offences by its drivers. His statement will doubtless have set some nerves jangling in Uber’s offices given that London is Uber’s biggest UK market.

At the heart of the dispute is an argument over whether Uber drivers will be guaranteed a minimum wage when they are logged on to the app – as the ACDU wants – or only based on “active time” when they are picking up or dropping off passengers which is Uber’s current plan.

In a public statement the ACDU not only argued that hat paying only based on active time will leave Uber drivers “shortchanged to the tune of 40 to 50 per cent.” The union further claimed that the move was in violation of the Supreme Court’s ruling that pay should “accrue on working time from log on to log off whereas Uber is committing only to these entitlements to accrue from time of trip acceptance to drop off.

Uber, however, has contested that the Supreme Court ruling found that “working time” for drivers should start from the moment drivers log on and are available to take a trip. Yet Uber will likely argue that the Court ruled that this finding might change if Uber was to face meaningful competition from other ride-hailing apps. Uber is already claiming that this is the case, citing the rise of Bolt, Ola, Lyft, and others. Another fight is sure to follow.

The importance of the fight over which hours will count as work should not be underestimated. Unions argue that Uber deliberately floods the roads with drivers leading to short wait times for customers but longer ones for drivers between trips. Notably, a study in California finding that Uber drivers spent one third of their time waiting for bookings.

Uber, however, has argued that paying drivers while they were waiting would render its current business model unfeasible. Uber has claimed that forcing it to pay drivers the minimum wage for the entire period they spend online would mean it would have to either set rigid shifts or sharply reduce the number of drivers it allows on the app in order for the business to remain viable.

Meanwhile, what Uber has conceded following the Supreme Court ruling that its drivers were workers not self-employed is already set to shake up the gig economy.

Under the new arrangement the company has vowed that the 70,000 Uber drivers in the UK will retain the freedom to choose if and when they drive but will now be paid the National Living Wage for over-25s after expenses, irrespective of a driver’s age. Writing in the Evening Standard, Uber CEO Dara Khosrowshahi emphasised that these payments would work as “a floor, not a ceiling, meaning they will be able to earn more, as they do today”. He also promised that fares would not rise – though sceptics point out that a similar law in California was followed by fare increases.

Drivers will also be given paid holiday time based on 12.07 per cent of their earnings and automatically enrolled in a pension scheme which both they and Uber will contribute to. The free insurance payments in case of sickness and injury – as well as parental payments already offered to UK drivers by Uber – will remain in place.

Even as things stand the current ruling could also have major effects on the wider gig economy. While the Supreme Court decision only applies to Uber drivers – even drivers for its food delivery service, UberEats, are unaffected by it – the case sets a powerful precedent which could provide a basis for legal challenges to other businesses which use similar models such as Deliveroo, Ocado, and Pimlico Plumbers.

More generally, it will pile pressure onto the government to set minimum basic standards across the gig economy. The UK has some 4.7 million gig-workers. The implications for the labour market could be seismic.