Uber grants worker status to UK drivers after losing major union battle

On the verge of losing a major union battle in the UK, Uber will reclassify all UK-based drivers as workers.

Under the new designation, more than 70,000 drivers will receive some benefits, including minimum wage, vacation and pension contributions, but they will not get all of the benefits.

Uber announced the change in an SEC filing, adding that its UK rideshare business accounted for 6.4% of all gross mobility bookings in the fourth quarter of 2020.

Although the move increases Uber’s costs in the UK, the company is still targeting profitability from Adjusted EBITDA by year-end.

Earlier this year, Uber lost a major legal battle in the UK over this issue. The country’s Supreme Court upheld a ruling that a group of drivers were workers, not independent contractors. While the ruling applied to a small group of drivers, thousands more took action against the company.

In an editorial for The Evening Standard, Uber CEO Dara Khosrowshahi wrote that following the Supreme Court ruling, “we could have continued to challenge drivers’ rights to any of these protections in court. . Instead, we decided to turn the page. “

Khosrowshahi admits, “I know many observers won’t congratulate us on taking this step, which comes after a five-year legal battle. They are right, although I hope the path we have chosen shows our willingness to change. “

Meanwhile, Uber and the gig-economy as a whole face regulatory challenges around the world. Uber has spent millions to address these challenges in other regions.

In California, Uber pushed back on Assembly Bill 5, an odd-job economy law passed by the state legislature in 2019 that tightened the rules for classifying workers as independent contractors.

After widespread campaign costing more than $ 200 million – the most expensive voting measure in state history – Uber and a handful of other gig economy companies convinced voters to back a voting measure called Proposition 22, which exempted Uber and other gig-saving platforms from state labor law.

In turn, construction workers received certain benefits without full employment status. Some of the additional costs associated with providing benefits have been passed on to carpooling customers.