Uber Drivers To Receive Minimum Wage, Holiday Pay & Pensions – What Does This Mean For The Wider Gig Economy?

Uber has announced that all of their 70,000 UK drivers will receive the national minimum wage, holiday pay and pensions as from today (17th March 2021).

The announcement follows the high profile Supreme Court ruling last month, where the Court upheld previous Employment Tribunal decisions that the Uber drivers in the case were ‘workers’ for the purpose of various employment rights and were entitled to benefit from national minimum wage, sick pay and holiday pay.

The changes implemented by Uber in respect of their drivers are as follows:

  • For drivers aged over 25, they will receive the national living wage (£8.72), once a trip request has been accepted and after expenses.
  • All drivers will be paid holiday time, which is based on 12.07% of their earnings and paid out on a two-weekly basis.
  • Eligible drivers will automatically be enrolled into a pension with contributions from Uber alongside their own contributions.
  • Drivers will continue to receive free insurance in case of sickness or injury, on top of parental payments (this has been in place since 2018).
  • All drivers can choose if, when, and where they drive.

The above changes do not apply to Uber Eats’ couriers who remain self-employed.

Has the announcement been welcomed?

Whilst this announcement has generally been well received, many have commented on the fact that Uber will still not pay its drivers for the time they spend waiting in between trip requests. Instead, Uber will only commit to paying the national minimum wage from the time a trip request is accepted to drop-off. This seems to go against the Supreme Court ruling, which made it clear that drivers should be entitled to the minimum wage whenever they have their app on and are available for work.

The lead claimants in the Supreme Court case, James Farrar and Yaseen Aslam, commented on the announcement:

“While we welcome Uber’s decision to finally commit to paying minimum wage, holiday pay and pensions we observe that they have arrived to the table with this offer a day late and a dollar short, literally.

“The Supreme Court ruled that drivers are to be recognised as workers with entitlements to the minimum wage and holiday pay to 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.

“This means that Uber drivers will be still short-changed to the tune of 40% to 50%. Also, it is not acceptable for Uber to unilaterally decide the driver expense base in calculating minimum wage. This must be subject to collective agreement.

“While Uber undoubtedly has made progress here, we cannot accept anything less than full compliance with legal minimums. We would also expect to see Uber make progress towards trade union recognition, a fair dismissals appeals process and a data access agreement.”

Other criticism directed at Uber includes failures by the company to announce anything in respect of:

  • Compensating drivers for past entitlements they have missed out on;
  • Paying the national minimum wage to those aged over 21 who have a minicab licence (they have only announced that those aged over 25 years of age will receive the minimum wage); and
  • What level of expenses Uber will allow to be deducted. For example, Uber may allow petrol rates in a region where the rates are lower, but perhaps not so much in London, where the rates are higher.

Could the announcement from Uber have an impact on the wider gig economy?

Following the announcement from Uber, many have commented that the company’s decision to grant their UK drivers basic pay and employment rights may have far-reaching consequences for other gig economy firms, who operate a similar business model, such as Deliveroo.

Some businesses may feel unable to sustain an argument that their workers should not be entitled to these basic employment rights, and could potentially be subjected to similar legal proceedings which were brought by Uber drivers in the Supreme Court case.

However, as a result of the Supreme Court’s ruling last month and Uber’s announcement today, it doesn’t mean that any legal action brought by a gig economy worker against their employer would automatically be successful. As with every employment case, each one will depend on the specific facts relevant to the case, the outcome on employment status always depending on the nature of the relationship between the individual and the paying entity.

Furthermore, for some gig economy businesses they simply cannot afford to change their commercial model and provide their workers with basic employment rights. Other businesses may be able to restructure, but this may come at the expense of having fewer workers.

Trade unions have warned other gig economy businesses that they need to change as a result of the announcement from Uber and the Supreme Court ruling. National Officer of the GMB union, Mick Rix, has commented that “this is the end of the road for bogus self-employment”, adding:

“It’s a shame it took the GMB winning four court battles to make them see sense, but we got there in the end and ultimately that’s a big win for our members. Other gig economy companies should take note.”

Uber Gig Economy

How Nelsons can help

Melanie Morton is a Legal Director in our expert Employment Law team.

The matter of employment status has long been a vexed issue for gig economy workers. If you would like any advice in relation to the subjects discussed in this article, please contact Melanie or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online enquiry form.