A smartphone displaying the Uber app in London.
Oli Scarff | Getty Images
Shortly after losing a major labor battle in the UK, Uber will reclassify all UK-based drivers as workers.
With the new designation, more than 70,000 drivers will receive some benefits, including minimum wages, vacation and pension contributions, but will not receive full employee benefits.
Uber announced the change in a SEC filing, adding that its UK travel-sharing business accounted for 6.4% of all gross mobility bookings in the fourth quarter of 2020.
Although the move will increase Uber costs in the UK, the company still targets the profitability of adjusted EBITDA by the end of the year.
Earlier this year, Uber lost a major legal battle in the UK over this issue. The country’s Supreme Court upheld the decision that a group of drivers were workers, not independent contractors. Although the decision applies to a small group of drivers, thousands more have taken action against the company.
In an opinion piece in The Evening Standard, Uber CEO Dara Khosrowshahi wrote that, following the Supreme Court decision, “we could have continued to dispute drivers’ rights to any of these protections in court. Instead, we decided to turn the page. “
Khosrowshahi admits: “I know that many observers will not pat us on the back for taking this step, which comes after a five-year legal battle. They are right, but I hope that the path we have chosen will show our willingness to change.”
Meanwhile, Uber and the giant economy as a whole are facing regulatory challenges around the world. Uber has spent millions fighting these challenges in other regions.
In California, Uber opposed Assembly Bill 5, a gig economy law passed by the state legislature in 2019 that tightened rules to classify workers as independent contractors.
After a wide-ranging campaign, costing over $ 200 million – the most expensive electoral measure in the state’s history – Uber and a handful of other companies in the giant economy convinced voters to support an electoral measure called Proposal 22, which exempted Uber and other platforms of the giant economy of the state labor legislation.
In turn, show workers received some benefits without full employment status. Some of the additional costs of providing benefits have been passed on to customers who share a ride.