The gig economy: why Uber is giving UK drivers worker status
The so-called gig economy has made huge inroads in recent years, with apps connecting customers with workers providing a service.
Contractors or workers?
The exact designation of those service providers has long proved a bone of contention. Perhaps the biggest name in the gig economy revolution is ridesharing app Uber, which has just announced it is to grant its “drivers” worker status in the UK, entitling them to all the benefits required under UK law.
Uber makes a U-turn
In a U.S. Securities and Exchange Commission , the company said: “Private-hire drivers using its Mobility platform in the United Kingdom (“UK”) will be treated as workers. A worker is a classification that is unique under UK employment law. Workers are not employees (and remain self-employed for tax purposes) but are entitled to the minimum wage (generally called the National Living Wage in the UK), holiday pay, and, if eligible, a pension.
“Going forward, all drivers in the UK will be paid holiday time based on 12.07% of their earnings, paid out every two weeks. Eligible drivers in the UK also will automatically be enrolled into a pension plan with contributions from Uber. These contributions will represent approximately 3% of a driver’s earnings.”
The company further said its UK mobility business represented 6.4% of all bookings in the fourth quarter of 2020, and while it would increase costs in the UK, it did not intend to pass those on to customers.