A smartphone with the Uber app in London.
Oli Scarff | Getty images
After losing a major job battle in the UK, Uber will reclassify all UK-based drivers as employees.
Under the new designation, more than 70,000 drivers will receive a number of benefits, including minimum wage, vacation time and retirement benefits, but they will not receive full employee benefits.
Uber announced the change in a SEC filing, adding that the UK ride sharing business accounted for 6.4% of all gross mobility bookings in the fourth quarter of 2020.
While the move will increase Uber’s costs in the UK, the company is still targeting adjusted EBITDA profitability by the end of the year.
Earlier this year, Uber lost a major legal battle in the UK on this matter. The country’s Supreme Court upheld a ruling that a group of drivers were workers and not independent contractors. Although the decision applied to a small group of drivers, thousands of others have taken action against the company.
In an op-ed in 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 will not pat us on the back for taking this step, which comes after a five-year legal battle. shows change. “
Meanwhile, Uber and the gig economy as a whole are facing regulatory challenges around the world. Uber has spent millions to meet those challenges in other regions.
In California, Uber opposed Assembly Bill 5, a gig economy law passed by state legislatures in 2019 that tightened rules for classifying employees as independent contractors.
After a 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 support a voting measure called Proposition 22, which Uber and other gig economy platforms exempted. of state labor law.
In turn, gig workers received a number of benefits without full employment status. Part of the additional cost of providing benefits was passed on to customers sharing rides.