Uber is set to face further legal action over pay as unions said the taxi hailing app’s new deal was continuing to shortchange its UK drivers.
On Tuesday, after years of resistance by the company, Uber said it accepted that its 70,000 private-hire drivers were workers with rights to a minimum hourly wage and holiday pay in line with a supreme court ruling last month.
The new pay deal does not apply to delivery riders for the Uber Eats food service, which works with about 30,000 couriers.
Uber also said it would guarantee earnings after only 45p per mile of expenses – in line with the rate set out by HMRC for private company car usage. Campaigners said this was not sufficient.
A key complaint by campaigners is that Uber’s pay scheme ignores the supreme court ruling that drivers’ working time should be calculated from the moment they log on to its app to work until they log off.
Instead, Uber has deemed that working time starts from when a job is accepted by a driver, a move which drivers said cut potential earnings by up to 50%.
One driver told the Guardian: “I still have to provide the car and fuel at my expense and [I’m] sitting waiting for work whilst not being paid.”
Jonny Goldstone, head of the rival private hire group Green Tomato Cars, said that Uber’s promise to drivers was “obviously making a mockery” of the supreme court ruling, and that it was “incredibly cynical” since drivers were already likely to be earning well over the national minimum wage once they had accepted a job.
“Availability for work before you accept a booking is really what the supreme court ruling is about,” he said.
James Farrar, of the App Drivers & Couriers Union and a lead claimant in the successful Uber tribunal case, said the taxi hailing company could not unilaterally decide how the supreme court ruling should be applied. “Uber is forcing people to bring new claims. That [working time rule] will have to be tested in court in future,” he said.
Uber is prepared to fight a new employment tribunal case to settle the matter. It said that the supreme court ruling on working time was based on practices in place in 2016 but now phased out.
A spokesperson for Uber said: “If drivers were entitled to the minimum wage for all the time they simply had the app open, this would mean set shifts and a drastic cut to the number of drivers who can earn with Uber, at a time when the UK needs more earnings opportunities not less.
“Drivers have told us this is not what they want and the changes announced yesterday are the only way to ensure these new rights come with flexibility. This is consistent with the supreme court ruling which assessed Uber’s business in 2016 and based its decision on key features, which have subsequently been removed.”
Other taxi companies, such as Bolt, Ola, and Addison Lee, are now under pressure to follow Uber’s lead on improving conditions for drivers, a move that could raise fares across the board.
Goldstone said customers should be prepared to pay more. “Customers have to be prepared to pay sensibly for the [better] service they are receiving, over public transport or riding a bike,” he said.
But one analyst said on Wednesday that the pay changes for drivers were not likely to affect Uber’s profits.
Justin Post, at the Bank of America, estimated that holiday pay, the guaranteed minimum wage, and pension benefits, could translate to about a 15% increase in UK drivers’ net earnings.
Post said Uber’s costs would increase by $132m for the year ahead due to the UK pay deal but this was likely to offset by lowering other driver incentives in the UK.
“New driver benefits could improve Uber’s competitive positioning for UK drivers, increase driver supply and reduce the need for incentives, as only Uber is offering [those] benefits [and] competitors may need to respond,” he said.