Uber has taken a half-step on workers’ rights

“We have decided to turn the page,” wrote Dara Khosrowshahi, the Uber chief executive, in an opinion piece in a London local newspaper after the company decided to extend more rights to its British drivers. Instead of trying to fight the UK Supreme Court decision that its drivers should be classified as workers and not self-employed, it would change its business model. “The path that we chose shows our willingness to change,” he said. 

Complying with the law after a five-year legal battle does demonstrate just how happy the company is to change — although not in the way that Khosrowshahi means. So, too, does the decision, unmentioned in his oped, not fully to respect its spirit. 

While the Supreme Court concluded that Uber ought to pay the minimum wage to drivers for the full time they use the app, the ride-hailing company will only classify “working time” as when they are assigned to trips. The supreme court’s judgment that drivers were workers and not self-employed was based on the fact that they must take direction from the company whenever they are using its app. Uber relies on a vast fleet of underused workers to ensure that its customers can swiftly find a ride; having to pay them whenever they are taking direction from the company would imperil its business model.

Partly, the company’s decision reflects the genuine changes in the ride-hailing market since drivers originally brought the case in 2016. As competition to Uber has increased, more are using multiple apps, logging in to both Uber and its rivals to find a wider range of clients. While the company could instead demand that its workers drive exclusively for it when logged on to its app — a more standard employment relationship — it argues that its drivers value their freedom. More options for companies to drive for means this flexibility is not as one-sided as it once was.

Uber’s attempts to push the envelope as far as it can are understandable for a disrupter. Entrepreneurs exist to spot opportunities. In many countries overregulation is common and Uber has provided a necessary corrective to a dysfunctional taxi market; often, however, it has taken advantage of legal grey areas where enforcement is weak and the rules are unclear. 

It is government’s job to establish clear boundaries and ensure would-be innovators obey the law. That means proper enforcement, preventing drivers from having to rely on a slow journey through the courts to achieve justice.

In Britain, three different agencies are responsible for enforcing labour standards: the Gangmasters and Labour Abuse Authority, the Employment Agency Standards Inspectorate and the part of HM Revenue & Customs that oversees minimum wage compliance. The job of director of labour market enforcement, created in 2019 to set strategy for all three organisations, is vacant.

Change in legislation will, eventually, be needed too. Neither the current regulation of the labour market nor of taxi companies is suitable for the digital age. In British employment law “workers”, as the drivers are classified, are an intermediate category between employees and the self-employed, enjoying some but not all rights. Clarifying these distinctions and bringing them into line with the definitions used in the tax system — many drivers would prefer to be self-employed for tax purposes but workers for rights and the minimum wage — would prevent the kind of regulatory arbitrage that Uber and its competitors have exploited in the UK.