By Costas Pitas
LONDON (Reuters) - In a major victory for unions, Uber's more than 70,000 British drivers will be paid the minimum wage while picking up and driving passengers as part of the ride-hailing company's agreement to grant workers' rights after it lost a groundbreaking Supreme Court case last month.
Uber Technologies (NYSE:UBER) Inc has pushed back against European and U.S. labor advocates' demands for better driver compensation with some success, calling for a "third way" of combining flexible on-demand work with more limited benefits than traditional employees receive.
The agreement in Britain classifies Uber drivers as workers who are entitled to fewer rights than those classed as employees, who are also guaranteed sick pay and parental leave. Uber in California last year pushed and won a similar compromise on drivers' status.
In a case led by two former Uber drivers, a UK employment tribunal ruled in 2016 that they were due entitlements such as paid holidays, prompting Uber to appeal all the way to Britain's top court, which ruled against it in February.
Uber said at the time it would consult with drivers whilst lawyers said it could take several months for the details of the ruling to be worked out at a further employment tribunal hearing. Meanwhile, more cases could be filed.
On Tuesday, Uber said UK drivers would receive some added benefits, including paid holiday time, be enrolled in a pension scheme and receive no less than the minimum wage, which stands at an hourly 8.72 pounds ($12.07) for those aged 25 years and over, after they accept a trip request.
"This follows the recent UK Supreme Court ruling, which provides a clearer path forward as to a model that gives drivers the rights of worker status while continuing to let them work flexibly," Uber said.
Drivers will not receive minimum wage during the time they spend waiting for a passenger. That portion, known as cruising or dead-heading, can account for as much as a third of the time drivers spend behind the wheel with the app turned on, according to several U.S. studies.
UK and U.S. labor activists have called on Uber to pay drivers from the moment they log onto the app and are available, but Uber has said it could not control what drivers did during that time and whether they were actually working.
The Silicon Valley-based company said its drivers in London, by far its largest market in Europe, earn 17 pounds an hour on average and the flexibility to choose if, when and where they work will be retained.
Uber has faced opposition from traditional taxi operators and unions who criticised the app for undercutting existing players, leading to protests and regulatory and legal challenges which have forced the company to pull out of some markets.
France's top court in 2020 recognised the right of an Uber driver to be considered an employee while European Union regulators are considering new rules to protect gig economy workers.
California lawmakers last year implemented a bill that would have forced gig economy companies to treat their workers as employees, leading Uber to put forth its "third way" ballot proposition, which voters approved.
That cemented app-based workers' status as independent contractors while offering some benefits, including minimum pay while riders are in their cars, healthcare subsidies and accident insurance.
In California, Uber has financed at least some of the added benefits by increasing prices for riders.
Tuesday's announcement could impact others in the gig economy, where millions of people tend to work for one or more companies on a job-by-job basis.
"Uber is just one part of a larger private-hire industry, so we hope that all other operators will join us in improving the quality of work for these important workers who are an essential part of our everyday lives," said Uber's Northern and Eastern Europe boss Jamie Heywood.