Uber has announced that 70,000 of its drivers in the United Kingdom will be guaranteed a minimum wage, holiday pay, and pensions. Aside from that, Uber's fares will not increase this year.

Uber to grant minimum wage to drivers

The ride-hailing company said that drivers would earn the National Living Wage in the United Kingdom, which is £8.72 or $12.12 an hour, in a move that could shake up the gig economy. The announcement came a month after Uber lost a legal battle in the U.K. over drivers' status.

Uber stated that it turned the page on workers' rights, but some said it had not gone far enough.

Analysts also warned that the ride-hailing company had increased California prices after doing the same for its drivers, and there is a chance that Uber will make the same move in the U.K. in the near future despite saying there won't be any increase in fares. 

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Uber's chief executive Dara Khosrowshahi told the Evening Standard that this is a significant improvement in the standard of work for U.K. drivers. But they know that a lot of observers won't just congratulate them for taking this step, which comes after a five-year legal battle.

Khosrowshahi said that observers have a point, but they hope the path they chose shows their willingness to change for the better.

 According to The Washington Post, Union leaders and employment experts said that Uber's move would have far-reaching consequences for the gig economy.

Rachel Mathieson, Bates Wells lawyer, who represented Uber drivers fighting for workers' rights, called the move a significant milestone.

How the change happened

In February, Uber lost the third and final stage of a five-year legal battle with drivers who claim that it had wrongly classified their employment status, according to The Verge.

However, the Supreme Court ruled its drivers were workers, a category that means that they can have holiday rights, pension rights, and minimum pay.

Uber was not legally obligated to grant these benefits, but it was facing further legal action from drivers, and there were calls for compensation for past missed entitlements.

The company is also being challenged by its drivers in other countries over whether they should be classified as workers or self-employed.

So what happens now? Uber, which is currently worth $110 billion, said that the changes to its U.K. drivers' pay would come in on Mar. 16 and form an earnings floor, not an earnings ceiling.

Uber said that the new rates would come on top of free insurance to cover sickness, injury, and maternity and paternity payments, which have been in place for all drivers since 2018.

According to Uber, it will pay the National Living Wage for over-25s, irrespective of a driver's age, after accepting a trip request and after expenses.

Also, all drivers will be paid holiday time based on 12.07% of their earnings, and Uber will pay it out on a fortnightly basis. The drivers will automatically be enrolled into a pension plan with contributions from Uber alongside driver contributions.

Despite all of these changes, Uber drivers will still get to choose when and how long they will drive. 

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Written by Sieeka Khan

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