Uber Agreeing to Drivers Union Sets its Gig Business Model Up for A change

Uber Agreeing to Drivers Union Sets its Gig Business Model Up for A change

For the first time in its ride-hailing history, Uber is recognizing a trade union. Following a landmark ruling in London in February, classifying its drivers as employees, the California-based taxi app has been forced to grant employment status to its drivers.

This means about 70,000 of its ride-hailing drivers will for the first time, be accorded minimum wage earnings, pensions, other work benefits and their health and wellbeing.

UK’s workers union, GMB is negotiating on behalf of the drivers and Uber said the development shows it is committed to the workers’ welfare.

“While Uber and GMB may not seem like obvious allies, we’ve always agreed that drivers must come first, and today we have struck this important deal to improve workers’ protections,” said Jamie Heywood, regional general manager for Northern and Eastern Europe.

Uber faced the heated challenge to declassify its drivers as private contractors for years. With lawsuits spanning across London and California, its biggest markets. The ride-hailing giant eventually lost the fight in the UK.

Now the development leaves it open to further court rulings and changes that may go in favor of the drivers who want out of the “independent contractor” status.

In the United States, Massachusetts is the second state to sue Uber and Lyft over the misclassification of drivers. In May 2020, California Attorney General Xavier Becerra, along with city attorneys of Los Angeles, San Francisco, and San Diego, sued the companies, arguing that their drivers were misclassified as independent contractors when they should be employees under the state’s AB5 law that went into effect on January 1st.

While Uber has maintained that the gig economy business model grants drivers the flexibility they need, and it’s their wish to keep it that way, labor unions and governments are seeing the practice as unfair treatment of workers.

“The bottom line is Uber and Lyft have gotten a free ride for far too long,” Maura Healey, Massachusetts’ Attorney General said last year. “For years these companies have systematically denied their drivers basic workplace protections and benefits, and profited greatly from it. This business is unfair and it’s also illegal under Massachusetts law.”

Uber survived the California legal battle by invoking the prop. 22 ballot provision that allows the people to decide what they want through votes. The company had argued that classifying drivers as employees would mean a hike in ride-hailing fares, inciting the people to vote yes to the gig business model. However, the war seems far from over.

In the wake of the lawsuits in California and London, Uber drivers in unexpected places in Africa, like Johannesburg and Lagos, caught wind and moved to seek improved welfare and workers’ benefits.

The trajectory set by the development in London will likely spur further action in more cities especially in the US. Uber had frowned at unionism, but by recognizing GMB, the ride-hailing giant has opened doors for it, giving a union the right to negotiate on behalf of drivers for the first time.

The UK is the only country in which Uber has recognized a union, but it seems to be the beginning.

GMB has urged other operators to fight to be recognized as employees, saying the deal offered a golden opportunity to improve workers’ rights.

“This agreement shows gig economy companies don’t have to be a Wild West on the untamed frontier of employment rights,” said Mr. Rix.

Uber and GMB will have to negotiate work benefits on behalf of the drivers. Under the agreement, GMB and Uber will discuss topics such as Uber’s National Living Wage guarantee, pensions and holiday pay. Drivers won’t automatically become members, and to be represented by the union, they will have to sign up.

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