On the go: Uber drivers will be auto-enrolled into a pension scheme after a Supreme Court judge ruled that its drivers should be classed as ‘workers’.
The ride-hailing app said it will give its 70,000 UK drivers a guaranteed minimum wage, holiday pay and pensions, starting from Wednesday.
It comes after Uber lost a Supreme Court case in February, with a judge ruling that drivers should be classed as workers not as independent third-party contractors.
Uber has now said that all eligible drivers will automatically be enrolled into a pension plan, with contributions from Uber alongside driver contributions.
In a statement, Uber said it will also work to ensure that every driver who does not opt out receives the appropriate contributions.
All employers must provide a workplace pension scheme and automatically enrol workers and make contributions to their pension, subject to criteria.
Pension commentators have previously said that this judgment paves the way for more gig workers to be auto-enrolled into a pension, giving them the opportunity to save for retirement.
Under the new set up, drivers would earn at least the UK’s national living wage, paid to the over-25s, of £8.72 an hour, although it will increase to £8.91 an hour for those aged 23 and over from April. But Uber said this is a floor and not a ceiling, with drivers able to earn more.
The holiday pay will be paid fortnightly and based on 12.07 per cent of the worker’s earnings.
Jamie Heywood, regional general manager for northern and eastern Europe at Uber, said: “This is an important day for drivers in the UK. Uber drivers will receive an earnings guarantee, holiday pay and a pension, and will retain the flexibility they currently value.
“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.”
A worker is a classification that is unique under UK employment law. Workers are not employees but are entitled to the minimum wage, holiday pay and a pension.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said Uber’s reclassification of its drivers would “reverberate through the entire gig economy”.
She said: “It has become clear that the Supreme Court’s decision last month steered Uber into a dead end in its fight to keep those behind the wheel on self-employed contracts.
“It is likely that other operators will now be forced to reassess the employment status of the drivers they have relied on to develop lucrative businesses.”
Streeter continued: “The company has reversed on its previous position of claiming that the ruling only applied to a limited number of drivers who had brought the case. Throwing in the towel is likely to come at a significant cost to the company.
“Drivers will not only be enrolled in a pension plan with contributions paid by the company, but they will also be paid the national living wage as a minimum and receive holiday pay.”
This article originally appeared on ftadviser.com
