Uber continues to deal with setbacks as it dominates in the disruption of the taxi industry worldwide. They’re currently appealing a ruling in the UK that would revoke their license to operate. It would be a huge setback, given how big a percentage of their overall business London represents.
Now, they’ve lost an appeal in the UK that may force them to treat their drivers as employees. It appears they have the right to appeal further. If they lose, they would be forced to pay drivers minimum wage, pay them for holidays and extend other benefits a typical UK employee would receive.
Are Uber Drivers Employees?
I’ll admit to being torn on this question. The singular act of providing your own vehicle doesn’t make them a contractor. Think about pizza delivery drivers here in the US. However, Uber drivers do set their own schedule. That’s typically (though not always) a good indication they’re an independent contractor. Uber drivers can work wherever they choose as well.
Uber does set their wages and provide other structure like an employer.
What If Uber drivers are employees?
A mandate that Uber drivers are employees would add significant complexity to their business model. They would likely need a sizable human resources department to tackle all the issues commensurate with an employee base that large. They might be required to offer health insurance in a dizzying number of jurisdictions, a process that’s hard to fully automate.
It’s likely those extra costs get passed on to customers. It’s not immediately clear how that would affect pricing, especially compared to traditional taxi cabs. Does a higher price for an Uber ride make some customers migrate to other transportation methods? Do more people return to taxi cabs and public transit?
Uber still controls a ton of the market. Rental car companies are getting more aggressive and a recent study might indicate a small drop in Uber’s share of the market. They’re not in danger of disappearing, but the future isn’t as clear as it once was. A double whammy of losing one of their largest markets and a potential forced change to their business model makes for some rough sailing.
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