Is Uber heading for trouble?

Posted on Tuesday, November 15, 2016 by Nadio GranataNo comments

As a frequent user of Uber, I’ve got to say I think the App is amazing! For readers who are not familiar with the App, it’s a way of ordering and paying for a taxi via your mobile phone. Simple.

It’s so popular in major cities across the world that it is dramatically impacting on literally millions of people per day. Users of the App, like me, enjoy frequent discounts and loyalty bonuses whilst we merrily recommend it to friends and colleagues. The system is so smart, it can identify your location and give you an instant estimate on your journey cost and tell you to the next minute, what time your lift will be arriving. Having completed your journey, the App instantly supplies you with a receipt containing your journey details and driver information. Ratings are required and your opinion matters as your driver gains from having delivered you in the best possible condition.

So, what could possibly be the problem?

This column is, after all, sponsored by Stafflex to enable us to discuss employment issues with you, the unsuspecting reader …. and right now you’re right to be asking, ‘what has this got to do with employment issues?’.

It’s huge!

Uber has just this week been challenged by a couple of its drivers, in a UK Employment Tribunal. Two London drivers, namely James Farrar and Yaseen Aslam, representing another 17 Uber workers, have successfully claimed that they are employed by the San Francisco HQ and not, as had hitherto been accepted, classified as ‘self-employed’.

In reality, this means that they are now eligible for holiday pay, sickness pay and the National Living Wage instead of the paltry £5.00 per hour they were often averaging. And these are just the tip of the iceberg. There are currently more than 40,000 drivers in the UK and each presumably will have a similar right should this recent ruling be upheld on appeal.

And that’s not the end of it ….

Uber is only one of the several new (technology) businesses taking the world by storm. Note I put the word ‘technology’ in brackets. This is because Uber and the likes of Airbnb, Freelancer and Upwork might have a fighting chance in court if they are ruled to be ‘technology companies’ as opposed to ‘taxi company’, ‘hospitality company’ or ‘employment agency’. Yes, definitions matter and if these companies operating in the gig industries (gig working is when people opt to assume temporary, often ad hoc, work contracts (or ‘gigs’) sourced online through digital, cloud-based marketplaces) are allowed to continue, we will have nearly half a million ‘employees’ already in the UK missing out on basic employment rights.  

So when will Kirklees be affected by the exponential growth of the gig economy? It’s probably worth conducting a survey of KBN readers to gain more insight into this. My hunch is that very few of us, less than 5%, will have heard about the ‘gig industry’ and even fewer will be using Uber frequently as it seems to have disappeared from the region. However, some of us are old enough to recall when online shopping was starting out and had a take up of less than 1% for a few years until it boomed with Tesco, Ebay and Amazon leading the way to the tipping point.

When we look further afield, the gig economy is already taking hold. According to the Recruitment and Employment Confederation, “The ‘gig economy’ has grown over recent years, so too have debates about its place and value to the global labour market. Confusion has arisen around what exactly it constitutes and how it impacts employers, recruiters and workers alike. Some see online talent platforms as ‘clearinghouses’ with the potential to inject new momentum into the jobs market. The McKinsey Global Institute calculates that by 2025, digital work platforms could add $2.7 trillion, or 2.0%, to global GDP, increasing employment by 72 million full-time equivalent positions. For the UK, that equates to £45 billion and extra work for 766,000 people. The study estimates that up to 200 million people around the world could personally benefit from using digital work platforms, specifically by allowing the unemployed to find work as freelancers or by allowing part-time workers to work additional hours on a supplementary basis”.

The bigger question is … if the gig economy is going to become so big, what jobs will it replace?

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