(CNN Business)Uber is reclassifying its 70,000 drivers in the United Kingdom after the UK Supreme Court upheld a ruling last month that they should be classified as workers and not independent contractors.
The company said Tuesday that as "workers" — a classification unique to employment law in the UK that falls short of "employee" — drivers will be entitled to minimum wage, vacation time, and a pension. Uber did not apply the changes to its Uber Eats food delivery workers, only ridehail drivers.
Uber (UBER) said the minimum wage will be based on engaged time after a trip is accepted and after expenses — a definition that received push back from drivers on Wednesday. The court determined last month that drivers are working from the time they turn on Uber's app, rather than only when transporting passengers as the company has argued.
Uber's policy changes following the ruling mean that "drivers will be still short-changed to the tune of 40-50%," Yaseen Aslam and James Farrar, the former drivers who led the legal action against Uber, said in a statement. "While Uber undoubtedly has made progress here, we cannot accept anything less than full compliance with legal minimums," they added.
Last month, the court ruled that a group of Uber drivers that brought a case to an employment tribunal were not independent contractors because their activities were "very tightly defined and controlled by Uber." The judge cited the company's control over fares and how it dictates the contractual terms on which drivers perform their services. Aslam and Farrar filed the suit in 2016 when they were driving for Uber.
The decision marks a significant defeat for Uber in the United Kingdom, where it has come under pressure from labor activists and transportation regulators. Uber has defended its controversial business model of treating its workers as independent contractors, while, more recently, presenting the addition of new benefits as a sort of middle ground.
"Following last month's UK Supreme Court ruling, we could have continued to dispute drivers' rights to any of these protections in court. Instead, we have decided to turn the page," wrote Uber CEO Dara Khosrowshahi in an op-ed Tuesday published by the Evening Standard discussing the changes. "We have been calling for updates to legal frameworks, both in the US and the EU, that would guarantee benefits and protection for independent workers without removing the flexibility that makes this type of work so attractive to them in the first place."
Aslam and Farrar said that the driver expense base, which is used to calculate minimum wage, should be subject to collective agreement and called on Uber to make progress towards trade union recognition.
The change to its UK business model follows a decisive win in its home state of California, where voters passed a ballot measure in November exempting Uber and other gig economy companies from a state law that would have required them to reclassify their drivers and delivery people as employees rather than independent contractors.
As part of the ballot measure, Uber continues to treat its drivers as independent contractors with some new benefit concessions, including a minimum earnings guarantee based on "engaged time" when a driver is fulfilling a ride or delivery request, but not the time they spend waiting for a gig. Uber and other gig companies have made it known they plan to push similar laws in other states, as well as pursue federal legislation in the United States to solidify their approach.
