Written evidence from Networked Rights and United Private Hire Drivers (WOW0101)
United Private Hire Drivers (UPHD) is the UK’s largest dedicated member representative body for private hire drivers with branches operating in London, Glasgow and Edinburgh and a membership of more than 1,100 drivers throughout the UK.
UPHD was founded by James Farrar and Yaseen Aslam who are also the originators and lead claimants in the recent successful worker rights case against Uber.
UPHD is now working to file many more member claims against Uber and other private hire operators who are do not respect the employment rights of our member base.
1. Is the term 'worker' defined sufficiently clearly in law at present? If not, how should it be defined?
Yes, we believe the term ‘worker’ is sufficiently clear in law. The emphatic judgement in our case against Uber underscores this well.
The problem is not one of definition but one of enforcement & access to remedy. Low paid self employed workers will often lack the financial resources to bring a worker rights claim and the burden of proof of employment status is placed on the worker.
Workers, already in a precarious contractual position, will often be unwilling or unable to challenge the employer.
There is little government agency support of workers on precarious contracts who have doubts about their employment status.
Government should be policing the labour market and not solely rely on workers to make a complaint.
We are fortunate to have the ‘worker’ distinction to capture abuses of firms seeking to avoid legal employment obligations while maintaining control. In our worker rights case against Uber the Judge noted that the contract contained ‘fiction’, ‘twisted language’ and ‘even brand new terminology’ as Uber attempted to construct contracts to deliberately avoid its obligations. Uber contracts drivers via the Netherlands and demands drivers submit to binding arbitration there. We were very grateful to be found to be ‘workers’ and that Uber’s arguments to the contrary were soundly defeated. The Employment Tribunal identified 13 reasons why Uber drivers were found to be workers including:
We are concerned that companies such as Uber hide behind a thin veneer of consumer technology to claim that it is something that it is not and that established employment regulations should not apply.
For instance, Uber, through its contracts and PR communications, insists that it is a software company and not a technology company. This is a false construct that allows Uber to define itself by the mechanics of its software distribution system rather than by the nature of the business it is actually engaged in. Uber is licensed in London and in cities throughout the UK as a ‘private hire operator’. Its moniker is to be ‘everyone’s private driver’. It boasts of being a ‘transportation system’. Yet in its contracts with drivers and riders both are compelled to agree that Uber is not a transportation provider at all.
The United States District Court Northern District of California said in its ruling against Uber[i]:
‘’First, Uber’s self-definition as a mere “technology company” focuses exclusively on the mechanics of its platform (i.e., the use of internet enabled smartphones and software applications) rather than on the substance of what Uber actually does (i.e., enable customers to book and receive rides). This is an unduly narrow frame. Uber engineered a software method to connect drivers with passengers, but this is merely one instrumentality used in the context of its larger business. Uber does not simply sell software; it sells rides. Uber is no more a “technology company” than Yellow Cab is a “technology company” because it uses CB radios to dispatch taxi cabs, John Deere is a “technology company” because it uses computers and robots to manufacture lawn mowers…..’’
Similarly the Central London Employment Tribunal judgement noted[ii]:
‘’Any organisation (a) running an enterprise at the heart of which is the function of carrying people in motor cars from where they are to where they want to be and (b) operating in part through a company discharging the regulated responsibilities of a PHV (private hire vehicle) operator but (c) requiring drivers and passengers to agree as a matter of contract that it does not provide transportation services and (d) resorting in its documentation to fictions, twisted language and even brand new terminology, merits, we think a degree of scepticism.’’
Through technology hype and deliberate misclassification Uber has sought to create confusion about applicability of existing employment regulation. Uber makes the case that its business model presents unique and new circumstances where existing employment classifications such as that of worker simply do not fit its mould breaking business model. We disagree.
The real issue here is not one of unclear or obsolete definitions of status but one of deliberate misclassification of status and misleading of workers during the contracting process. In October 2015 when Uber introduced its 27 page contract issued by its Dutch entity it refused to meet with drivers or provide any briefing on what the contractual changes entailed. Drivers simply had to agree to it by clicking ‘I agree’ in app or stop working.
The burden of proof is placed on the shoulders of the worker rather than the employer to prove if his/her status is misclassified. Access to remedy for low paid workers is almost impossible. Tribunal fees are beyond reach not to mention legal representation and the time frame is too long.
2. For those casual and agency workers working in the 'gig economy', is the balance of benefits between worker and employer appropriate?
No. There is a massive imbalance between the employer and worker in the UK private hire market. There has been long a culture of bullying in the trade which was once described by Uber as brutally exploitative. This has led to the re-emergence of working conditions which, according to Frank Field MP, fit the Victorian era definition of ‘sweated labour’.[iii]
Drivers have no say on contract terms imposed. Uber has refused to negotiate and we have seen the same intransigence from Addison Lee. In both cases driver pay was reduced and in Uber’s case, commission rates paid to the firm were increased.
Up to 80% of drivers in London’s private hire market hail from minority communities. We cannot ignore that discrimination is at play in the exploitation of people in this labour market.
Uber imposes contract terms that test credulity yet are almost impossible for a driver to negotiate. The recent Employment Tribunal noted:
‘’…we are struck by the remarkable lengths to which Uber has gone in order to compel agreement with its (perhaps we should say its lawyers’) description of itself and with its analysis of the legal relationships between the two companies, the drivers and the passengers.’’
Uber as a start up in growth mode, can drive prices down to unsustainable levels since it bears no operational cost. This allows Uber to rapidly expand the market and their share of it while the driver is impoverished.
Uber passes all risk and responsibility to the driver. Even the rider contracts make clear Uber accepts no risk and responsibility for the journey.
For drivers at firms like Addison Lee the situation is worse since the driver is bound to pay rent to the company before they can work. An Addison Lee driver starts the week £230 in debt as he must pay vehicle rent before earning anything.
In following evidence we will illustrate how the imbalance between the worker and employer as well as poor industry regulation has led to years of abuse in the private hire industry.
3. What specific provision should there be for the protection and support of agency workers and those who are not employees? Who should be responsible for such provision – the Government, the beneficiary of the work, a mutual, the individual themselves?
In the case of UK private hire drivers who are publicly licensed central government should direct and devolve powers to mandate worker protections as a condition of operator licensing for firms such as Uber and Addison Lee. Currently Uber resides off short to avoid tax and employment law responsibilities whilst paying only £500 pa for an operator license that allows them to run 30,000 vehicles in London. We believe, respect for worker rights is a small price to pay for such a public license.
We note recently Uber picking up lucrative contracts from the NHS and in school transport. Again, we believe the government must insist on worker rights protection as a condition of acquiring such business. If our government cannot do more to protect us, it should at least commit to be complicit in our exploitation.
In addition we would like to see:
4. What differences should there be between levels of Government support for the self-employed and for employees, for example over statutory sick pay, holiday pay, employee pensions, maternity pay?
Workers must be entitled to all these basic benefits.
5. Is there evidence that businesses are treating agency workers unfairly, compared with employees?
Yes. It is clear that corporate employees at Addison Lee and Uber enjoy significant benefits denied to workers who create the wealth. For example, operations staff directly managing drivers are entitled to share options and other benefits.
Drivers are a lower class of worker ghettoized inside firms such as Uber and Addison Lee.
6. Should there be steps taken to constrain the use by businesses of agency workers?
N/A
7. What are the issues surrounding terms and conditions of employees, including the use of zero-hour contracts, definitions of flexible contracts, the role of the Low Pay Commission, and minimum wage enforcement?
The main issues are:
As for minimum wage enforcement – it simply non existent. In nearly 20 years of regulated private hire trade we are not aware of even one enforcement action. Before we consider new laws we need to have assurance that the government intends to enforce them.
8. What is the role of trade unions in representing the self-employed and those not working in traditional employee roles?
The trade union movement has a potentially very important role in protecting vulnerable workers trapped in abusive employment arrangements. However, the distributed nature of app workers presents a challenge in organising.
Another problem is a perceived conflict of interest for a TU already representing incumbent employees in an industry being disrupted whilst trying to organise and represent self- employed workers employed by the disruptor. For example, Unite, RMT and GMB have historically represented Taxi drivers who are now feeling the disruptive effects of Uber on their livelihood.
UPHD has emerged as a trade representative body because it provides a better fit for workers who seek and need representation to protect their rights. Our growth has been organic with a quickly growing realisation amongst drivers that they need to protect their own interests collectively.
UPHD has launched a raft of legal actions on behalf of our members looking to reserve and protect their rights.
Our recent rapid growth demonstrates there is high demand for representation, protection and affiliation.
We believe Uber has set out to deliberately mislead this Parliamentary committee in their written submission dealing with our recent tribunal victory.
Uber wrote:
‘’One driver, for example, logged onto the app for 91 hours over one week last year, but took only 18% of the trips that were sent to him. What he did during the other time, Uber cannot know: he may have been working for another mini cab company; he may have been at home working on something else; or, he may have been asleep and simply forgotten to switch off the app. Whatever he was doing, he was taking advantage of the flexibility the app creates to work only when it suited him.
If this same driver were classified as a worker, Uber would be required to compensate him on an hourly basis for his time. Like almost all other companies that pay hourly wages, Uber would likely schedule predefined shifts for him, and require that he take all trip requests that came his way during that shift. As a result, he would lose the flexibility and independence that drivers say they value so much today. It would also raise questions as to which ‘employer’ should be responsible for paying this hourly wage if the worker used Uber while also working for another company at the same time. For example someone driving with Uber may also have parcels in their car that they are delivering throughout the day. It would be an odd result for both to be required to pay the minimum wage.’’
We are aware of circumstances where a driver worked also for precisely 91 hours and did indeed cancel or turn down a very high proportion of the work offered. However, he completed 136 jobs in that period for a rate of 1.49 jobs per hour. Uber’s own on boarding documents recommend drivers working 50 to 60 hours per week should complete between 1.4 to 1.6 jobs per hour. Yet, in the case of this driver working 91 hours, he remained as productive at 91 hours as Uber expects for a driver working 50 to 60 hours.
We have every reason to believe the case study Uber refers to is the same as the one we refer to. In any event, it is telling that Uber has only declared how much work was cancelled, which is not relevant, but omitted to tell the committee how much work was actually done in 91 hours, which is of utmost relevance.
We would be more than happy to provide supporting evidence for our 91 hour case study and we would respectfully ask the committee to demand all supporting detail for Uber’s claims.
We believe it is crucially important that Uber come clean given their fanciful if outrageous suppositions that drivers might be ‘asleep’, ‘at home’ or ‘working for another mini cab company’ and to so justify their refusal to respect basic worker rights.
The UK private hire industry is a distressed environment for workers and has been for years. Despite the trade being publicly licensed, workers have had no protection for years and the entry of Uber into the market has precipitated a race to the bottom with drivers paying the price.
In 2014, Uber testified before the Greater London Assembly that the minicab business model was ‘brutally exploitative’[iv]. It was then and is even more so thanks to a relentless race to the bottom as unscrupulous operators off load all cost and risk to drivers while preserving their bottom lines while ruthlessly cutting prices.
The rise in mobile consumer technology has undoubtedly had a profound impact on how business is transacted. However, we believe it is important to carefully discern between innovation at the transaction level and how work is actually done at the operational level. Uber has built incredible growth in the UK private hire market in a short amount of time by providing customers an attractive app experience and a quick response from time of booking to arrival of the vehicle.
However, at the working level nothing much has changed at all. A customer booking is accepted by Uber, they dispatch a driver and car to pick up the client and take them where they want to go. Neither Uber, nor any other operator, has yet overcome the laws of physics or mastered time travel. Capital must be found to buy the car, it costs money to run the car and the driver must also be paid for his work.
Much has been made about Uber’s vision of autonomous, driverless cars providing transport services in future smart cities. There may be inevitable job losses as and when that vision is realised and Uber can get rid of ‘the other dude in the car’[v] – the driver.
For now, there is a real risk that policy makers may buy into technology industry hype and trade away the rights and welfare of today’s workers on the dream of a utopian tomorrow.[vi] As the American Civil Rights leader Leon Sullivan once said: ‘there may be milk and honey tomorrow but we need ham and eggs today’.
In their testimony to the committee Uber said that ‘it’s long been commonly accepted that taxi and minicab drivers (many of whom have less control over their work than drivers using Uber) are self employed.’ To a point we agree with Uber on this point, labour exploitation has long been an accepted norm of the minicab trade since its regulation in 1998. Indeed, Uber concedes this point in its testimony to the Greater London Assembly in 2014. The minutes of that testimony record ‘Uber described the traditional minicab model as ‘brutally exploitative’ as drivers are very low paid and have to work long hours to earn a suitable salary.[vii]
Since that time, as Uber has expanded to ignite a ferocious race to the bottom, the exploitation has only become even more brutal. In December 2016, many UPHD members submitted testimony to Work and Pensions Select Committee Chair Frank Field MP for his report: Sweated Labour, Uber and the ‘gig economy’.[viii] Mr. Field compared the work practices described to him in testimony fitted a definition of sweated labour of the Victorian era.
As we consider the future world of work we should be scandalised that ‘sweated labour’ conditions now exist in the licensed transport system of our capital and many of our great cities.
We hope this committee will make firm recommendations to the government to protect the workers not only of tomorrow but also the workers of today.
Uber’s business model
Uber provides private hire transport services in the UK via it’s on line, mobile platform. Customers book a journey via an app, Uber accepts the booking before assigning the job to a driver.
Although the Uber rider, driver and vehicle all operate in the UK the transaction is recorded and a receipt is issued from the Netherlands. Drivers are also contracted and paid by Uber BV in the Netherlands although the operator license in London is held by Uber London Limited and UK licenses outside London are held by Uber Britannia Ltd. Both these entities are UK registered companies.
Uber’s business model closely resembles the characteristics of a typical on line business – it seeks to scale virally and keep the marginal cost of expansion close to zero. Unfortunately, despite Uber’s hype it is a physical business not an internet business. It is a transport company rather than a software company despite its protestations.
Uber enjoys the positive network effects of over supply – over supply means a quick response time for customers and this responsiveness and reliability brings customers back again and again. It is a virtuous cycle for Uber. On the other hand, over supply means less work, lower prices and higher commission payments for drivers. It becomes a vicious cycle for us. Yet the Employment Tribunal noted:
To be confident of supplying demand, it must, at any one time, have some of its drivers carrying passengers and some waiting for the opportunity to do so. Being available is an essential part of the service which the driver renders to Uber. If we may borrow another well known literary line: ‘‘they also serve wo only stand and wait’’
Uber’s true innovation is limited to the transactional level as well as regulatory arbitrage. Despite the app innovation, a driver and a car still must come and collect a passenger and they need to earn a dignified living to do so.
The driver bears all operating risk, regulatory risk and capital costs.
Only Uber can win this rigged game.
Management by Algorithm
While the paper contract creates one reality, the operating algorithms creates another one entirely. Drivers are led to believe that the dispatch algorithm is completely egalitarian and does nothing more than assign any given job to the closest driver. In truth, drivers have seen patterns that suggest the algorithm is altogether more discriminatory and may ration work according to your performance rating, how much commission you pay, how much you’ve earned and how many hours you’ve worked in recent periods. The point is that drivers know the algorithm is rigged for the house to always win. They just never know what the odds against them actually are.
Working conditions
UK regulations envisage that private hire operators provide facilities for drivers to wait at a base office and for the public to walk in to make bookings. Local regulations, for this reason specify that planning consent is secured, a land line is available, lost property recovery processes are operational, public liability assurance is in place and that off street parking is available.
Uber has openly flouted these rules. For example, in Bradford Uber’s licensed office was actually a rented room in a local pub which is opened only for a few hours once a week. Local offices have served the purpose only to host massive on boarding sessions but there are absolutely no rest, bathroom or kitchen facilities made available to working drivers.
Uber provides no live telephone service for drivers and all queries must be dealt with after the fact via email. Uber provides no emergency assistance to drivers and there is no way for a driver to immediately flag an emergency. In more traditional operator centres drivers would be supported by a live support office. In the event of an emergency a controller can quickly send cars to assist a driver in trouble. Drivers have asked Uber to integrate a panic button in app so that local drivers could be summoned to assist a driver in trouble. It has refused to do so.
Poor working conditions and long hours have resulted in drivers appearing in distressed conditions. For example, Heathrow area residents and the previous Deputy Mayor for Transport have spoken about the problem of Uber drivers openly defecating as they wait for work near the airport. The truthfulness of these accounts has not been substantiated but either way the allegation points to the existence of a vulnerable and distressed workforce stripped of dignity either by rumour or by exploitative working conditions.
Driver Safety
Uber has communicated that it has regional emergency support teams working in real time. However, no UPHD member can report any contact with this team. Drivers have are regularly assaulted and some require police assistance. Uber is not available for real time support and in some cases has refused to cooperate with police to identify the assailant riders. In one case Uber refused to cooperate with the Metropolitan Police in identifying an assailant rider for over 10 weeks. Uber will typically contact the driver the day after an attack and ask ‘if they are ok’ but when the driver says no, Uber offers no further assistance.
Working hours
The only way so called ‘self employed’ drivers working for Uber could grow their businesses is to spend more hours behind the wheel. And this they do, to excess.
As the Tribunal judgement noted:
‘’Ms Bertram spoke of Uber assisting the drivers to ‘’grow’’ their businesses, but no driver is in a position to do anything of the kind, unless growing his business simply means spending more hours at the wheel.’’
As prices fall, commissions increase and markets flood with capacity, the only option open to drivers is to work increasingly long hours to cover overhead and earn the same amount.
Uber claims that it monitors driver hours and flags drivers who work unsafe hours. For example, Uber’s Gareth Mead, appearing on the Today Programme on BBC Radio 4 on October 2 205, said that drivers working excessive hours were automatically logged out and prompted to take a break. However, UPHD has not been able to identify a single driver who has ever been asked to stop working or reduce hours by Uber. UPHD members have worked up to 91 hours in a week and regularly more than 70 hours but none has ever been flagged. Besides the social injustice of workers operating long hours, such practices have a blow back on public safety also for drivers, their passengers and other road users. The regulator and the public must recognise that since Uber has externalised all risk with the driver assuming all responsibility, it has no incentive to control hours and every incentive to maximise driver supply hours.
False income promises and the referral trap
Uber has used questionable marketing techniques to entice drivers into joining Uber and taking on big car finance obligations to do so. Drivers were variously promised earning of up to £4,000 per month. In August 2015, Uber agreed with Advertising Standards to remove two misleading ads. Later, in October 2015, Uber’s Gareth Mead told the Today Programme that dull time drivers took home £48,000 per annum. He said: 'if you treat driving on the platform as full time job working 7 or 8 hours a day then typically a driver will take home £48, 000 to £49,000 a year.' On November 12, 2015 Uber UK General Manager Tom Elvidge told City AM that drivers took home £16 per hour after commission or £20 per hour before commission. Jo Bertram told the BBC's Victoria Derbyshire Show on November 7, 2015 drivers take home £15 to £16 per hour and the majority net after their own operating costs £10 to £12 per hour.
Throughout, 2015 and 2016 drivers were paid referral bonuses of up to £500 for every private hire drive they successfully convinced to join up to Uber. With good money to be made, drivers perhaps had an incentive to be less than candid about the true earning potential. Once drivers had entered into mid and longer term car financing arrangements they were as good as trapped.
Uber Executive service for economy drivers
As Uber ramps up its efforts to capture the business market it has begun to flood the executive service circuits just as they have done at economy level. However, drivers who have invested £40k to £50k for an acceptable executive vehicle such as Mercedes E or S class are forced to accept Uber and Uber Pool fares also. In this way Uber has destroyed the average yield for executive level drivers and raised the aspirational level for economy riders lucky enough to get an exec level service for economy fare.
Performance management - the ratings system
Drivers are rated on a scale of 1 to 5 stars by customers and are routinely deactivated if their cumulative rating falls below 4.4 for Uber X and 4.8 for Uber Executive. Drivers approaching these thresholds resort to increasingly desperate measures to keep their job. Drivers are encouraged by Uber to stock bottled waters, mints, chewing gum and newspapers. They are expected to provide an auxiliary cable so the passenger can take control of the in car sound system directly from their own mobile phones.
Unfortunately, passengers tend to rate the whole experience so drivers can be punished for circumstances not of their own making. For example, driver ratings typically decline if they work a lot during surge pricing as the passenger rates the driver for an inflated price he has no control over. As a result, drivers with poor ratings often chose to lose out on greater earnings during surge times for fear their rating may dip below the threshold.
Even drivers who have been assaulted will be rated by their assailant.
Collective agreement
Although Uber regularly seeks collaboration with drivers to lobby for regulations that benefit Uber, when the shoe is on the other foot Uber refuses to acknowledge the collective approach of drivers. Uber refuses to recognise any collective approach to driver representation and insists it will only meet with individual drivers.
Disciplinary and Grievance:
There is no established process for drivers to file a grievance. If Uber has any concern about a driver it will deactivate them and demand they attend a meeting in the office in order to get reactivated if at all.
Drivers have been deactivated for spurious and even false reasons only to be reactivated days later but only after they have lost a good portion of weekly income.
For example a driver was deactivated on suspicion that he had refused to carry a guide dog. In fact he had carried the dog and it was a case of mistaken identity. Uber reinstated him and apologised but offered no compensation for five days lost earnings.
Other drivers are deactivated routinely for not maintaining a high enough star rating. One driver received a warning email on two days before Christmas telling him to improve his ratings. But by January 10th following the holidays Uber sent him another email telling him that he would now be permanently deactivated.
Such deactivations are routine now and UPHD receives many requests for support.
Lost property
If a passenger leaves property in the car Uber passes our contacts to the rider and we are pressured to drive to the passenger to return the property. We are not allowed to charge for this.
Income deductions and customer complaints
Uber dominates the customer relationship and the driver is given no information in advance other than the rider’s first name and pick up point. It is not until we swipe to start the journey do we know where are going.
If the passenger makes a complaint about the route or the trip Uber deducts a refund from driver earnings without even informing the driver let alone getting their side of the story.
Trip refusals and the penalty box
Drivers have ten seconds to accept a job and jobs are offered even before we finish a current job. If a driver fails to accept or cancels three jobs in a row they will be locked out of the platform for 10 minutes. This was later reduced to two minutes.
Industry worker rights
Private hire operators typically impose sham self employment arrangements on drivers and have done so for years.
Holiday Pay
Neither Uber nor Addison Lee allow for any paid holiday leave. For very low income workers holiday leave entitlement as they simply otherwise cannot afford to stop working. This is the same reason why drivers work excessive hours. Indeed, some operators demand circuit or vehicle rental fees for the holiday period. The worker, rather than enjoying paid leave, is instead having to pay out to leave!
Minimum wage
Private Hire operators typically do not honour national minimum wage obligations and drivers are paid only for the work they do even though they maybe on call for or in transit between jobs for many additional hours per week.
Medical Leave
Drivers who suffer injury or pool health on the job face a very precarious future. Neither do Uber nor most other operators provide any medical insurance or sick pay. In fact, one driver working for Addison Lee was forced to continue paying £230 per week for the vehicle while he was seriously ill. When he returned to work after two weeks, Addison Lee deducted the two weeks outstanding rent from earnings and allowed no provision to stagger payments. This left a couple with 4 young children without any income for more than three weeks.
Unpaid work
When an Addison Lee rental vehicle requires inspection (twice a year) or services (every 5000 miles) it is the responsibility of the driver to take the vehicle to the appropriate centre for the work to be done. The driver is not paid for this time and the fuel costs for these trips is paid for by the driver.
In Summer 2016 we surveyed 173 drivers nationally on working conditions and their perceptions of the regulatory environment. 67% of those surveyed and the rest were spread throughout the UK. 67% worked for Uber and 28% worked for Addison Lee.
The major findings by Operator were as follows:
Uber
Addison Lee
Overall, all drivers reported on their views of regulatory oversight:
The statistics bear out Uber’s earlier assertion in their testimony that the minicab business model is indeed brutally exploitative of drivers – whether you work for an app or legacy operator. The slight variance on abuse of drivers is perhaps explained by the fact that Addison Lee work is often corporate travel so passengers would risk having misbehaviour reported back to the employer. Addison Lee’s higher working hours is likely due to the firm’s vehicle rental model which rewards longer hours with lower rental payments.
In February 2017 UPHD surveyed 236 drivers members on issues of health and well being since becoming a licensed private hire driver and they reported:
These survey results show the immense toll on drivers of working in precarious employment. Inevitably, our national health and social care systems will be left to pick up the pieces.
In recent communications Uber has claimed that drivers typically earn £16 per hour after the deduction of Uber’s commission. Uber has sometimes referred to this sum as ‘take home’ and the ‘lions share’ of collected revenue. However, what Uber neglect to say that this residual must cover all operating costs before a driver can take home anything.
To calculate a more optimistic view of take home pay we start with Uber’s own figures for what it has said its ‘top drivers’ earn. For most of 2016, Uber published a weekly benchmark so drivers could compare their performance to that of a ‘top driver’. (Uber never communicated how the ‘top driver’ sample was selected and defined. Uber has since discontinued publishing these benchmarks.)
For the week of May 16-23, 2016 Uber reported that ‘top drivers’ worked 48 hours per week and earned £18 per hour in gross fares. After commission is deducted at the current rate of 25% for Uber X drivers this leaves a net payment to ‘top drivers’ of £648 before operating costs. This works out at £13.50 per hour based on Uber’s own figures for top drivers yet Uber has since said average drivers actually make £16 per hour – a discrepancy of 19%. With TfL licensing as many as 1,000 extra drivers a month in London to flood the Uber circuit driver yields can only have deteriorated through the end of 2016 and into 2017 so the picture today would look much worse – perhaps this is the reason why Uber stopped publishing driver earnings benchmarks.
The typical rental cost of a Prius + vehicle is £270 per week as quoted by PCO Rentals in London which includes insurance costs. Fuel costs for 48 hours are estimated at approximately £100 and add to this £15 for car washes, £10 for mobile phone use and £5 for Uber network charges. When these bare bone operating costs are deducted a driver is left with just £248 for 48 hours work which comes to £5.17 per hour. This is before national insurance and other inevitable operating costs. It must also be emphasized that these figures are based on ‘top driver’ income levels. The average or lower earning drivers will fare much worse.
Uber top driver earnings
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Activity | £ |
| Notes |
48 hours * £18 per hour fares | 864 |
| a. |
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Uber Commission @ 25% | -216 |
| b. |
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Rental - weekly cost to rent Prius + | -270 |
| c. |
Fuel | -100 |
| d. |
Car Wash | -15 |
| e. |
Phone | -10 |
| f. |
Uber network charges | -5 |
| g. |
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Net Income | £ 248 |
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Net Income per hour | £ 5.17 |
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Notes |
a. For week of May 16 -23, 2016 Uber declared 'Top Drivers' worked 48 hours and earned £18 per hour in gross fares. This is part of bench mark reporting in a drivers weekly earnings report. Uber does not explain how a 'top driver' is defined.
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b. Uber commission for UberX service is 25% from November 2015 |
c. This is a fairly typical cost per week to rent a vehicle from PCO rentals – an Uber approved rental company. Insurance and maintenance is included. |
d. Fairly typical, if conservative, for 48 hours work. |
e. Hand car washes are typically c. £10 each at places like American Car Was on Great Eastern St |
f. To make and receive calls from customers |
g. For use of Uber device for dispatch and navigation |
Additional income streams for Uber
In addition to standard driver commissions we believe Uber derives other income and grants itself relief from commission on some categories of driver payments.
For example –
Addison Lee, the second largest private hire operator in London, tends to fly under the radar as a gig economy actor yet it’s record on driver earnings is often worse than Uber. To driver for Addison Lee, a self employed driver must rent a vehicle from Addison Lee. With weekly rental rates of £230 for a Ford Galaxy, Addison Lee’s business model relies on deriving income from drivers based on inflated vehicle rental rates and commission from fares.
UPHD member and Addison Lee driver – earnings for one week in January, 2017 | |||
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Activity | £ |
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48 hours worked |
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Standard fare income with Addison Lee | 517.81 |
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Total income | 517.81 |
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Addison Lee vehicle rental | -215 |
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Mobile phone | -20 |
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Fuel | -120 |
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Total Operating costs | -355 |
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Net Income | £ 163 |
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Net Income per hour | £ 3.39 |
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In England and Wales the industry is governed by the Private Hire Vehicles Act 1998, the Private Hire Vehicles (London) Act 1988. The Scottish government directly governs the trade there via the 1982 Civic Government Act. In Northern Ireland the Department for Infrastructure oversees taxi and private hire regulation under powers derived from the Taxis Act (NI) 2008.
Throughout the mainland UK there is a common approach of two tier licensing system which distinguishing between taxi and private hire services. Broadly speaking, taxi drivers are allowed to instantly ply for hire directly with the public without an intermediary. Private hire drivers must only accept work which is pre booked via a licensed operator. The only exception to this is in Scotland which allows drivers operating up to 3 cars to accept their own bookings privately without the involvement of a licensed operator.
In Northern Ireland the approach has been to attempt to collapse the two tier system into a more standard system of licensing for taxi and private hire services with the latter allowed to ply for hire at peak times.
The regulatory model developed in 1998 which separates licensed drivers and licensed operators while making the former dependent on the latter has been the Achilles Heel of the trade. It has baked in tremendous abuse of a gig economy before it was ever called a gig economy. Drivers, with few exceptions, have been employed as self employed contractors but have never had the freedom to run their own businesses. Operators don’t only take a percentage fares but also have set up other mechanisms such as charging drivers a weekly rent just to be able to work for an operator, accept fines for minor infractions, costs for testing and other spurious charges.
The regulator
Legislation assigns licensing and regulatory oversight to local authorities. On the mainland, TfL inevitably dominates the scene with many regulatory authorities taking their cue from London.
Private hire drivers must complete an English language proficiency test, a topography test, undertake DBS screening and a medical test before they can be qualified for a license. For operators to be licensed they must show they have a public operating centre, a land line, public liability assurance and can demonstrate they are fit and proper to hold a public license.
Private hire and taxi licensing diversity profiles contrast greatly in London. According to TfL stats, up top 80% of private hire drivers come from minority communities whilst the inverse is broadly true for the taxi trade,
Regulatory dysfunction
Although local licensing authorities have a dual role for licensing and regulating the industry, it is fair to say that it has done the former much better than the latter. Indeed, licensing has become big business with TfL doubling licensing in recent years to 118,000 with new and renewing licenses generating £350 each for TfL.
Unfortunately, poor regulatory development and discrimination has created a hostile regulatory environment for private hire drivers which has created more precarious working conditions and made it more difficult to assert worker rights.
For example:
In London the regulatory situation for private hire drivers is difficult but the situation is largely replicated with licensing authorities throughout the UK
Conclusion
Before we can begin to see the gig economy for what it is we must remove the obscuring influence of good old fashioned illegal exploitation and abuse.
New terminology and transaction level innovation has created an inflated sense that economies and business models must inevitably be disrupted.
Workers today are offered exploitation as a price for flexibility. It is wrongly suggested that workers want their cake and eat it also.
In truth the only real flexibility comes with a good income. We urge the committee to work to protect vulnerable workers first then look to build greater flexibility for the gig economy when these bases are covered.
James Farrar
Yaseen Aslam
21 March 2017
[i] http://uberlawsuit.com/OrderDenying.pdf
[ii] https://www.judiciary.gov.uk/wp-content/uploads/2016/10/aslam-and-farrar-v-uber-reasons-20161028.pdf
[iii] http://www.frankfield.com/upload/docs/Sweated%20Labour%20-%20Uber%20and%20the%20'gig%20economy'.pdf
[iv] https://www.london.gov.uk/sites/default/files/gla_migrate_files_destination/All%20responses%20final_0.pdf
[v] http://www.techradar.com/news/world-of-tech/uber-wants-to-get-rid-of-the-dude-in-the-car-with-driverless-taxi-service-1250870
[vi] https://www.whatdotheyknow.com/cy/request/319091/response/788729/attach/4/2%20Redacted.pdf
[vii]https://www.london.gov.uk/sites/default/files/gla_migrate_files_destination/All%20responses%20final_0.pdf P 527
[viii] http://www.frankfield.com/upload/docs/Sweated%20Labour%20-%20Uber%20and%20the%20'gig%20economy'.pdf
[ix] http://www.lawcom.gov.uk/project/taxi-and-private-hire-services/