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Uber Technologies said its British drivers would face broad changes if required to be classified as employees with benefits, a sign it’s is considering alternatives to its labor model amid tighter scrutiny from regulators.
Uber would become more like a private-hire car service that exerts more control over when and where drivers work, Andrew Byrne, the head of public policy for Uber in Britain told a parliamentary hearing Tuesday.
The statement was a rare instance in which Uber said how it may adjust if a government implements new labor laws, a threat the company’s business is facing in cities around the world.
“It would change the nature of the relationship we would have with drivers,” he said, adding that classifying drivers as employees would add “tens of millions” in additional costs such as national health insurance taxes, minimum pay, sick and vacation time, and maternity and paternity leave.
The startup generated $1.75 billion in adjusted net revenue in the second quarter of this year, up 17 percent from the prior quarter. Uber narrowed losses by 9 percent to $645 million, based on financial results provided by the company.
The worker debate goes to the heart of Uber’s business model. The company has relied on a network of workers who log-on through an app without much oversight from the company, arguing it shouldn’t have to classify drivers as workers because it’s a platform that connects drivers with people seeking a ride.
As long as drivers have a private-hire driver license and proof of insurance registered with Uber, they can log into the app to pick up passengers. Byrne indicated that flexibility would erode if drivers are classified as employees.
Byrne said drivers earn about $19.8 (15 pounds) per hour, excluding the cost of fuel, insurance and car payments. The company said it couldn’t ensure drivers earn more than the minimum wage of 7.50 pounds an hour after those deductions are made.
British policymakers are exploring new regulations for the so-called gig economy, in which workers set their own hours at companies such as Uber and are classified as self-employed contractors rather than staff members entitled to benefits. A British government report published earlier this year concluded a better balance needed to ensure workers aren’t exploited, while also maintaining the flexibility many say they like about joining Uber and similar firms.
The report recommends more assurances for workers, including minimum pay and vacation time, as well as requiring companies to pay taxes for “dependent contractors” to cover government benefits.
Critics of the Uber model, including many taxi companies that have lost business as people have signed up to drive, say the companies are exploiting labor laws and other regulations to keep costs low and grow quickly. After hearing complaints from a group of Uber drivers, a British employment tribunal also is deciding whether the company must provide more stable pay and benefits.
Uber also faced questions about the safety risk of drivers on the road who are working long shifts. The company said it’s testing a function that would block drivers from using the app if they drove more than a maximum of driving 10 or 12 hours in a 24-hour period. Roughly a quarter of Uber drivers in Britain work more than 40 hours per week, the company said.
The hearing highlights the multiple ways Uber’s business is under scrutiny. London transportation authorities revoked Uber’s license last month. The authorities said Uber hasn’t properly reported crimes or conducted adequate background checks, concluding the firm doesn’t pass the “fit and proper” test to operate.
The Independent Workers Union criticized regulators for not citing treatment of workers among the reason the city revoked Uber’s taxi license last month. A group of Uber drivers have been pushing the government to force the company to adopt more worker protections, including minimum wage and pay for vacation and sick time.