Ride-hailing app FREE NOW has warned drivers all operators would need to increase commissions to a similar level set by Uber in order to afford a switch to the new workers model.
In an email to thousands of taxi drivers it details why the FREE NOW model would struggle to work in its current form if cabbies were handed workers’ benefits like minimum wage, holiday pay and pension contributions.
Mariusz Zabrocki, FREE NOW General Manager UK, states that FREE NOW currently considers all drivers as business partners, but does point to some people calling for drivers to be treated as workers instead.
Only last month, the Mayor of London, Sadiq Khan, urged “all private hire operators” in the capital to pay their drivers the London living wage following the Supreme Court ruling which determined Uber drivers were entitled to be considered as employees.
The Mayor said: ”I welcome the Supreme Court ruling, which is a landmark decision for people who suffer from low pay and a lack of security at work.
“I want London to be the best place to do business and to work. Gig economy workers, including private hire drivers, deserve the same rights as other workers and I urge all private hire operators in London to pay their workers the London Living Wage and to give them the security they deserve.”
FREE NOW drivers currently pay commission of 12.5% + VAT (15%) so from every £1,000 of fares, the driver earns £850 before their cost deductions.
Zabrocki highlights Uber’s commission fee is set at 25%, suggesting that it is this significant difference that enables Uber to cover the costs of the changes that they are proposing.
FREE NOW’s General Manager then adds: “Any operator, including FREE NOW, would need to increase commissions to a similar level in order to afford the worker model, and based on previous driver feedback we have focussed on keeping commissions as low as possible.”
In comparisons drawn up by FREE NOW the difference in earnings for the current ‘business partner model’ compared to Uber’s ‘worker model’ (where the driver also opts into a pension), would mean earnings drop by 2% from £850 to £837. Using the same hypothetical scenario drivers cash earnings (take-home pay, not including pension) would drop by 7%, from £850 to £791.
The ride-hailing firm are now likely to contact cab drivers in the coming weeks to conduct further research and gather driver feedback.
Following the Supreme Court ruling, Uber put together a package which all drivers in the UK will receive. This consists of:
At least the minimum wage after accepting a trip request and after expenses. This is a floor and not a ceiling, with drivers able to earn more. On average, drivers earn £17 per hour in London and £14 in the rest of the UK on the same basis when driving on Uber.
All drivers will be paid holiday time based on 12.07% of their earnings, paid out on a fortnightly basis.
Drivers will automatically be enrolled into a pension plan with contributions from Uber alongside driver contributions, setting drivers up over the long term.
Free insurance in case of sickness or injury as well as parental payments, which have been in place for all drivers since 2018.
Support from Uber’s Clean Air Plan in London, which has so far raised over £120m for drivers switching to an electric vehicle.
All drivers will retain the freedom to choose if, when and where they drive.