Uber and Deliveroo get a gig economy rights grilling

Uber and Deliveroo execs faced questions from a UK parliamentary committee today as the government continues to deliberate on changes to employment law to account for the rise of gig economy work facilitated by tech platforms.

Ride-hailing giant Uber was also grilled over what one committee member dubbed its “aggressive” response to TfL’s recent decision to strip its operator license in London — describing its claim that the city regulator risked putting 40,000 drivers out of work as hypocritical since Uber does not actually employ any of those drivers, while also pointing out that its business is intent on trying to automate the driving function via developing driverless car technology.

“The business absolutely accepts that in lots of places it’s had the wrong attitude,” Uber’s head of public policy, Andrew Byrne responded, flagging up new CEO Dara Khosrowshahi’s open letter apologizing to Londoners for “mistakes”. “It needs to change… Hopefully we can see a path forward now with TfL where we can address their concerns and continue to operate.”

“There’s no suggestion that how we plan to move forward is total replacement of individuals by automation,” he added on the driverless car point. “We do think that a fleet with lots of human drivers will be the norm for 10, 20 years. That will continue to be the case in the UK.

“Our investment in the research into automation is something that we do as a business — and we’re proud of the fact that it might have big safety implications. But we will absolutely recognize that we have responsibility to the people using the app when that time comes. But that time is not coming for a very significant amount of time.”

Gig economy costs vs worker rights

Last year the UK government commissioned an independent review of what it dubbed ‘modern working practices’, to examine what it described as the “implications of new forms of work on worker rights and responsibilities, as well as on employer freedoms and obligations”.

The independent report, carried out by Matthew Taylor, was published in July, and included recommendations such as creating a new classification for workers on tech platforms — which it called “dependent contractors” — to separate them from the “legitimately self-employed”.

It’s not yet clear whether (and which) of the report’s recommendations the government might take forward. Hence parliamentarians taking further evidence from both gig economy employers and workers to feed into any regulatory reform.

Uber is also currently appealing a UK employment tribunal verdict that last year judged a group of its drivers to be workers, rather than self-employed contractors. In its appeal the company is now arguing it’s acting as an agent on the driver’s behalf — likening its operation to that of a traditional minicab operator (rather than trying to claim it’s just a tech platform that connects self-employed drivers with people wanting a ride, as it unsuccessfully argued last year).

Byrne told the committee today that Uber expects a judgment on that appeal by Christmas. He also said that having to provide all the circa 50,000 self-employed drivers on its platform in the UK with workers’ rights would cost the company “tens of millions” of pounds. (He claimed not to have a more precise figure to hand.)

Probed on Uber’s approach to sick pay, Byrne pointed to the personal injury and illness insurance the company launched in the UK earlier this year — saying Uber “heavily subsidizes” the scheme.

He said it costs Uber to the tune of £6 to £8 per driver. While Uber drivers wanting to obtain the cover have to pay £2 per week.

“It provides drivers with sick pay, life insurance, jury service cover, a small maternity and paternity benefit,” he said. “Uber heavily subsidizes the contribution to that. Drivers can choose to pay into that for £2 per week.”

“I would call it the welfare state,” quipped one committee member in response.

Another area Uber was pressed on was on its attitude to safety — with the committee raising concerns it had heard about long hours being clocked up by drivers, including drivers sleeping in their cars to try to enable them to work for longer.

Byrne said the average number of hours worked per week by Uber drivers is “just under 30 across the UK” — which begs the obvious question of how much higher the average just for London is — while he claimed a quarter of Uber drivers work fewer than 10 hours per week, another quarter work more than 40 hours, and “about 25 per cent” work more than 40 hours per week.

The committee asked him to send it breakdowns for percentages working more than 50, 60, 70 and even 80 hours per week, should there indeed be any Uber drivers clocking up so much work.

Byrne revealed that Uber is working on a mechanism to cap the amount of time an Uber driver can be logged into the app to work over a rolling 24 hour period.

“At the moment we call people and remind them when they drive long hours,” he said when asked what it’s doing to improve safety. “But we are developing and testing at the moment a solution that effectively logs something off when they work over a certain number of hours within a 24 hour period.”

He said Uber isn’t yet sure how many hours of work a driver will need to clock up before the app logs them off but added “it looks something like 12 [hours] — 10 or 12 I think we’re testing at the moment”.

“We are trying to use technology to make people drive safer,” he added. “We use telematics — so effectively using the phone as a sensor in the vehicle. And drivers now get a report every week that provides an indication of the level of safety of how they’re driving — so that looks at whether they’re accelerating quickly, whether you’re braking quickly.

“The app will now not let you interact with it, and give you an indication if it’s ever taken out of its cradle while the car is moving, and things like that — so there are four or five different indicators that we provide different driver feedback.”

The committee also pressed the execs on the risk of gig economy workers overworking because they might have already clocked up a full day’s work elsewhere before logging on to work for another tech platform.

“I would say that we don’t know when people have done other things outside Uber, and that’s something that we haven’t got a solution to at the moment, I guess,” said Byrne, adding: “We’re happy to discuss whether there’s more we can do there.”

Asked which of the Taylor report recommendations Uber would like to see implemented, he flagged up two areas he said Uber views as “hugely important”, and would be keen to “work with people further on”. Namely: lifelong learning, and simplifying the process for self employed individuals to pay tax — the latter being some obvious friction for onboarding more drivers.

On lifelong learning he argued: “It becomes extremely important. We’ve tried to deliver with our drivers through a third party called FutureLearn and the ability for them to get Open University qualifications for free and work with skills courses — everything from coding to Japanese literature… That’s something we’re trying to do. And I think that’s something that as the economy changes over the next 20 to 30 years that will be increasingly important.”

While, for tax, he pointed to systems in place in other markets aimed at simplifying how tax is paid and argue they’re a win-win for all concerned.

“The other big area that we would love to see more on is tax,” he said. “In other places — like Estonia — we have a link up within the app to their equivalent of HMRC so drivers can pay their tax very simply. And one of the biggest feedbacks we get from drivers about self employment is that their obligations around paying their tax is very complicated.

“And we’ve also — we give them a free tax advisory consultation through another third party that is something that I think can be made simpler and more effective. And that would benefit the state and the people who are self employed and use the app.”

Asked for any concerns Uber has attached to the Taylor report’s recommendations, Byrne said the company isn’t sure how ratings portability would work in future — arguing it’s “difficult to see how a rating for somebody who drives for a living would compare to somebody who might be a cook”, for example.

“We think we can work together on those sort of areas and come up with a way of providing resumes and things like that. But whether straight ratings portability and things like that will work is one of our questions,” he added.

He was also asked directly about the number of allegations of sexual harassment the company has received from Uber users against drivers on its platform, and how many of those allegations it’s reported to the police. This was a key concern flagged by TfL last month when it stripped Uber’s license.

Byrne replied that he would have to write to the committee with the exact information, adding: “On the reporting issue we are currently engaged in a working group with the police to address exactly what the policy for us going forward should be.

“We had previously come up with a policy that said the choice for anyone who wants to make an allegation is that they report it or not. And clearly the police have said to us that’s not good enough — and we’re working with the police to change it.”

Also giving thoughts on the Taylor report, Deliveroo’s MD for the UK and Ireland, Dan Warne, said the food delivery company is keen to see changes to regulations that would allow it to provide more rights to riders on its platform but without running the risk of its (currently) self-employed couriers being reclassified as workers.

If that were the case, and all Deliveroo’s ~15,000 riders in the UK were given worker status, Warne said it would add a “substantial” amount of cost to the business — saying this would shake out to around an additional £1 to delivery costs per hour. (Pressed for the exact figure on how much National Insurance Deliveroo would need to pay in that instance, he said he would have to write to the committee to provide it.)

What we favor is ending the trade off between flexibility and security. Unfortunately with an independent contractor model today we’re unable to offer some of the benefits that we think companies like ourselves should be offering.

Warne’s general argument was that Deliveroo riders value the flexibility of being able to work “when they like, where they like, for as many hours as they like” but also said the company wants to be able to offer riders rights such as sick pay and holiday pay in exchange for accrued work on its platform. Though current UK employment law is standing in the way of it doing that, he said.

“What we’ve said on the Taylor Review and what we’ve leant into heavily is being able to actually directly offer sick pay, for example. So rather than just subsidizing something, actually offering through the accrual of work done with us the opportunity, should you be sick or injured to have some kind of protection there,” he told the committee.

“Which we believe is a lot more than anyone else is currently doing in the industry. It’s something that unfortunately with the existing letter of the law on self employment is not something that we can do.”

He also revealed that churn of riders on the platform is “very high”, and said riders’ main concerns are also around the lack of key benefits such as sick pay and insurance — suggesting Deliveroo’s own model could benefit if it were able to offer riders greater incentives to work (but without granting all of them worker status).

“On the insurance side we do believe we could do something comparable to what Uber have done – the challenge is the majority of our riders are cyclists and there isn’t an insurance product in the market readily available for cyclists,” he said. “So we are currently in conversations to try and put something in place. That’s a little more complicated that we probably anticipated but we are getting there with it.”

Being able to bonus loyalty was something else Warne mentioned the startup would like to be able to do — but again claimed that the current legal framework for classifying self employment vs worker status prevents it from doing so because it could invite a legal challenge to the status of riders on the platform.

“What we favor is ending the trade off between flexibility and security,” he said. “Unfortunately with an independent contractor model today we’re unable to offer some of the benefits that we think companies like ourselves should be offering.

“So what we’ve said to Matthew Taylor and what we say to the committee today is we want to find a way where potentially we can offer some of the benefits of security that our riders want while still maintaining the flexibility that we know is of most value to them.”

The execs also faced questions on the UK minimum wage — which is one area legal experts have suggested the government could seek to change employment law to enhance the rights of gig economy workers.

Deliveroo’s Warne said the average wage per hour across all its riders is £9.50. (The current UK national minimum wage is up to £7.50 per hour, depending on age.)

He also claimed 60 per cent of Deliveroo riders concurrently log into other third party gig economy platforms where they can also source work.

“If we were to offer worker status across all of our riders we would have to significantly sacrifice that flexibility and we would have to… offer shifts to riders which restricts flexibility and moves away from a model that we know is very, very popular,” he added.

While Uber’s Byrne said it couldn’t be sure that every hour an Uber driver works they’ve earned the national minimum wage “because we don’t know the cost profile” (i.e. of costs associated with running a car).

The average earnings for an Uber driver across the UK is about £15 per hour, he said, specifying that’s after the company’s service fee cut. “Any driver who is concerned about their earnings absolutely can come and talk to us about that,” he added.