PremiumOn 19 February, the UK Supreme Court made a landmark ruling that Uber must classify its drivers as ‘workers’ rather than self-employed. While India has already taken steps towards formalization of the labour market, Mint looks at the possible impact of this ruling.
On 19 February, the UK Supreme Court made a landmark ruling that Uber must classify its drivers as ‘workers’ rather than self-employed. While India has already taken steps towards formalization of the labour market, Mint looks at the possible impact of this ruling.
What did the UK top court say in its ruling?
The UK Supreme Court dismissed the ride-hailing giant’s appeal against an employment tribunal’s ruling that Uber drivers must be classified as ‘workers’ rather than self-employed. This would make drivers eligible for employment-related benefits such as minimum wages and holiday pay. Uber said it will now launch a consultation to seek the views of all active drivers who use its app in the UK and understand where things could improve. The company will thereafter share its next steps. Experts believe that the ruling could lead to better remuneration for millions of gig workers and reshape the gig economy.
Will the ruling have any impact in India?
While there may not be any quick impact in India, the ruling creates a precedent in policymaking for gig workers and platforms offering similar services across the globe. Some experts believe categorizing gig workers as employees could put an end to the uniqueness of the aggregator model that gives them flexibility in working hours or as a side hustle. However, in India, the Union finance minister Nirmala Sitharaman in the budget 2021-22 said that social security benefits will be extended to gig workers. Minimum wages will apply to all categories of workers, and they will all be covered by the Employees State Insurance Corp.
What is the extent of Uber’s presence in Indian market?
The company entered India over seven years ago and has seen good growth since then, barring covid-led disruption. It not only created work avenues for drivers, but turned out to be one of the biggest disruptors in the transportation space, kickstarting a debate on whether cab aggregators are impacting auto industry. Uber operates in over 85 cities in India.
Are cab aggregators regulated in India?
Yes. In November 2020, the Centre issued its first guidelines to bring all vehicle aggregators, such as Uber, Ola under a regulatory framework, aiming to ensure customer safety and formalization of gig workers, thereby make ride-hailing firms more accountable. As per the Centre, these firms must ensure health and term insurance for each driver for at least ₹5 lakh and ₹10 lakh, respectively, with the base year of 2020-21 and increase it by 5% every year. In the past, there were no uniform guidelines for cab aggregators across states.
What are some of the drivers’ concerns here?
Drivers have complained about shrinking incentives in the last few years. In parallel, commissions charged by aggregators on every ride have gone up, impacting their incomes. Drivers in the UK and the US have had concerns on whether they should be treated as workers or self-employed. Uber’s 2019 annual report mentions driver dissatisfaction and protests, and says any future protests could negatively impact its business. Continued driver dissatisfaction may also result in a decline in the number users on its platform.
