Uber drivers face real-terms pay cut after service fee hike

Uber is under fire again from drivers over an increase in the service fee charged by the ride-hailing app, in a further example of the controversy surrounding the treatment of workers in the gig economy.

The treatment of workers in the UK’s gig economy has come under greater scrutiny during the Covid-19 pandemic, with couriers and drivers working for technology platforms such as Uber, Deliveroo and Ola demanding better pay, safety protections and greater algorithmic transparency from the operators.  

At the end of June 2021, Uber told drivers it would be increasing the service fee it charges its long-serving drivers from 20% to 25% – a change that took effect on 13 July – meaning the company now takes a quarter of every fare’s value.

Previously, only new drivers who started working for the firm after 2015 were charged the 25% commission, but now the rate has been extended to all Uber’s UK workers.

According to a message sent to drivers ahead of the service fee rise, a copy of which has been shared with Computer Weekly, Uber justified the decision by saying it would bring greater equality among drivers, as new starters were already charged the higher commission rate.

“We want to treat all drivers equally on the Uber platform,” said the firm. “An important part of this is equalising our service fee to 25% for all drivers. We also ensure all drivers in the UK are treated as workers, offering holiday pay, guaranteed national living wage and pension enrolment, as well as the Uber Pro programme. These are only available on Uber and not from other operators. We appreciate that this is difficult news.”

The move comes at a time when drivers are still trying to recover from the financial impact of the pandemic, which the International Workers Union of Great Britain (IWGB) said saw their wages plummet to almost nothing while rental fees, vehicle maintenance and other overheads – all of which the drivers must pay for themselves – continued.

“I have worked for Uber for six years and working throughout the pandemic has been such a tough time for drivers,” said Hassan Haji, an Uber driver and member of the IWGB’s United Private Hire Drivers branch (UPHD). “Not only have we seen pay drastically fall, we have had to risk our lives chasing the pennies on offer.

“I could not stay home and keep safe, and so I continued to work and carried passengers safely around London. The thanks I have got from Uber? A 5% pay cut that will further destroy my finances that were already in tatters. I am trying hard to recover from the pandemic and Uber seem to just want to make things worse.”

The commission increase follows a reduction in the rate of pay that drivers receive per mile, which, according to Nader Awaad, Uber driver and chair of IWGB’s UPHD branch, meant drivers were already earning about 30% less than they did before the change.

He also claimed that drivers were not informed of the reduction, finding out only when they started getting paid less. Computer Weekly contacted Uber about these claims, but received no response.

“You don’t get your proper briefing, your proper breakdown, a proper communication, you don’t get consulted – nothing whatsoever from Uber,” said Awaad, adding that even as one of the UK’s largest unions for private hire drivers with just over 1,000 members, “they don’t talk to us”.

Computer Weekly understands the reduced rate was introduced in the wake of February’s unanimous Supreme Court decision which ruled that Uber drivers should be classified as workers and therefore entitled to be paid the national minimum wage, to receive statutory minimum holiday pay and rest breaks, and protection from unlawful discrimination and whistleblowing.

But although Uber announced in mid-March that it would begin paying its UK drivers the minimum wage, it diverged from the court’s interpretation that drivers should be paid from when they log into the app, not just when passengers are on board.

Awaad said: “Uber want to protect their profits, so what they did was reduce the driver’s fare as a way of compensating the losses so they can afford to pay up our holiday pay and pensions. The issue is not only about increasing their percentage from 20% to 25%.”

He added that if Uber was genuinely concerned about equality among drivers, it could have reduced the commission from 25% to 20% instead.

All of this, said Awaad, is worsened by the fact that “you’re in a job where you’re spending 20% to 50% of your income solving problems”.

This is because, when driving 12 to 15 hours a day, as many drivers do, especially in cities as complex as London, there is a greater chance of becoming fatigued and making mistakes – ranging from going into a bus lane or receiving a traffic fine to having a motor accident or simply taking the wrong route into a low-emissions zone – all of which cost the driver money, said Awaad.

Computer Weekly contacted Uber about the claim that the service fee increase had little to do with equality or fair treatment, and whether it was using the commission hike as a way to recoup losses in the wake of the Supreme Court ruling, but received no response.