On the heels of losing a major labor battle in the United Kingdom, Uber (NYSE:UBER) will reclassify all U.K.-based drivers as workers.
Under the new designation, more than 70,000 drivers will receive some benefits, including minimum wage, holiday time and pension contributions, but they will not get full employee benefits.
Uber announced the change in a Securities and Exchange Commission filing, adding that its U.K. ride-hailing business accounted for 6.4% of all mobility gross bookings in the fourth quarter of 2020.
While the move will increase Uber’s costs in the U.K., the company is still targeting adjusted EBITDA profitability by year-end.
Earlier this year, Uber lost a major legal battle in the U.K. around this issue. The country’s Supreme Court upheld a ruling that a group of drivers were workers, not independent contractors. While the decision applied to a small group of drivers, thousands more have taken action against the company.
CEO Dana Khosrowshahi wrote that following the Supreme Court ruling,”we could have continued to dispute drivers’ rights to any of these protections in court. Instead, we have decided to turn the page.
“I know many observers won’t pat us on the back for taking this step, which comes after a five-year legal battle,” Khosrowshahi said. “They have a point, though I hope the path that we chose shows our willingness to change.”
UBER opened trading Wednesday down $2.35, or 4%, to $56.50.