What does it mean for taxi insurance?
After a long-running dispute between workers’ union GMB and the taxi app provider Uber, the London Employment Tribunal recently ruled that Uber drivers should be regarded as employees of Uber rather than an army of self-employed drivers. Uber are appealing the decision, but if the ruling stands, the implications could be far-reaching. One question which arises from the case is, will Uber have to pay their taxi drivers’ insurance and car maintenance costs?
What is Uber?
For those who don’t know, Uber started life back in 2009 in that famous hub of tech start-ups, San Francisco. It operates an app that allows passengers to hook up with a taxi driver directly rather than via a traditional taxi company or by hailing a black cab from the side of the road. The service has proved both popular and controversial. Uber operates in more than 70 countries worldwide, but is seen by many as a threat to the livelihoods of traditional taxi drivers.
Uber and the gig economy
The organisation takes advantage of the very modern concept of the gig economy, where temporary positions are common and organizations contract with independent workers for short-term engagements. Uber’s philosophy is that drivers who sign up are independent individuals who pick and choose when and how often they participate. The only thing that unites them is use of the app.
The gig economy is being promoted as a positive step forward in the brave new world. A world in which the workforce is comprised of people who are hired to work on demand, moving from job to job as it suits them.
This type of working arrangement suits the digital marketplace well and may indeed provide the balance that some people want in their lives. The controversy arises in that it’s a seemingly short-term solution and does not address workers’ rights and what responsibilities organisations such as Uber are expected to honour. At this point, it seems that even a worker under the much maligned zero-hours contract has more workplace rights than someone working as part of the gig economy.
Employed v self employed
Prior to this court case, Uber’s stance that drivers are independent contractors meant that the organisation was not responsible for any costs normally associated with an employee or any vehicle running costs incurred as a taxi driver. Uber is appealing the ruling but if it is upheld Uber may find that it’s responsible for holiday pay, paid rest breaks and national minimum wage, and for fixed costs such as taxi insurance and car maintenance.
What draws taxi drivers to Uber?
Drivers may be drawn to Uber’s service by the appearance of few barriers to entry and the laid back implications of the gig economy. Many may be surprised to realise that their standard, domestic car insurance is not sufficient when acting as a driver for hire. There are a number of necessary fixed costs essential to all self-employed or employed taxi drivers, such as licencing, private hire insurance and additional cover for potential loss of earnings through accident, illness or legal actions.
Insurance requirements vary depending on whether a taxi driver is self-employed or employed, so the results of Uber’s appeal is likely to have a wider impact on taxi insurance.
Insurance for self-employed taxi drivers
If self-employed, the taxi driver must first decide if they operate a public or private hire service. Local authorities will advise on the correct type of licence to apply for. Uber drivers are basically offering a private hire service, as the passenger is essentially pre-booking the driver via the Uber app to come and pick them up.
Self-employed drivers are also advised to take out public liability cover and to consider additional cover to protect themselves in the event of accident, illness or legal action.
Insurance for employed taxi drivers
Most taxi firms prefer to contract self-employed drivers to keep costs to a minimum so they can pass these savings on to passengers, but this is a pretty grey area. If a driver is employed, and drives a vehicle belonging to the company, then the taxi firm is likely to be responsible for providing insurance and public liability insurance. Taxi drivers should check their employment status carefully, making sure they are adequately covered by insurance and public liability.
Insurance for taxi firms
If employing taxi drivers, any fleet manager or taxi firm owner should ensure that their fleet of vehicles is properly insured if they are driven by multiple drivers.
An uncertain future?
The Uber court case and its upcoming appeal have thrown the employment status of thousands of UK taxi drivers into question. It remains to be seen what the implications will be for the both drivers and taxi firms, including Uber.
What is certain is that for the time being, Uber taxi drivers should make sure they are adequately covered by the correct type of insurance to protect themselves and the public in the event of an accident.
What type of taxi insurance is right for you?
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