The rideshare companies Uber Technologies Inc (NYSE:UBER) and LYFT Inc (NASDAQ:LYFT) will resume regular services with customers to begin travel amid easing COVID-19 related restrictions.
Demand for travel increases
The growing demand for travel augurs well for ridesharing companies.
The gig business model also received political support in California. However, the company that depends on independent contractors for their fleet faces challenges worldwide to conduct their operations.
Re-designate drivers as employees
However, gig economy companies that operate food delivery and rideshare services still face challenges. On the backdrop of an unfavorable ruling in the UK by the Supreme Court, Uber decided to designate their drivers as employees.
After designated as employees in the UK, the drivers can enjoy retirement benefits, holiday pay, and minimum wages. The drivers are also entitled to sick pay.
According to a communiqué in March 2021, Uber will enroll all its drivers in its pension scheme.
Gig economy companies are under severe pressure to offer pension schemes to their drivers. The pensions’ watchdog is closely working with Uber.
CEO of The Pensions Regulator, Charles Counsell, said it is in discussions with the ride-hailing company after the highest court in the UK declared drivers as employees and not independent contractors.
Charles also said other gig-economy companies should consider enrolling workers and freelancers in their pension schemes or face the risk.
In a chat with the regulator’s podcast, Charles said he would call all other organizations operating in the gig economy to begin recognizing their people as workers and include them in the pension scheme.
Dan Ives, an analyst at Wedbush, said everyone is watching the UK. The fear is likely to spread to other nations like Scandinavia, Germany, and France. The ruling in the UK could also impact the gig economy companies in these nations.
The rideshare companies avoid paying expenses to maintain the employees by classifying them as independent contractors.
Maintains five million drivers
Uber maintains five million drivers worldwide. According to a communiqué in 2019, Lyft maintains two million drivers.
Both Lyft and Uber are still fighting to maintain ICM (independent contractor model) in California. They may scale back jobs if forced to adopt drivers as employees.
Please make sure to read and completely understand our disclaimer at https://www.wallstreetpr.com/disclaimer. While reading this article one must assume that we may be compensated for posting this content on our website.