Drivers on one of Europe’s biggest minicab networks will be able to choose whether to become a worker or remain self-employed in a breakthrough for modern-day working practices.
Freenow, which allows passengers to book a cab via its smartphone app, hopes the move will boost the recruitment and retention of drivers – and make it easier for Londoners to book a cab.
It comes after rival operator Uber lost a Supreme Court case in 2021 in which it had argued its drivers were not workers but self-employed independent contractors with fewer rights. Workers are entitled to the minimum wage and paid holidays.
Freenow, which was formed from the merger of brands including Hailo, mytaxi and Kapten, is based in Germany and backed by BMW and Mercedes.
It operates across 150 European cities, with London “by far” its biggest UK operation. It has about 20,000 drivers in the UK.
The platform, which describes itself as a “mobility super app” as customers can also use it to hire e-bikes and e-scooters, has come to increasing prominence through sponsorship deals.
It is the shirt sleeve sponsor for Luton Town FC, newly promoted to the Premier League, and sponsored the Mercury music prize.
Mariusz Zabrocki, UK general manager at Freenow, told the Standard: “We will be the first ride-hailing company in Europe to give drivers a choice of their employment status.
“Drivers will choose whether they want to be workers or remain independent contractors.”
Mr Zabrocki said: “We definitely believe it will encourage more drivers to work for us. We believed they will be more engaged.
“Also, I think a lot of passengers care about the employment status of drivers.”
A survey found that 59 per cent of drivers on the app wanted to remain independent contractors, while 31 per cent wanted worker status. The remainder were undecided.
“There was no ‘one size fits all’ solution so we decided to give the choice,” Mr Zabrocki said. “What we are trying to do is be as fair as possible to both groups of drivers.”
Contractors will be paid per trip. Workers will have a contribution of each fare put towards holiday pay – the most sought-after benefit – and a voluntary pension, to which Freenow will also contribute. Earnings will be at least equal to the national living wage, currently £10.90 an hour.
The changes will not affect black taxi drivers using Freenow. Only 10 per cent of its taxi drivers said they wanted to be classed as workers.
Freenow has 30,000 cars on its platform: 20,000 minicabs and 10,000 black taxis.
The initiative on drivers’ rights, which launches next month, was initially announced in agreement with the GMB union.
Andy Prendergast, GMB national secretary, described it as a “cutting edge deal” that was a “step towards a fair world of work for all app-based workers”.
However the union decided to suspend its support for the arrangement after a backlash from members.
In a post on Uber section of the GMB’s website, Mr Prendergast wrote: “Since the agreement was released, our members have been clear that this deal isn’t acceptable.
“Drivers told us they value flexibility combined with workers rights and worker status gives drivers the best of both worlds.
“As a result, and having reflected on the views of our members, we have been given no choice but to inform Freenow that the deal is suspended unless they can agree to provide all drivers with worker status. We will always work with any operator willing to provide drivers the rights they are entitled to.”
Mr Zabrocki said he was “surprised” at the GMB’s decision. “Every private hire driver operating on Freenow is being offered worker status,” he said.