NPHTA: MINIMUM FARES FOR
Article by Steven Toy Vice Chair NPHTA
info@nphta.co.uk
In the last month’sPHTM, I suggested minimum fares for private hire drivers could be another tool to protect drivers from exploitation along with restrictions on cross border working. Such regulation could be deemed to be interfering in the workings of the free market, but any form of regulation does that, and hackney carriage drivers are already regulated by a council-issued Table of Fares in their own areas, which acts as a maximum that may be demanded as payment by the driver, so why not impose a minimum rate payable to Private Hire drivers who otherwise work to fare structures set by the local operator from whom they receive their work?
Unlike with hackney carriage drivers, private hire fare rates are largely unregulated, and since the arrival of the peer-to-peer apps, fares can vary unpredictably and significantly in an instantaneous response to fluctuations in supply and demand. Outside of periods of high demand, fares are often set as low as there are drivers out there willing to accept work at that rate. Drivers may find themselves accepting work at rates which are completely unprofitable, perhaps just to ease the boredom of waiting, or to put some food on the table, even if in the longer term, those earnings will eventually be completely swallowed up in motoring and other expenses.
Who pays the cost for “cut price” offers?
Operators have also been known to set fares deliberately low in order to gain more bookings by undercutting the competition, much like price wars with supermarkets where you shop around for a loaf of bread, or where is cheapest for Nescafé at the moment. This is nothing new, and not actually unique to our industry, but the store workers’ wages are not impacted by such cut price offers in the way drivers are when an operator offers low fares to attract customers.
Moreover, price wars may actually benefit shop workers in that increased demand resulting from price reductions may increase their number of paid hours. Whilst for drivers, any increased demand comes at a lower earning rate and higher running costs.
There are obvious public safety implications associated with such practices, as this forces drivers to work longer
10
hours before they reach their break-even points, and they may cross the tiredness threshold well before they turn a reasonable profit.
Case law and actions taken as a result
In 2021, the Supreme Court ruled that drivers should receive certain protections from such 19th Century- style exploitation to include minimum wage and holiday pay.
See here:
https://shorturl.at/jnjXa
The peer-to-peer apps now pay minimum wage while drivers are actively engaged in trips, from the point of acceptance
to completion, as well as a small
contribution to holiday pay deducted from each fare payable by the passenger. However, this does not include the time spent waiting to receive trips or returning to an area where they are more likely to receive a trip, having dropped off a passenger in a remote area.
To illustrate the implications of this, imagine a waiter working in a restaurant with a supervisor holding a stopwatch. Instead of being hourly paid for all the time spent in the restaurant as an employee, they would only be paid when actively engaged with customers. Thus, they would be paid for the time taken to accept orders from customers and take them to the kitchen, bring food and drinks, present the bill, and take payment.
Imagine not being paid until a customer sat at a table, and not being paid for their time spent scanning tables to see if anyone required their service, clearing and setting tables, or returning dirty crockery, cutlery and glasses, which would be the equivalent of a driver not being paid for the time taken to return to the nearest town, having dropped off a passenger, although we know that waiters are PAYE employees, with set hours, and no ability to reject requests, so it is not quite the same thing, but does illustrate the point.
Moving to PAYE?
Requiring operators to pay an hourly rate to drivers for all their time spent waiting for trips as well as that of being actively engaged with them would mean that drivers would no longer enjoy working flexible hours. Operators would have to dictate their working hours, including working nights and weekends, in much the same way as for a waiter.
MAY 2025 PHTM
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