Uber's payment algorithm sparks discontent – drivers set to sue the platform operator

The organization Worker Info Exchange International (WIE International) has served the company with a so-called Letter Before Action – the formal precursor to a lawsuit. In it, the foundation demands that Uber stop its dynamic compensation system and compensate affected drivers.

The letter was addressed to Uber BV in Amsterdam and Uber Technologies in the USA. WIE International accuses the group of breaches of European data protection rules. Specifically, it concerns automated decisions by which Uber has been determining the pay of its drivers in real time since 2020. The system is called Up Front Pricing and replaces fixed tariffs with variable prices computed by algorithms.

Income down, control diminished

The debate centers on whether the system disadvantages drivers. Studies provide indications for this. A study by the University of Oxford and WIE International from this year shows that 82 percent of British Uber drivers have earned less per hour since the introduction of the dynamic system. The commission they pay to Uber now often exceeds half of the fare — previously it was 25 percent. At the same time, drivers' control over when and where they work has diminished. WIE International estimates the average loss of income at 8 to 16 percent in the past year.

The organisation sees this as a compensation model that personalises rates, but reveals little about the criteria. Full-time drivers would thus in some shifts be far below the minimum wage after costs are deducted.

Amsterdam could become the scene

If Uber does not meet the demands, WIE International intends to file a class-action lawsuit with the Amsterdam District Court. The basis would be the Dutch Act on Collective Redress. Drivers from the United Kingdom, the Netherlands, and other European countries could join. WIE International is currently reviewing compensation systems in other states, so the case could be expanded.

The allegations are clear: The company uses personal data and profiling to train algorithms, without obtaining the drivers' consent. Additionally, driver data were unlawfully transferred to the United States between August 2021 and November 2023. As a result, they would potentially have been exposed to access by U.S. authorities.