My last Chauffeur Blog set out the difference between an
executive car company and a minicab office and the way drivers work for them. An
executive company largely accepts bookings in advance where passengers have planned
ahead. A minicab office mostly accepts spontaneous bookings. There has been a massive
upheaval in both of these markets in recent years by new ‘tech’ companies. Uber,
Lyft and Ola are typical of disruptors using mobile phone technology to book
and organize journeys.
The way new ‘tech’ companies offer cars at short notice is
just the same as traditionally cab companies have done for years. They ask a
self-employed driver to pay them a fee in return for work. The driver will then
work a shift and be available on-demand. For a busy driver it can be lucrative, for
a quiet driver it can be dire. Some drivers work sixty hours a week with many hours
spent sitting around waiting for a job. The hope is that over a week, the busy
times cancel out the quiet times and the average is sufficient to make a wage.
Last week, one of the UK’s biggest private hire companies ‘Addison
Lee’ made the media after three of their drivers took them to court. The ruling
said the drivers should not have been self-employed. The impact could be
immense and I wonder whether many operators will survive as the knock-on effect
is huge. Just to highlight a simple fact: historically what a driver earned
from fares was their income, now it would be considered the companies. This in
turn leads to all sort of complications when managing money!
Firstly, the operator (or company) would no longer receive a
fee from individual drivers as their income. Instead they would have to collect
the all fares which would be considered collectively for multiple drivers. Ultimately
this requires VAT to be charged at an extra 20%. For business customers like we
have at DrivenByQ this is not an issue but for the general public this could be
catastrophic. The money would need managing and a payroll established. Add administration
costs to the equation and there would no doubt be cash-flow issues.
Since becoming a Limited Company in 2007, DrivenByQ
registered for VAT and at all times informed drivers in advance of what their
bookings would be. Between jobs, drivers go home or have downtime. This means
their hourly rate is favourable because there is no requirement to sit around for
hours on end and wait for a journey. We never charged a weekly fee either.
Instead we earned a commission from each driver’s journeys. The commission
increases with their turnover so it is favourable to increase their overall earnings.
I wonder where the industry will now start heading. With the
Taylor Review having an effect, court cases coming to a head and new
technologies emerging, I am sure there will be lots more change to come. Just
consider electric vehicles, driverless cars, workers rights, drones and the
possibility of car ownership becoming a thing of the past and you could quite
easily be excused for feeling gloomy. On the other hand, this change we are
seeing could lead to a very exciting time where there are lots of opportunities
on the horizon. Maybe, you just need a different vision to see it?
