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Does Relying On Commission And Tips Impact Your Health And Wellbeing?

Can unpredictable pay impact physical health and wellbeing?
Can unpredictable pay impact physical health and wellbeing?
  • Workers who report more instability in their income are more likely to report insomnia, headaches, and stomach issues
  • Uber take a large proportion of their drivers’ income
  • Are the harmful effects simply due to low pay?

When you get into an Uber do you ever think about just how much your driver is making to take you where you want to go?

Whether booking a short journey that doesn’t cost a lot, or a slightly lengthier trip at peak times; if you assume that the entire fee goes into your driver’s pocket you’d be wrong. The company itself is reported to take about 25% of all fares and, on top of that, the driver is usually responsible for financing their own car maintenance and fuel costs.

Though, back in 2021, a ruling from the Surpeme Court mandated that UK-based Uber drivers should be entitled to receiving a number of employee rights such as bering paid at the National Minimum Wage and access to paid annual leave, there followed significant doubt amongst workers as to whether the company has complied with such orders – leading to strike action by drivers in the summer of 2022.

The fact remains that, like many gig-economy or service based roles, it is by no means an easy or profitable job. Though millions of people rely on services like Uber and Bolt every day, to traverse the city or receive goods, the reality is that the drivers themselves are unlikely to be raking it in, despite Supreme Court rulings or the long hours they work, to provide for themselves and their families.

And such realities have significant consequences. Aside of hindering some workers in gaining financial security, could the instability of their income also be impacting their physical health as well as their mental wellbeing?

Professor Gordon Sayre from emlyon business school has researched just that, conducting three separate studies looking into whether or not the volatility of pay impacted workers’ health.

Professor Sayre looked at three categories of workers over different periods:

  • 375 gig workers across three weeks
  • 85 tipped workers every day for two weeks
  • 252 higher-paid workers across two months

Overworking causes illness

Over the first two studies it appeared that even on days workers did earn money, those who relied on tips didn’t feel physically better than other workers. This could be, Professor Sayre reasoned, due to the fact that these employees were working so hard for the tips that they end up overworking themselves.

But he raises the question, are the harmful effects simply due to consequences of low pay in the first place? Whilst the UK offers the NHS to all, many countries require people to pay for their healthcare. If workers are already living on low wages and some are classed as self-employed contractors rather than company employees, they would be unlikely to receive health insurance.

This means many might be avoiding making appointments with doctors or nurses due to fears of being unable to pay. Could this be affecting their wellbeing over time, as well as having to deal with potential daily concerns over how much pay they’ll actually be taking home?  

A Problem for Everyone

Interestingly, the research revealed that is is not only low paid workers who struggle with this reality. Professor Sayre explains that “not only was pay volatility related to worse health in lower paid tip jobs but also for higher-paid professionals working in finance, sales and marketing where commissions and performance bonuses are common.”

This finding is surprising given that, even though they are commission based, the commission they get can be staggeringly large. The research suggests that the harmful effects of pay volatility aren’t always simply due to low figures, but to stress.

No matter how much people make, if they don’t know how much they’re making from one day to the next they cannot structure a budget to live by or plan for the future. The stress of this uncertainty, the Professor suggests, could end up affecting wellbeing. After all precious few people work for the sheer joy of the job! Securing financial stability and growth are always a priority.

Steps Forward

Professor Sayre recommends that companies carefully consider whether the perceived benefits of performance-based pay policies that generate instability outweigh the costs to the health of workers. He suggests striking a balance by reducing an individual’s reliance on volatile forms of pay, offering a more substantial base pay instead.

Ultimately, the study findings do not prove that volatile pay always causes poor health symptoms, only that there is a correlation between them. There are, of course, always additional factors at play. For example, for gig economy or zero-hour workers, low, unpredictable wages leading to poor living conditions and subsequently, health and wellbeing issues.

For Uber drivers in the UK at least, there has been some progress towards improving their circumstances. The may be a small light at the end of the tunnel with the Supreme Court’s ruling demanding a responsibility from the company to their workers.

An article posted to employernews after the ruling stated “the ruling is a positive step forwards for the wider gig economy as other business models which operate using freelance contractors may have to follow Uber’s lead.”

Let’s hope those other companies have not followed Uber’s lead too closely. In July this year, a former Uber driver successfully won his tribunal against the company, securing more than £20,000 when it was ruled that the firm had in fact not abided by minimum wage and holiday entitlement laws. He was not alone in his claim – as many as 70,000 other drivers have reportedly received similar settlements. It should not take court action to ensure worker rights are routinely met.

The reported $600m the company has had to set aside in order to deal with such claims should be enough to make both them and other employers think twice about how they pay and support their staff…

…which is a positive step forward, right?

By, Millie Jones

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