HC2121 - Business Ethics: Uber Australia's Wage Theft Controversy

This essay critically analyzes the ethical issues faced by Uber Australia, specifically focusing on the wage theft accusations made by its drivers. The company's policy of upfront fixed pricing, intended to attract customers, led to significant pay cuts for drivers, who were allegedly forced to accept these terms under threat of deactivation. The essay examines the conflict between corporate interests and employee welfare, comparing Uber's practices to those of Ingogo. It applies the moral philosophy of deontology to assess the ethicalness of Uber's decisions, arguing that the company prioritized profits over the well-being of its drivers. The essay concludes that Uber Australia's actions were unethical, highlighting the importance of considering employee interests in business decisions. Desklib offers a range of similar essays and study resources for students.

Running head: ETHICAL ISSUES OF UBER AUSTRALIA
Ethical issues of Uber Australia
Name of the student
Name of the university
Author note

1ETHICAL ISSUES OF UBER AUSTRALIA
Ethics refers to the moral judgments made by an individual with regards to what is right
and what is wrong. In an organization, the decisions related to ethics would have an impact on
the overall culture and stakeholders of an organization. A system of ethical and moral behavior
in an organization would help in guiding the behaviors, values and the decisions of any business
organization, along with the individuals who are a part of it (Bednarz 2013). Maintaining a code
of ethics, as a matter of fact, would be extremely beneficial to a company in terms of profits and
even brand positioning (Trevino and Nelson 2016). The following essay conducts a critical
analysis of a recent news article related to business ethical issues by Uber Australia.
On July 26, 2018 a news article published in ABS News wrote about an ethical issue that
Uber Australia faced in recent times. The app cab company with branches all over the globe was
recently accused by its drivers of wage theft. The Uber drivers claimed that the company had
been deceiving them by compelling them to take pay cuts as a result of recent changes in policy.
The recent policy dictated that the company would provide its customers with a fixed upfront
price (like 50 Australian dollars) instead of providing them with a range. This was done so as to
attract more customers and provide them with assurance. The drivers were told that the
customers would be given a brief estimate of the price, which would be beneficial for the drivers
themselves since they would be assigned more trips. However, the drivers alleged that they were
forced to sign a contract and had to accept the estimate price policy set by Uber Australia (ABC
News 2018). If they failed to comply with the policies provided by Uber, they would be
deactivated or blocked from using the app without any prior explanation.
The main ethical issue identified in this case is that of corporate governance and ethics.
The company had promised its employees that imposing this new policy would prove to be
beneficial for them and cater to their interests as well. Yet, Uber Australia forced the drivers to

2ETHICAL ISSUES OF UBER AUSTRALIA
sign a contract which would terminate their services if they failed to abide by the policies, that
too without prior notice. As a result, a majority of the drivers observed a significant drop in their
earnings. Since customers were being given an exact estimate which may or may not be accurate,
drivers often incurred losses. The Uber Australia policy claimed that the estimate prices would
be based on the distance to be covered by the driver and the time taken to cover the distance.
Based on certain parameters like heavy traffic or multiple stops made by the customer, the fare
would be adjusted automatically. This was the condition provided to the drivers. Yet, the drivers
claimed that it was in these situations that the Uber policies proved most ineffective (ABC News
2018). The management of the company or the leaders involved in development of the policies
based the upfront prices of the cab fares based on certain ambiguous calculations, which proved
to be problematic for the taxi drivers. According to these drivers, these calculations are based on
theoretical evidence an historical data which are not accurate. Accordingly, the drivers are facing
tremendous losses and losing more than 30 dollars per week.
Following this controversy, there were several investigations into what made Uber
Australia take this unethical decision. It was found that the business model of Uber was designed
in a way that could not take into account the interests of the drivers and the customers
simultaneously. In order to incorporate the interests of both the drivers and the customers, Uber
would have to invest huge sums of money, which was impossible for them. As a result, the
interests of the drivers had to be compromised. It has also been found that due to the policies
implemented by Uber Australia, the drivers employed under the company are earning even less
than the specified wage, which is not enough to sustain an existence. The drivers work for more
than seventy hours per week, yet take home less than minimum wages. On top of that, fixing the
fares without backing of sufficient traffic evidence proved to be all the more problematic for the

3ETHICAL ISSUES OF UBER AUSTRALIA
drivers. This is because the drivers were putting in long work hours, yet, they were getting paid
less than they should have.
Thus, it can safely be asserted that the decision taken by Uber Australia is an example of
unethical behavior. It must be remembered that each organization is powered by its workforce
(Michaelson et al. 2014). An organization like Uber is entirely reliant on its workforce of drivers.
As such, it is the responsibility of the organization to ensure that the interests and the benefits of
the drivers are taken into account. However, the recent policy implemented by Uber prioritizes
the interests of the customers and entirely ignores that of the customers. Moreover, the policies
implemented by the company are not backed by solid evidence. The upfront pricing strategy
implemented by Uber is based on historical data and not current statistics. This can be compared
to another company in the same industry, named Ingogo. The company, Ingogo too follows a
fixed pricing strategy where an estimate is provided to the customer at the beginning of the trip
and he or she would be required to pay exactly that mount (Ingogo Ltd. 2018). However, the
fixed pricing strategy at Ingogo takes into consideration the interests of the drivers as well. The
fixed fare estimate is calculated on the basis of the best routes available, the tolls and other
miscellaneous charges involved and other factors. These uncertain and unpredictable factors are
incorporated as part of the price provided to the customer so as to avoid confusion later on.
Moreover, what was most unethical about the way Uber handled the situation. The company had
compelled the drivers to sign a contract that forced them to accept the unfair fare system and if
they failed to do so, their employment would be terminated without notice. Post the accusation
of the drivers, an investigation was launched into the claims. The leaders of the company said
that the confusion had been due to miscalculation on part of the company. As a result, they
would be willing to compensate the drivers for the unfair treatment that had been meted out to

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them. However, the compensation offered by the company proved to be insufficient to make up
for years of losses. Thus, it can be affirmed that Uber Australia has failed to make ethical
decisions in this aspect.
In this aspect, it is important to scrutinize and understand the unethical practices by Uber
Australia and align them to moral philosophies. Moral or ethical philosophy may be defined as
the process of defending, systematizing and utilizing concepts of wrong and right conduct (Ferrel
and Fraedrich 2015). Concepts such as good and bad, right and wrong, virtue or vice are
analyzed as part of moral philosophy. There are essentially seven kinds of moral philosophies,
namely teleology, egoism, utilitarianism, deontology, relativist, virtue ethics and justice
(Teulon 2014). The philosophy of teleology suggests that an act can be deemed morally
acceptable and right only if they produce some desired results, which could serve utility purposes
or self interest (Berker 2013). Egoism suggests that an action can be called morally right if it
maximizes an individual’s self interest. Utilitarianism, as the name suggests, defines an act as
morally right if it maximizes total utility or is a step towards the greater good. Deontology
emphasizes mostly on the preservation of the basic rights of people and the behavior
demonstrated by individuals rather than the consequences (Bentham 2014). Relativism refers to
the ethicalness of a decision, based on group and individual experiences. Virtue ethics is more
conventional in nature and analyzes the ethical aspects of a situation based on accepted norms of
ethics. Justice defines ethicalness of situations based on concepts of fairness. In order to
analyze the ethicalness of Uber Australia’s decision, the moral philosophy of deontology
would be used. Such a philosophy specifies that every individual must be treated with respect.
In business, this is of prime importance. Employees are human beings and deserve a degree of
respect. As such, the drivers employed by Uber Australia were deprived of even the basic wages

5ETHICAL ISSUES OF UBER AUSTRALIA
needed for existence. Uber failed to treat their drivers with the same level of respect as their
customers, prioritizing one over another. Contradictory to the utilitarianism principle, deontology
suggests that businesses are obligated to take ethical decisions and take into consideration the
interests of the employees even if it does not maximize utility. Uber justified their stance by
stating that their decisions were in the interest of social utility, and their policies were
implemented to improve customer experience. This would in turn improve profit generation for
the company. Yet, as the principle of deontology suggests, it would be wrong to forego interests
of individuals and indulge in behavior that is simply for utility purposes (Sacco et al. 2017).
Going by the principles of deontology, some actions are inherently wrong while some are by
nature good. This theory is thus also known as nonconsequentialism (Vadastreanu, Maier and
Maier 2015). In other words, an act must be judged on the basis of its ethicalness, irrespective of
whether it yields favorable results or not. Accordingly, it can be affirmed that the behavior on
part of Uber Australia was indeed an unethical one. They prioritized profits over the interests and
well beings of their drivers. The ethical philosophy followed by Uber can be said to be utilitarian
in nature, since it suggests that compromising the driver’s welfare is justified since the steps
taken by the company would beneficial for the customers and even increase the profitability of
the company.
To conclude, it can be said that Uber Australia made an unethical decision, as far as the
wages of their drivers are concerned. A news report released in July showed that the fixed fare
policy for Uber Australia was severely protested against by their drivers. The drivers claimed
that the fares were fixed based on unscientific evidence and historical data of traffic. As a result,
the drivers were working twice as hard, but were not making profits. They were earning wages
less than the minimum wage levels. To make matters worse, Uber Australia had made the drivers

6ETHICAL ISSUES OF UBER AUSTRALIA
sign a contract which stated that if they failed to abide by terms and conditions, they would be
terminated without notice. A moral philosophy of deontology has been used in this essay to
assess the ethicalness of Uber’s actions and accordingly, it was deemed unethical.

7ETHICAL ISSUES OF UBER AUSTRALIA
References:
ABC News. 2018. Uber accused of 'wage theft' by drivers. [online] Available at:
http://www.abc.net.au/news/2018-07-26/uber-drivers-allege-upfront-wage-theft/10025908
Bednarz, T.F., 2013. Ethics in business. Practical Ethics for Food Professionals: Ethics in
Research, Education and the Workplace, 52.
Bentham, J., 2014. Deontology; or, The Science of Morality.: In two volumes. Adegi Graphics
LLC.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson
Education.
Ingogo Ltd., 2018. ingogo | Taxis done better. For Passengers, Drivers and Businesses. [online]
Ingogo.com.au. Available at: https://www.ingogo.com.au/
Michaelson, C., Pratt, M.G., Grant, A.M. and Dunn, C.P., 2014. Meaningful work: Connecting
business ethics and organization studies. Journal of Business Ethics, 121(1), pp.77-90.
Sacco, D.F., Brown, M., Lustgraaf, C.J. and Hugenberg, K., 2017. The adaptive utility of
deontology: Deontological moral decision-making fosters perceptions of trust and
likeability. Evolutionary Psychological Science, 3(2), pp.125-132.
Teulon, F., 2014. Ethics, moral philosophy and Economics. Financial Economics, pp.28-8.
Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do
it right. John Wiley & Sons.

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Vadastreanu, A.M., Maier, D. and Maier, A., 2015. Is the success possible in compliance with
ethics and deontology in business. Procedia Economics and Finance, 26(15), pp.1068-1073.
Appendix:
A link to the article has been provided:
http://www.abc.net.au/news/2018-07-26/uber-drivers-allege-upfront-wage-theft/10025908

9ETHICAL ISSUES OF UBER AUSTRALIA