Do Uber Drivers Get Penalised for Cancelling?

No, Uber drivers aren't penalized for cancelling. There wouldn't be any point in having a 'Cancel' option if they're penalized each time they do so. If they have cancellations rate more than 25% than Uber deducted some % from their monthly incentives.

Do Uber drivers get penalized for Cancelling?

Drivers only see where they're going after accepting an incoming ride and starting the trip. They earn a cancellation fee when the rider takes more than two minutes to cancel, or if the rider takes more than five minutes to come to the pickup spot (in which case the driver can cancel).

What happens to Uber drivers when they cancel?

If the passenger cancels, drivers get either the standard cancellation fee or the wages they already earned, whichever is more. Uber still doesn't compensate drivers for time and distance traveled after making an out-of-the-way drop-off.