DRIVING TOWARDS A BETTER FUTURE: LEGAL IMPLICATIONS OF UK’S UBER JUDGMENT IN INDIA

This article has been authored by Yashna Singh, a second year student at MNLU, Mumbai.

Introduction

The Supreme Court of United Kingdom recently delivered a landmark judgment in the case of Uber BV and Ors. v. Aslam and Ors., (hereinafter “the Uber judgment”) in which it unanimously held that Uber drivers are “workers” and not “independent contractors”. The central question decided by the Court was whether Uber drivers could be categorized as “workers” under employment legislations, which would grant them employee rights. The decision given will lead to substantial change in the manner in which such workers are now treated under UK’s labour law, and will entitle them to benefits such as, minimum wages and sickness benefits.

The appeal to the Court was related to the employment status of Mr. Yaseen Aslam and Mr. James Farrar and twenty other drivers who were the claimants in this case. The appeal arose from the judgment of the Employment Tribunal in 2016. The Tribunal had given the verdict that Uber drivers passed the test of being “workers” in accordance with Section 230(3) of the Employment Rights Act,1996. Since, Uber’s appeals were dismissed by the Employment Appeal Tribunal and the Court of Appeals; it approached the Supreme Court to challenge this decision.

Uber’s Arguments

Uber claimed that the drivers could not be classified as workers because they were “independent contractors” who provide services to passengers under contracts by using Uber as their “booking agent” and therefore cannot claim workers benefits. It also used the terms of the written agreement and claimed that when the passenger is connected with the driver, there is a contract formed between them and Uber ceases to be a part of the transaction.

Reasoning of the Court

The Court used a three-fold test for the purpose of classifying a worker within the ambit of Section 230 of the Employment Rights Act 1996. This includes a) a contract under which an individual undertakes to perform any service or work b) rendering the work or the services personally and c) the other party to the contract is not a client of any profession or business undertaking which is carried on by that individual.

The Court’s rationale was “That the purpose is to give protection to vulnerable individuals who have little or no say over their pay and working conditions because they are in a subordinate and dependent position in relation to a person or organisation which exercises control over their work.” It stated the following reasons for determining the level of control exercised by Uber:

(1) The Court said that the remuneration of the drivers is dictated by Uber. Neither the passengers are allowed to give, nor are the drivers allowed, to demand any price higher than the one set by Uber.

(2) Further, the terms of the contract are set by Uber and the drivers do not have the ability to modify or challenge it. Therefore, making the contract similar to that of a permanent contract between employers and employees.

(3) The Court also considered the fact that once driver partners sign in to the app, they have very little say in approving or refusing rides, and Uber keeps a track of this by controlling their acceptance and declining rates.

(4) The Court also noticed that the drivers are bound to maintain the passenger ratings and can be dismissed if the same are not maintained. Driver ratings are significant as they determine the quality of rides customers receive thereby affecting their services.

(5) Lastly, Uber actively discourages all types of contact between the driver and the passengers and, therefore acts as an intermediary between them. It also monitors the payment of fares, remuneration of the drivers, and acts as the manager of complaints given against the drivers.

Prevalent Situation in India

Due to absence of codified laws in India, judgments are relied upon, for determining the nature of employment. One of the most important criteria is the supervision control test which was laid down in the case of Dhrangadhara Chemical Works v. State of Saurashtra. To determine the employer-employee relationship, the Supreme Court held that if the manner and type of work that is to be undertaken by the employee is controlled and supervised by the employer, then the nature of the relationship will be that of an employer-employee. This should be determined from a case to case basis by considering all relevant circumstances. The Uber judgment has already assessed the degree of control that exists between Uber and it’s drivers. Therefore, the judgment is of great importance and can be used as a guiding force for giving similar entitlements to Uber drivers in India. Currently, while employees are given several benefits under The Trade Unions Act, 1926, Worker’s Compensation Act, 1923, Payment of Wages Act, 1936, etc, gig workers are not covered by these laws because they do not fit in the traditional definition of an employee and therefore companies such as Uber use it as a means to deny social security benefits to their drivers.

In the recent past, Uber and Ola driver partners in India have also complained of the lack of protection provided by these companies and lodged legal challenges against them. The Delhi Commercial Drivers Union filed one of the first cases in 2017, claiming that apps like Uber and Ola were “exploiting” them by not treating them as employees.

The drivers’ union alleged in its filing that drivers who are registered with both platforms are being denied even the basic benefits, including coverage in the event of injuries or death.

Code on Social Security

The parliament recently enacted the Code of Social Security, 2020 (hereinafter “the Code”) which recognized the term “gig worker” for the first time. The Code defines a gig worker in Section 2(35) as a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship. This would cover drivers of companies such as Uber and Ola. The Code makes a differentiation between the traditional definition of an “employee” and the new “gig worker”. The definition of employee has been retained as the one existing in the current labour laws whereas, the definition of a gig worker includes the concept of deemed employment which is independent of the conventional employer-employee relationship. This is an important difference given that in certain situations the drivers might require flexibility in their manner of working. However, this should not be an excuse for companies to avoid their liability to protect their workers.

The Code encourages the government to formulate schemes on areas such as life and disability cover, maternity benefits, and any other benefit deemed right by the Government.

It is essential to note that while the Code lays down the definition and directs the government to make schemes for gig workers’ benefit, no material benefit has yet been laid down for these workers under the Code. The legislature has only outlined the categories of benefits to be given to these workers, without determining the nature of the relationship between the employer and the employee. Further regulations need to be developed and the extent of protection given by the Uber judgment can be used as a directing principle for the same.

Conclusion

The gig economy is on the rise, especially during the Covid pandemic as it provides a more flexible option to the workers, especially to those who have suffered economically because of the pandemic. Though Uber is adamant about not treating its drivers like workers, it has been involved in various legal battles around the world with Courts taking different stances. However, with a rise in thriving platforms like Uber, there is a need to protect the workers who are the driving force behind it. The gig economy is a unique economy and the traditional notions of independent contractors and employees need to be done away with, to cater to this category of workers. While the Code is a good step, merely defining the term gig worker is not sufficient and rules need to be brought out on the directions given. The extent to which the protection should be given can be taken from the Uber judgment. Though the technology that drives the on-demand economy is recent, the restructuring of work to bypass labour laws is not. A process should be created for determining when such workers should be given the same labour rights as employees, and when they should be considered as independent contractors. The need of the hour is to strike a balance between protecting labour rights and ensuring that these platforms survive, as mere technicalities cannot be used to evade responsibility.