The Uber Emergence of Gig Economy

In a recent judgment delivered on February 19, 2021, the Supreme Court of the United Kingdom (“UK”) in Uber BV and Others vs Aslam and Others[1], upheld the judgment passed by the Employment Tribunal and held that drivers engaged by Uber were “workers” within the definition and not independent, third party contractors. The aforesaid judgment has significant implications upon the precarious treatment of gig workers, which may also have a bearing on treatment of such workers in India.

The UK Supreme Court’s Treatment of Gig Workers

In Uber BV and Others vs Aslam and Others[2] The Supreme Court of UK held Uber drivers to be “workers” basis inter alia the following predominant factors:

1. The remuneration paid to drivers for the work they do and the “service fee” is unilaterally fixed by Uber. Such control further extends to Uber’s right to decide in its sole discretion whether to make a full or partial refund of the fare to a passenger pursuant to a complaint about a driver or the service provided by him.

1. Uber unilaterally dictates the contractual terms on which drivers are to perform their services. The drivers must mandatorily accept Uber’s standard form of written agreement and the terms on which passengers are transported.

1. Though the drivers have the freedom to choose when and where (within the area covered by their licence) to work, Uber has the absolute discretion to accept or decline any request for a ride. Uber exercises control over the acceptance of the request by the driver in two ways, namely by controlling the information provided to the driver about the passenger and by monitoring the driver’s rate of acceptance (and cancellation) of trip requests.

1. Uber exercises a significant degree of control over the way in which drivers deliver their services, by vetting the types of vehicles that may be used by a driver, integrating, and monitoring the technology used by a driver in delivering his service and by even directing a driver to the pick-up and destination locations by showing appropriate routes on a map.

1. Uber restricts the communication between passenger and driver to the extent minimum and necessary for performing a particular trip. Further, Uber undertakes active steps to prevent drivers from establishing any relationship with a passenger capable of extending beyond an individual ride.

Basis the above conclusions, the UK Supreme Court inter alia held that Uber exercised significant control over its drivers and that the drivers are in a subordinate position and are dependent on Uber. As such, it upheld the Employment Tribunal’s finding that the drivers are “workers” and not independent contractors, for the purposes of the applicable labour laws in UK.

Gig Economy & Indian Legal Landscape

Presently, gig economy is at a nascent but emerging stage in India. The recently enacted Code on Social Security, 2020 (“Code”) in India defines a “gig worker” as “a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship”.[3]

As per the Code, the Central Government may frame social security schemes for gig workers, registered as per the provisions of the Code, and the members of their families for providing admissible benefits, on matters relating to life and disability cover, accidental insurance, health and maternity benefits, old age protection, creche, and such other benefits determined by the Central Government. The contribution, user charges, scale of benefits, qualifying and eligibility conditions and other terms and conditions subject to which the aforesaid scheme may be operated shall be as specified in the said scheme.

Further, as per the Code, a gig worker should be registered on the specified portal of Ministry of Labour and Employment, Government of India, to avail the aforesaid benefits. In this regard, the Government has published the draft Code on Social Security (Central) Rules, 2020, for comments from stakeholders, which provide that a gig worker is eligible for registration on the portal as aforesaid, if (a) he / she has completed 16 (sixteen) years of age or any other prescribed age; and (b) he / she has submitted a self-declaration containing information prescribed by the Central Government.

While the Code has been enacted in India, the Central Government is yet to notify (a) the date from which the provisions of the Code will be in force in India and the Code on Social Security (Central) Rules, 2020, and (b) the aforesaid schemes for gig workers, which notification is reported to be imminent[4].

As such, presently gig workers in India continue to be governed as per the existing labour laws till notification of the date of effect for the Code and the schemes in this regard by the Government of India. In absence of any prescribed statutory benefits/ payments to gig workers, an employer-employee relationship has to be established between an employer and the gig worker in order for such gig worker to be entitled to benefits/ payments available to employees under the Indian laws in force as on date.

Establishment of Employer–Employee Relationship

The Supreme Court of India, in various judicial precedents, has held that while no hard and fast rule can be laid down to determine existence of an employer-employee relationship and each case has to be answered based on the facts involved therein[5], the prima facie test for determination of an employer-employee relationship is the existence an employer’s right to supervise and control the work done by the employee, not only in directing what work the employee is to do but also the manner in which he shall do his work.[6]

In addition to the above supervision and control test, the Supreme Court recently in Sushilaben Indravadan Gandhi and Ors. vs. The New India Assurance Company Limited and Ors.[7] has also recognised and reiterated the following tests for the purposes of establishing an employer-employee relationship, and determining if the employment contract is a ‘contract for service’ or ‘contract of service’:                                          

1. Whether the employer has economic control over the worker’s subsistence, skill, and continued employment;

1. Whether persons were employed wholly or principally in connection with the business of the shop, and if the employer’s supervision and control over the person’s work included the right to reject sub-standard work;

1. If the work undertaken by a person is integral to the employer’s business, such as in a contract of service, or if such work, although done for the employer’s business, is an accessory to the said business, such as in a contract for service;

1. Whether wage or remuneration is paid by the employer;

1. The test of who owns the assets with which work is done and/or who ultimately makes a profit or loss, in order to determine if the business is being run for the employer or on one’s own account; and

1. The test of determining if a person who has engaged himself to perform services is performing them as a person in business on his own account.

As such, the existence of an employer-employee relationship (if any) between gig workers and an employer needs to be examined based inter alia on the above factors. This is similar to the analysis conducted by the UK Supreme Court in Uber BV and Others vs Aslam and Others[8] to determine the existence of control exercised by Uber over its drivers.

Conclusion

With the advent of multiple industries such as Uber, Ola Cabs, Meru Cabs etc and freelance workers in India, gig economy seems to be in a phase of rapid emergence in India. However, till the Code is put into effect, an employer-employee relationship needs to be established between a gig worker and the employer, in order for such gig worker to be recognised as an ‘employee’ and/or ‘workman’. Only upon such recognition, a gig worker will be entitled to the benefits and payments payable thereto under applicable Indian labour laws.

The views and opinions expressed in this article belong solely to the author and do not reflect the position of Tatva Legal, Hyderabad.

[1] [2021] UKSC 5

[2] Ibid

[3] Section 2(34), Code on Social Security 2020

[4]https://www.thehindu.com/business/labour-ministry-finalises-rules-under-4-codes-reform-to-be-a-reality-soon/article33834468.ece

[5] In Dharangadhara Chemical Works Ltd. vs State of Saurashtra 1957 SCR 158 and reiterated in Sushilaben Indravadan Gandhi and Ors. vs. The New India Assurance Company Limited and Ors., AIR 2020 SC 1977

[6] Sushilaben Indravadan Gandhi and Ors. vs. The New India Assurance Company Limited and Ors., AIR 2020 SC 1977

[7] Ibid                                                                                                                         

[8] [2021] UKSC 5