Uber, employment and the gig economy

Whatever the company might wish to call it, Uber’s relationship with its workers is one of employment.

The emergence of digital technologies as intermediaries between producers and consumers of goods and services has led to a significant change in the labour market.

Globalisation of the economy has drastically increased competition and caused the number of atypical labour forms to grow. The expansion of these new forms of employment entails the creation of new kinds of contract, and in many cases the circumvention of employment law, as workers are turned into ‘entrepreneurs’.

Take the legal relationship between Uber and the company’s drivers, as an example of the connection between the term ‘worker’ and the gig economy. The platform makes it possible to request transport services via a smartphone with the Uber app installed. The app detects the location of the user and finds the nearest available driver, who has entered into a contract with the company.

Uber bills the user on behalf of the provider of the transport service, then pays part of the sum to the (non-professional) driver—reserving the right to change the general terms and conditions at its sole discretion, without requiring the driver’s consent. For his part, the provider of the service (the driver) has the right, independently and at his own discretion, to accept or reject the request, thus serving his own economic goals.

The app has the option to rate drivers. The company thus exerts indirect influence over them and can deactivate the app for the driver at any moment if there are several low scores.

Legal relationship

These features can lead to the prima facie conclusion that the legal relationship between Uber and its drivers is in essence civil, as in civil-law relationships the party performing the contract is independent of the party requesting the work. The latter is not interested in the organisation of labour, nor in its creation.

In reality, however, while Uber drivers drive a vehicle, they do not carry out an independent economic activity, as the core features of the service and its functioning are set by the company. The Uber business model includes establishing a connection between users and drivers, as well as providing the transport from which the company profits. Nor can the latter be deemed ‘shared travel’, in so far as the latter is in principle not carried out for profit.

Brokering a connection between searching for and offering transport does not have intrinsic economic value. It follows that it should be examined together with the transport service in their entirety. This in turn leads to the conclusion, as the Court of Justice of the European Union (CJEU) has ruled, that Uber carries out a classic transport service.

Employment contracts

Carrying out transport activities in most situations entails concluding one or more employment contracts. In certain cases, depending on the needs of the company, the latter can hire subcontractors, who are not workers.

The criterion which differentiates a contract of employment from a contract for services is that in the former the individual is subordinate to a greater degree to the managerial powers of the other party and does not carry out independent economic activity. He or she is bound by the requirements of the employer and the goals of the company.

According to the case law of the CJEU, there are three prerequisites of a contract of employment: the undertaking of an obligation to provide work or services in return for the payment of a salary or wages, the integration of the worker or employee in the organisation of the employer and the individual’s dependence on the employer, who bears the risk of the activity carried out.

Unless the work of the individual can be considered not to merit remuneration sufficient for subsistence and has a short duration, or the individual has broad discretion in decision-making (as well as in the performance of his or her duties) and his or her work is not subject to direct control, the CJEU holds that such activity should be considered genuine and effective, thus allowing the individual carrying it out to be deemed to be an employee.

This is in line with Recommendation 198 of the International Labour Organization, for example, which adopts the principle of the genuinely existing relationship between the parties as a criterion for determining its legal nature—whatever label the parties have decided to give it. It lays down the legal presumption of the existence of an employment relationship, when the genuine relationship between the parties gives an indication of its core characteristics.

The activity of Uber drivers does not have independent economic meaning, whereas the company determines the main features of the service—the cost and the driver’s remuneration—and exerts control over its provision, which implies subordination of the parties providing the transport service. Therefore the legal relationship between it and its drivers should be deemed an employment relationship.