The Advent Of The Gig Economy – Is Uber About To Become The World’s Largest Taxi Business?

By Gbenga Adebisi and Devoted Ezuruike

Advancements in technology, mobile penetration, and internet services have led to the emergence of a new economic sub-sector referred to as the ‘gig economy’. According to Investopedia.com, in a gig economy, temporary, flexible jobs are commonplace, and companies tend to hire independent contractors and freelancers instead of full-time employees. It is unarguable that ride-hailing is the global poster child of the gig economy, such that Uber, the ride-hailing giant accounts for over 1.9 billion “trips” globally. Uber, Taxify, and other owners of ride-hailing apps/platforms allow so-called ‘independent workers’ (drivers) to sign up with them and connect them with individuals in need of their services. However, the pertinent question that keeps resonating is whether drivers who sign up with the companies through apps/platforms owned by the companies are their employees or they are to be classified as independent contractors?

Under Nigerian law, the relationship between an employee and an employer is that of a master and servant because the master (employer) is directly in control of the employee’s (servant) work-related activities and sets the time of work, the tools and equipment for the work, and determines where and when the work should be done. In using the above factors to determine the status of these peculiar drivers, the following factors are pertinent:

1. The ride-hailing company processes the driver’s application to provide his services through their app and they can approve or refuse the same.
2. The ride-hailing company fixes the price and handles payment processing for ride services provided by drivers to customers.

• The ride-hailing company can impose sanctions on the drivers if complaints are made against them by customers.

All these go to show that there is some level of ‘subordination’ between the drivers and the ‘modern taxi company’ which is a major component in an employer-employee relationship. Independent contractors, on the other hand, are contracted for the services they are to render. They control the way and manner by which the work is done and provide their own tools for the business.

Therefore, can these drivers be considered as independent contractors because ride-hailing companies usually contend that classification by arguing that the drivers do the following:

1. Provide their own tools i.e their vehicles.
2. Fix their own schedule and duration of work.

• Can refuse a client or a particular location of work.

1. They receive about 80% of the value of their services.

These are some of the germane issues that call for answers in defining the status of these drivers. In Nigeria, an action was instituted against two of the biggest ride-hailing companies at the National Industrial Court in Suit No. NICN/LA/546/2017 – Between Oladapo Olatunji & Daniel John vs. Uber Technologies System Nigeria Limited & 2 Ors. In the suit, the Applicants sought the determination of the Court on their status as the Defendants’ employees and the attendant statutory obligations to be imposed on the Defendants thereto, rather than as independent contractors. The opposing argument of the Defendants bordered on lack of privity of contract, and that they are merely agents providing the technology to connect drivers with passengers because their core business is technology. In essence, the major bone of contention between the parties was the classification of drivers as ‘employees’ which definition effectively determines the rights and obligations to attach to the parties in the suit. In its judgment, the court held that the Applicants’ suit was speculative, academic, and hypothetical, and so declined to give a definitive position of Nigerian courts on the subject matter.

Across the globe, the status of ride-hailing platforms’ drivers is a growing subject of judicial intervention. In Australia, the decision of the Fair Work Commission in Suit No. FWC 6610 Mr. Michail Kaseris vs. Rasier Pacific V.O.F (U2017/9452) was to the effect that Uber drivers are independent contractors, and so they should not be referred to as employees of Uber. The Fair Work Commission is the Australian industrial relations tribunal which was created by the Fair Work Act of 2009, and it can hear claims and disputes relating to the workplace and deliver binding decisions which must be adhered to. Also, in a suit filed by the Attorney General of California against Uber & Lyft in the United States of America, it was argued that both ride-hailing companies exert enough control over drivers to make them employees, which position was upheld by the California Superior Court. The decision of the California Superior Court to the effect that both Uber and Lyft had misclassified their drivers as independent contractors have been upheld by the California First District Court of Appeal, and recently by the California Supreme Court on February 10, 2021. It is important to state that in all these cases, a major defense plank of the ride-hailing companies is that they are technology companies and that drivers are not a key part of their businesses. In the United Kingdom, Supreme Court recently ruled that former Uber drivers who sued Uber are to be regarded as their workers and they are not self-employed. The Court in giving its judgment, considered the following:

1. Uber was an intermediary party.
2. Uber sets the fare and therefore dictated how much drivers could earn.

• Uber sets the contract term and drivers have no say in them.

1. Request for rides is constrained by Uber who can penalize drivers if they reject too many rides.
2. Uber monitors a driver’s service through the star rating and has the capacity to terminate the relationship if after repeated warnings this does not improve.

The kernel of the judgment was to the effect that Uber drivers are workers whenever Uber’s app is switched on and they are ready and able to take trips. The UK Supreme Court held that the requirements that Uber places on its drivers amount to a sufficient degree of control to justify the categorization of drivers as workers. The decision of the UK Supreme Court emanated from an appeal on an Employment Tribunal in Case Nos. 2202550 & Ors – Between Mr. Y. Aslam & Ors. Vs. Uber B.V & Ors, wherein the drivers asserted that as Uber workers, they should be paid the U.K.’s national minimum wage and receive paid holiday while on the clock. Uber argued that the drivers using their app are self-employed independent contractors who utilize their technology to connect drivers, while they also process payments for the transactions.

In the United Kingdom, there are three categories of employment status namely:

1. Employees under a contract of employment.
2. The self-employed i.e independent contractors; and

• Workers, who are situated between the employed and self-employed categories.

The UK decisions will reverberate across the gig economy in the British Commonwealth and could signal a shift in how many countries view the status of gig-economy workers.

It is important to state that under Nigerian law, even where the employer-employee is not strictly defined in the contract of employment or is ambiguous, two tests have been applied to provide some clarity, as upheld in the case of Shena Security Co. Ltd v. Afropak & ors [2008] 18 NWLR (Pt. 1118). These tests are the control test and the integration of the person into the employer’s enterprise. In our consideration, a major factor that weighed on the mind of the UK Supreme Court, and which might have a telling effect in Nigeria is that the driver app is the major tool used by the drivers to provide their services, without which there can be no immediate (direct) or remote (indirect) connection between the rider, the ride-hailing company, and the customer.

Furthermore, in the Nigerian context, being an employee comes with certain rights and privileges. If a ride-hailing company is to be considered an employer, and the Driver employees; then the company would be responsible for certain matters. The drivers will be entitled to medical insurance, life insurance, disability insurance (through the Employee Compensation Act), and retirement plans (through the Pension Reform Act). The Employee Compensation Act was made for adequate compensation for employees or their dependents for any death, injury, disease, or disability arising out of or in the cause of employment. Where a Driver sustains any injury or disability or death in the cause of rendering his services as a driver, he is entitled to compensation for same. The basis or justification for the compensation is the employer’s duty of care, as he has a duty to protect the health, welfare, and safety of workers at work.

Beyond the ongoing courtroom battles, the ever-changing dynamics of the society have altered the employment landscape, with the International Labour Organization now recognizing the emergence of a new third form of employment relationship sitting between employment and self-employment i.e ‘the quasi-subordinate worker’. This category models the gig economy which can absorb vast numbers of ‘employees/workers’ as we now have with drivers subscribed to ride-hailing apps. The Quasi-subordinate/dependent employment model retains, in all systems, an important set of contractual characteristics borrowed from the contract of employment model. The model has facilitated the ability of the traditional employer and employee to structure their work needs and arrangements through contractual forms that departed from the employee/contract of employment classification. Proponents of this employment model argue that it helps to retain the relevance of the contract of employment against a background of relentless political, social, economic, and technological changes, especially with the impact of the Covid-19 pandemic on economies worldwide.

This approach can also assist with policy formulation in seeking to contextualize appropriate legal frameworks on an equal treatment basis, the rights of some non-traditional workers to those enjoyed by traditional employees, such as their entitlement to minimum wage, pension, amongst other benefits. However, antagonists of this position will argue that guaranteeing some labor rights to this category of workers, including fundamental rights such as the right to bargain collectively, may unduly interfere with some fundamental laws of the market, including laws that seek to promote free competition and prevent the formation of cartels or abusive dominant positions.

Indeed, the complexities of the emerging gig economy are still unfolding, and so regulatory authorities in Nigeria would do better to appreciate the changing dynamics of the employment landscape and begin to make necessary adjustments to meet the demands of the society. This position was aptly captured by Hon. Justice B. B. Kanyip, Ph.D., in the Nigerian suit filed against ride-hailing companies when he said:

‘Forms of work have changed and the traditional or orthodox distinctions between the worker/employee and the employer no longer exists or have been stretched to absurd limits.’

As the fate of ride-hailing companies is being settled in various jurisdictions across the world, it will seem likely that a spade is likely to be labelled by its proper name, rather than being camouflaged as a farming implement.

The three-pronged categorization of employees in the United Kingdom, as well as the recent UK Supreme Court’s decision can provide some guidance in seeking an appropriate policy and legislative framework that can help prevent a vacuum in protecting the vast number of young Nigerians who now make a living as workers in the emerging gig economy.

Article was written by Gbenga Adebisi and Devoted Ezuruike, of Marturion Legal.

REFERENCES

1. https://www.cloverhr.co.uk/types-of-employment-status/#:~:text=Under%20UK%20employment%20law%2C%20there,employment%20and%20self%2Demployment%20status.
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