In recent years, the world has seen a marked growth in a sub-category of the services sector which is often referred to as the “gig” or “collaborative” economy. It derives its name from the ad hoc nature of the work performed and is, by and large, a technologically driven environment in which temporary placements and short-term engagements are common. The rise of mobile app-based platforms has fuelled impromptu work opportunities ranging from making deliveries to driving passengers, but has also left the work-doers in a largely ill-defined employment position. Are they employees, independent contractors, or something in between?

In South Africa, the Commission for Conciliation, Mediation and Arbitration (“CCMA”) was recently faced with the crisp question of whether Uber drivers qualified as employees of Uber Technologies South Africa (Pty) Ltd (“Uber SA”) for the purposes of the Labour Relations Act 66 of 1995. For those readers who may not know, Uber develops, markets and operates the Uber car transportation and food delivery mobile application. Uber drivers use their own, unmarked vehicles to transport passengers or deliver food, whereas passengers use the mobile application to request a ride from one point to another.

The applicant in the matter, Uber SA, sought to challenge the CCMA’s jurisdiction to arbitrate several disputes relating to the purportedly unfair dismissals of a number of Uber drivers. The drivers (i.e. the respondents) had previously sought to join Uber BV, based in the Netherlands, to the proceedings on the basis that Uber BV was the holding company of Uber SA and possibly a “second employer”. However, the earlier application did not succeed.

All respondents, barring the third, were drivers or partner-drivers for Uber. CCMA Senior Commissioner Everett (“the Commissioner”) used the term “Uber” in the colloquial sense, without identifying whether the reference was to Uber BV or Uber SA. All of the drivers had been “deactivated” for one reason or another and had referred their unfair dismissal disputes to the CCMA. The applicant had objected to the CCMA’s jurisdiction to hear the unfair dismissal cases, alleging that the drivers were not employees of Uber BV (the entity with whom they had contracted), let alone its subsidiary – Uber SA.

The Commissioner distinguished between three separate categories of persons involved in the provision of the Uber lift service, namely:

“Partners only”: being persons who owned one or more vehicles, but did not do any driving themselves. The partners would receive payment of fares (less a fee deducted by Uber) and would pay the driver of their vehicles a certain portion.

“Partner-drivers”: being a partner vehicle provider who would also drive a vehicle themselves. The partner-driver would be entitled to appoint another to drive and, if so, that driver would need to be approved on the Uber application.

“Drivers only”: being persons who did not own their vehicles, but drove a vehicle provided by a partner.

The case before the Commissioner concerned only partner-drivers and drivers, the latter of whom were at liberty to move between the three categories at will. The respondents claimed that drivers, even if also partners, were employees of Uber whenever they drove, and they did so as employees irrespective of whether they owned or in some other manner secured a vehicle to drive.

In analysing the evidence and argument before her, the Commissioner observed that:

Part-time employment, outsourcing and casualization have been features of our labour market even at the time that the Labour Relations Act 66 of 1995 was passed, while the gig economy has provided new opportunities for otherwise unemployed people to earn an income. The line between who is employed and who is not is increasingly blurred as relationships have become largely anonymized, internationally and intra-nationally.

The Commissioner also noted that several thought-exercises or “tests” had been developed in order to determine the existence (or otherwise) of an employment relationship. These included the so called “control”, “organisational”, “economic dependence” and “dominant impression” tests. Despite their prevalence, these tests were largely unhelpful in distinguishing between employees and independent contractors. Although not expressly stated,  the “Code of Practice: Who is an Employee” introduced a new “comprehensive” test, which regarded all other tests as mere factors to be considered in determining the reality of the relationship between the parties.

Applying the comprehensive test to the facts before her, the Commissioner held that:

Uber drivers rendered personal services, drove in their own name and were not permitted to out-source driving to anyone else.

The relationship between Uber and its driver is indefinite, so long as the driver complies with the necessary requirements.

Drivers are subject to the control of Uber. Whilst drivers choose their hours of work and are free to accept or ignore a lift request, Uber controls the manner in which they work by setting clear standards and performance requirements (such as those contained in its Deactivation Policy – which gives Uber the right to deactivate access to the mobile application, thereby depriving the drivers of an opportunity to earn an income).

Whilst Uber attempted to argue that each rider contracts with each driver for each trip, this was merely a fiction, given that riders choose Uber to provide them with a lift through one of its drivers. The rider has no interest in, or say over, which driver arrives. Conversely, the driver has no say over the fare and is not aware of the destination until the rider is picked up. The driver has minimal knowledge of the rider’s personal details and is prohibited from further contact in terms of the service agreement with Uber.

These factors, said the Commissioner, indicate that the drivers were by no means independent or running their own transportation businesses. Rather, the drivers were “very much at the mercy of Uber, and economically dependent on the ability to drive for Uber, an infinitely more powerful juristic person than the individual drivers”.

She stated further that even though Uber BV provided the mobile application and generated the contracts with the drivers, Uber SA was, for all intents and purposes, Uber in South Africa. It would be severely disadvantageous to South African employees working for foreign companies if local subsidiaries of said companies were not regarded as the employer.

Having considered the issues before her, the Commissioner concluded that the CCMA had jurisdiction to determine the dismissal disputes referred by Uber drivers, given that they were employees of Uber SA for the purposes of the Labour Relations Act 66 of 1195 (as amended).

This ruling appears to be in line with developments in the United Kingdom, where a labour tribunal recently held that Uber drivers were employees and not self-employed contractors, thereby entitling them to holidays, sick pay and a minimum wage.

It remains to be seen what the outcome of the CCMA process will be. What is clear, however, is that this decision has far reaching consequences for those who participate in the gig economy. Service providers (and particularly those who rely on online or mobile platforms) had best be aware of the risks and would be well advised to consult their legal representatives before concluding any service level agreements with prospective “partners”, whether they believe them to be independent contractors or not.

Written by Morgan Riley, Senior Associate (Litigation), Knowles Husain Lindsay