South Africa’s Commission for Conciliation, Mediation and Arbitration (CCMA) has ruled that Uber drivers are employees and not independent contractors, and can form unions, engage in collective bargaining and exercise the right to strike. This ruling was part of an unfair dismissal dispute brought before the CCMA by a group of former Uber drivers.

Some of the key arguments put forth by the former Uber drivers were:

Drivers argued that riders do not contract independent drivers, but Uber, and it is Uber that issues a receipt for its services. It is necessary to distinguish Uber from, for example, Airbnb where the customer knows that he or she is contracting with the guesthouse owner.

Drivers maintained that Uber controls them in a number of ways: They are required to personally perform their tasks; Uber controls their conduct and how they do the work through a system of ratings by the customer and policies regarding cancellation rates; Uber controls the actual conditions under which business is done, including pricing and the number of drivers in a city or at specific locations such as the airport. Drivers would control this if they were independent contractors; they would determine where and how to place themselves in the market.

Uber’s counter to this was to reiterate the nature of the contract drivers sign with Uber BV before commencing work, something which Uber has stuck to in several other similar cases around the world:

Uber argued that drivers are not employees of Uber BV (Netherlands), and as Uber SA is ancillary to Uber BV, it follows that they are also not employees of Uber SA.

Uber also argued that the starting point is the contract and it is clear that drivers are not employees of Uber BV, let alone Uber SA which is not a party to the contract. In terms of the contract, Uber BV allows access to its technology via the app and in return it has the right to deduct a fee from the payment and remit the balance.

However, the Commission noted that:

Uber exercises extensive control over driver conduct; how drivers must do the work. Although characterised as help or tips, this construction falls apart in the light of Uber’s power to deactivate drivers and prevent them from earning an income. The power to terminate the working relationship is the ultimate control and this is what attracts the protections of the Labour Relations Act.

The Commission also succinctly put down Uber SA’s attempts at shirking from liability by stating that:

The confusion between Uber SA and Uber BV is precisely the situation that sections 200B and 198 of the Labour Relations Act seek to address by providing for joint and several liability. The local subsidiary of an international company must be regarded as the employer to avoid severe disadvantage to South Africans working for foreign companies. An ordinary driver could not have insight into inter-company arrangements and Uber SA presents itself as Uber for all intents and purposes. The Uber office in Cape Town has a general manager, with whom some drivers actively engage , and emails come from an Uber Cape Town email address.

Note that Section 213 of South Africa’s Labour Relations Act, 1995 defines an employee as:

a) any person, excluding an independent contractor, who works for another person or for the State and who receives, or is entitled to receive, any remuneration.

b) any other person who in any manner assists in carrying on or conducting the business of an employer.

It is Part b) of Section 213 that the Commission cited while stating that the “definition is broad enough to include Uber drivers. It is fairly obvious that the drivers assist in the business of Uber, which has a worldwide reputation as a provider of lifts for people wanting a ride, and not vice versa.”

The Commission further pointed out the nature of the relation between a driver and Uber, the amount of control Uber exercises over its drivers (especially through its Deactivation policy), dismissed Uber’s arguments that “each rider contracts with each driver for each trip”, and noted that:

These factors indicate that the driver is by no means independent or running her own transportation business. The driver is 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.

California Labor Commission ruling

Back in June 2015, the California Labor Commission had ruled that drivers working for technology platforms like Uber are essentially employees of the company, and not independent contractors. It said that while platforms like Uber may “hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation. The reality, however, is that they’re involved in every aspect of the operation. They vet prospective drivers…control the tools the drivers use…monitor the drivers approval rating and and terminate their access to the application if the rating falls below a specific level.” Also, Uber has the sole discretion in deciding what passengers will be charged for the service provided.

Now CCMA’s ruling once again raises the question about Intermediary liability and online aggregators and marketplaces’ responsibility towards merchants/vendors/contractors on the platform and the consumers. It’s safe to say that we’ve not heard the last of this, and this saga of employee vs independent contractor will drag on.

Read the entire CCMA ruling here.