South African Labor Commission: Uber Drivers are Employees

South Africa’s Commission for Conciliation, Mediation and Arbitration (CCMA), in an in limine ruling, has found that Uber drivers in South Africa are employees within the meaning of the law. The order is available here. The facts found relevant by the tribunal will be familiar to readers following Uber’s employment litigation in the United States and internationally. As are the legal arguments. As summarized by the Commissioner, Uber contended as follows:

First, there is no legal obligation on the part of any driver to drive any Uber registered vehicle or to use the Uber App, as is clear in the Uber BV service agreement. Second, there is also no right to instruct a driver to drive his vehicle, and the driver has a choice of where to drive and which passengers to transport. Third, a partner-driver may employ another driver to drive. Fourth, drivers are free to work whenever they like on anything else, including direct competitors. Fifth, the partner (and not Uber) is required to supply a vehicle and to carry all associated expenses. This is the essential tool of the trade and it is not provided by Uber. Sixth, the risk of profit or loss is borne by the partner as an independent contractor. Finally, a driver is free to move from one partner to another.

The drivers, for their part, 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.

The Commissioner’s analysis began with a critique of the “tests” used to determine the existence of an employment relationship. Under South African law, these include “the control test, the organizational test, the economic dependence test and the dominant impression test.” According to the Commissioner, these tests “have become largely unhelpful, and in many instances key aspects of the tests point to employment, and others point to independent contracting.” He then proceeded to apply a “reality of the relationship test” and found the following factors especially relevant:

Drivers render personal services. The relationship is indefinite. Drivers are subject to the control of Uber. (Despite the fact that drivers choose when and how long to work, Uber controls “the manner in which they work by setting clear standards and performance requirements.” And, even though there is no “direct or physical supervision, control is exercised through technology, to the point that even the movement of the cell phone can be detected, indicating reckless driving.”) Drivers are economically dependent on the ability to drive for Uber. Uber drivers are the essential part of Uber’s service.

The Commissioner did note that certain factors point in the other direction – away from a finding of employment status. But, in addition to the many specific factors indicative of employment, the Commissioner also relied on broader principles in ultimately finding an employment relationship. He wrote:

Promotion of social justice involves the balancing of power between those with resources and those who are in a weaker position in society. It involves protecting the rights of the weak and making it accessible to them to enforce their rights. An interpretation which promotes social justice must favour the drivers, who are in a considerably weak position when compared to Uber. Drivers’ ability to earn an income is dependent on access to the app and the ability to drive. They are not independent contractors in any true sense and they are in fact highly dependent on Uber for work.

An important decision both for South Africa and for the ongoing international litigation over the question of employment status of Uber drivers – and gig workers more broadly.