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Labour laws and the sharing economy: understanding unintended consequences

Cape Town, 06 Jul 2018
Read time 3min 50sec

The sharing economy (ie, the community-based online market) continues to expand at a rapid pace throughout a broad range of industries, with Uber and Taxify dominating the taxi/private vehicle hiring industry and Airbnb now the largest hotel accommodation and hospitality service in the world.

The sharing economy market has also extended to domestic services, dog-sitting and artisans through platforms such as Domestly, DogVacay and Advance. While the opportunity for growth and expansion appears endless in this ever developing market, these relationships may lead to unintended labour law consequences, which users and innovators need to be aware of, as this may raise serious risks.

Kirsten Eiser, partner and Cameron Rajoo, candidate attorney.
Kirsten Eiser, partner and Cameron Rajoo, candidate attorney.

The traditional model adopted in the sharing economy is that of a tripartite relationship between the platform, clients and service providers. The rights and obligations within this relationship give rise to a range of complexities. Both internationally and locally, this tripartite relationship has raised concerns.

The platforms typically argue they are a technology-based company offering a platform for sellers to connect with potential clients. While platforms such as Tinder or Bumble are able to assert that they facilitate a match, platforms which not only match but also govern the relationship between client and service providers (for example, prescribing the rate and the manner of pay, minimum hours and codes of conduct) potentially find themselves balancing precariously along the line of unintended quasi-employment for themselves and/or their clients.

Under South African employment law, platforms cannot hide behind the title of an independent contractor relationship. Employment tribunals (like the CCMA or Labour Court) are able to pierce the contractual terms to determine the true nature of the relationship between the parties. This could conceivably lead to a finding based on the specific facts that, notwithstanding the contractual terms, there is in fact an employment relationship and the platform is actually an employer. It is also possible that the tribunal may find the client is the service provider's employer or that both the platform and the client are the service provider's employers (dual employment). This is potentially just as big a risk to a platform that would likely lose business from clients who have been dragged to the CCMA.

Uber is no stranger to this grey area issue. Unfortunately, the case before the Labour Court in Uber South Africa Technology Services (Pty) Ltd v National Union of Public Service and Allied Workers (NUPSAW) and others [2018] 4 BLLR 399 (LC) did little to provide guidance on the true nature of the relationship between the platform and the various types of drivers. While the Labour Court overturned the CCMA award in which a certain type of Uber driver was found to be an employee, it did so on the basis that a material error was made by the CCMA in finding that a relationship existed between the service providers with the local Uber entity.

The Labour Court specifically stated the "...judgment does no more than conclude that on the facts, the drivers were not employees of Uber SA, and that they therefore have no right to refer an unfair dismissal dispute to the CCMA as against Uber SA. Whether the drivers are employees of Uber BV (either alone or in a co-employment relationship with another or other parties), or whether they are independent contractors of Uber BV, is a matter that remains for decision on another day..."

In any event, even if the Labour Court decision was conclusive on the matter, it is important to bear in mind that while platforms have certain commonalities, large aspects of the platforms are highly unique and individualised; and one size does not fit all. Each of these unique relationships will need to be tested on their own terms.

Every one of these types of tripartite relationships requires a proper legal analysis to identify aspects that may place the platform and/or clients liable for obligations they did not know they had. Adding to the complexity, even where a true independent contractor relationship can be established, such a relationship may still attract labour-related consequences in certain industries due to legislated determinations.

Editorial contacts
Webber Wentzel Paula Youens (+27) 21 431 7039
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