The distinction between an employment contract and a contract for services is the topic of a (broad) social, political and legal debate. Many judgments have already been rendered on this distinction. Earlier this year, we already wrote an article about this following the judgment of the Amsterdam Court of Appeal on 16 February 2021 (the Deliveroo judgment). The Uber judgment can now be added to this category. On 13 September 2021, in a dispute between trade union FNV and Uber, the Subdistrict Court of Amsterdam held that Uber drivers are working under an employment agreement. As a result, the drivers also fall under the collective labour agreement (“CAO”) for taxi transport, as far as this has been declared generally binding. In this article we will explain in brief how the Subdistrict Court arrived at this conclusion and what the consequences will be.
An employment contract exists if a worker (i) undertakes an obligation to perform work personally, (ii) against payment of wages, and (iii) in the service of an employer (a relationship of authority). The Subdistrict Court held that these requirements had been fulfilled.
Work
Uber argued that it only offers a platform (the Uber app). Through the Uber app, drivers and customers can contact each other and enter into agreements with each other. However, the Subdistrict Court is of the opinion that the drivers do perform work for Uber. Drivers are only admitted to the Uber app if they agree to Uber’s terms and conditions. This implies that the drivers enter into an agreement with Uber to offer transport services. Moreover, transport services are the core activity of Uber. Furthermore, there is a personal obligation to perform work. The Subdistrict Court concluded this from the circumstance that Uber checks expressly, by making the drivers take a selfie, whether they are personally performing the work. It makes no difference that this practice is based on the obligation of a driver to have licences, so that he cannot let others replace him. The Subdistrict Court concluded that the first requirement – performing the work personally – is fulfilled.
Wages
The Subdistrict Court also concluded that the second requirement – paying wages – is fulfilled. Uber receives a request for a taxi ride via the Uber app and determines – on the basis of the Batched Matching System (an algorithm) – which driver the ride is offered to, what the route will be, and the expected fare. After the ride, Uber receives the full fare and pays the driver weekly (or daily, upon request) the overall sum of the rides made, via Uber Pay. An amount of 25% is deducted from the fare for service charges. The fact that the fares are paid out to the drivers via Uber Pay does not mean that these payments are not wages. The name given to the wages and the method of payment are irrelevant. On this ground, the Subdistrict Court concluded that wages – the fares – are paid as a consideration for the work, which is the transportation of passengers.
Relationship of Authority
The Subdistrict Court considers the relationship of authority to be the most characteristic criterion of an employment agreement. In the debate on whether an employment agreement exists, this criterion plays a big role. It was concluded that there is a ‘modern relationship of authority’ in this case, which means that the form of the relationship of authority is more indirect (and often digital). It is Uber that unilaterally determines the terms and conditions under which drivers can start using the Uber app. These terms and conditions are regularly (unilaterally) amended and are non-negotiable. When the Uber app is used, an algorithm determines how rides are distributed and which priorities are set. A driver cannot choose to accept only a particular ride that is most advantageous to him. It is the Uber app that determines which ride is offered (first) to a driver. In addition, the drivers have no influence on the price, since it is Uber that sets the rates.
Moreover, the Uber app has a disciplinary and instructive effect. Drivers get ratings (customer reviews), which may affect their access to the Uber app and to the offer of rides. A low rating may lead to a driver’s exclusion from the Uber app, whereas a high rating may get a driver financial benefit. For example, a driver who gets a Platinum or Diamond rating will be more likely to be offered the (financially) attractive rides from Schiphol airport. If a driver regularly cancels rides, this may also lead to his exclusion from the Uber app. If a driver refuses a ride three times, he will be logged out by the system, and will not be offered any more rides until he has logged in again. Finally, if customers complain, it is Uber that makes the unilateral decision on a possible solution, including an adjustment of the fare agreed. The driver has the right to object, but the eventual decision remains with Uber. All things considered, the Subdistrict Court held that these circumstances cause the fulfilment of the third requirement: the relationship of authority.
Conclusion
Since the three requirements are fulfilled, the drivers are working under an employment agreement. As a consequence, FNV has won the case and the CAO for taxi transport must be applied to the drivers. In principle, this is only necessary for the period of time that this CAO has been declared generally binding. A CAO can be declared generally binding by the Ministry of Social Affairs and Employment. In that case, the CAO will apply to all employers and employees within a certain sector.
What happens next?
Uber had argued that it should be examined for each individual driver whether they have an employment agreement, but the Subdistrict Court did not go along with this. After all, the general characteristics and starting points are the same for all drivers. This makes it obvious that most drivers are working under an employment agreement and that the CAO for taxi transport must be applied. As a next step, it will have to be assessed on an individual level whether back wages are due, for example. In principle, employees can reclaim back wages for the last 5 years (under Section 3:307 Dutch Civil Code). In all likelihood, Uber will bring an appeal before the Amsterdam Court of Appeal. However, it is doubtful whether an appeal will change anything about this outcome. In an earlier ruling, the Amsterdam Court of Appeal already held that Deliveroo riders are working on the basis of an employment contract.
If you have any questions, feel free to contact Marieke Opdam or Ruud Schepers.
