• Insights

Uber drivers are employees: new ruling from the Netherlands

Written by
Bronsgeest Deur Advocaten, leading law firm in the Netherlands specialised in HR and employment law.
Authors
Hylda Wiarda
Hylda Wiarda
Partner - Netherlands
Bronsgeest Deur Advocaten
Christine Daniels
Associate - Netherlands
Bronsgeest Deur Advocaten
Netherlands
23.09.21
4
The Amsterdam Court of Appeal has ruled that Uber drivers are employees and that their services are covered by the collective agreement for taxi transport. The judgment held that the relationship between driver and platform was a ‘modern employer-employee relationship’.

On 13 September 2021, a new judgment was added to the increasingly lengthy series of rulings on the gig economy and the question of whether platforms can also be employers. In the case brought by the FNV, one of the largest employee unions in the Netherlands, against Uber, the Amsterdam District Court has ruled that taxi drivers who offer their services via Uber meet the characteristics of an employment contract.

The ruling is not the first victory for the FNV in court against a major player in the platform economy. Earlier this year, we covered the Amsterdam Court of Appeal judgment that Deliveroo’s meal delivery workers are also entitled to an employment contract.

Just like the Court of Appeal in the Deliveroo case, in the Uber case, the court dealt extensively with the question of whether there is an employment agreement. It listed the three characteristics:

  • personal performance of work;
  • in exchange for payment of wages;
  • in the service of the employer (a relationship of authority).
Personal performance

In this case, Uber argued that it is merely a technology company that runs a platform on which users can make contact and enter into agreements with each other, for example for taxi transport; that it is a kind of marketplace for taxi services.

This defence was rejected by the court. The court ruled that there is no doubt that drivers work for Uber. From the fact that drivers have to agree to the conditions set by Uber in order to be allowed on its platform, it follows that they enter into an agreement with Uber to offer transport services. Moreover, Uber’s transport services constitute the core of Uber’s business. There is also a personal obligation to perform the work. Uber explicitly checks by means of a selfie to be taken by the drivers whether the driver personally performs the work.

Wages

According to the agreement with the drivers, Uber receives the request for a taxi ride and subsequently determines by means of the algorithm to which driver the ride will be offered, the route and the expected ride price. After the ride, Uber receives the fare and pays the driver minus the service costs via Uber Pay. The fact that the fare is paid to the driver via Uber Pay does not mean that it is not wages. The court stated that the name given to the wages and the way they are paid out are not important. The conclusion is therefore that the fare is remuneration for the transport of passengers (the work of the drivers).

Employer-employee 'relationship of authority'

According to the court, the question of whether or not there is a relationship of authority is still the most significant criterion for distinguishing between an employment contract and another employment relationship, and thus decisive for the question of whether there is an ’employee’ or (for example) a self-employed person without staff (a ‘zzp-er’).

What is striking about this judgment is that, at paragraph 26, the court broadens the concept of ‘authority’ and arrives at a definition of a ‘modern employer-employee relationship’:

‘In the present technological age, the criterion of ‘authority’ has been interpreted in a way that deviates from the classic model, and which is more indirect (often digitally) controlling. Employees have become more independent and perform their work at more varied (self-chosen) times.’

At Uber, there is such a modern employer-employee relationship.

Drivers can only register with Uber through the app and the conditions under which they can use the app are non-negotiable. In addition, certain conditions can only be changed unilaterally by Uber.

Next, the app’s algorithm determines how the rides are distributed and what priorities are set. The algorithm does this based on the priorities set by Uber. The app works on the basis of a rating system. Through the app, drivers are given a rating and are assessed, which can affect access to the platform and the supply of rides. A low rating can lead to removal from the platform, while a high rating can lead to (financial) benefits. Moreover, Uber can change the app settings, which affects drivers’ rating and thus the offer of rides. The entrepreneurial freedom Uber claimed drivers enjoy is therefore essentially absent.

In addition, after refusing a ride three times, a driver is automatically logged out.  It is Uber that, through the algorithm, determines if and when a driver is logged out and if or when s/he is allowed to log in again. Finally, in the event of customer complaints, Uber unilaterally decides on a possible solution, including adjusting the fare. The driver can object to this, but the final decision lies with Uber.

Based on the above elements, the court ruled that the algorithm has a financially stimulating, disciplining and instructive effect on the drivers. The fact that the drivers are to a certain extent free to refuse a ride, may determine their own hours and may simultaneously make use of various apps or other booking systems does not alter this. As soon as they make use of the Uber app and are logged into it, they are subject to the working of the algorithm designed by Uber, and therefore fall under Uber’s ‘modern employer authority’.

The court concluded that the parties have only agreed ‘on paper’ that the drivers are self-employed. However, in its actual execution, the work relationship has all the characteristics of an employment contract. In this case, the additional consequence is that Uber must also apply the Collective Labour Agreement for Taxi Transport, at least for the period in which it was declared generally binding by the Minister of Social Affairs and Employment. Drivers who qualify may claim back pay (under the Collective Labour Agreement).

What does this ruling mean?

The question of whether there is an employment contract or an agreement for services has always been an issue. For the platform economy, however, it is a crucial question because the answer has a major impact on the revenue model they use. As mentioned, the courts in the Netherlands had already issued the Deliveroo ruling, but this Uber decision goes one step further: it does not concern a judgment about a number of specific drivers, but immediately applies to all Uber drivers in the Netherlands. That makes this judgment very important for the platform world. The ruling will have considerable employment law and tax law consequences for Uber. In the future it will become apparent whether this ruling gives trade unions and other interested organisations cause to challenge similar platforms. For the time being, it seems that Uber will appeal the court’s decision. The last word has therefore not been said yet: to be continued!