As I was writing this newsletter, I received an announcement that Menulog
, an Australian food deliver company, will start to qualify its drivers as employees instead of independent contractors. It isn’t the first company to do so, but it’s the first one to voluntarily announce it. Managing Director Morten Belling said in a statement:
“Ultimately, we want to employ couriers, however the current regulatory framework presents a number of challenges, with specific regards to existing modern awards, the lack of flexibility they present and subsequent cost.”
Gig platforms around the world are facing legal challenges over the classification of workers and the way people get paid. Uber
recently found themselves in this situation. In both cases, workers went to court and won (limited) employee rights.
Meanwhile in Spain
, the government has come to a labor reform agreement with unions and trade associations that will see delivery platform couriers recognized as employees once the law has passed.
In the Netherlands Uber and Ola Cabs
were ordered to give drivers insight into the data and algorithms underneath their platforms. And in South Korea, a driver working for Tada was ruled to be an employee.
These examples are just the tip of the iceberg: the ILAW just issued this brief on Litigating the Digital Platform Model
with an overview of 39 employment court cases in 20 countries around the world.
The only country that leans in the other direction is the US, where Uber and Lyft won a vote
against classifying their drivers as employees in November 2020.
Is this a watershed moment?
The unions certainly like to think so, but I’m not sure. Menulog makes a good point on its need to modernize awards with more flexibility. The way we pay and compensate employees was designed dozens of years ago and is firmly captured in legislation and collective labor agreements.
Especially in the last ten years, the labor market has changed fundamentally but apart from gig worker remuneration, compensation and rewards haven’t really changed that much.
On the other hand, these gig workers deliver services that consumers are only willing to pay so much for. The bigger question is: how sustainable will these business models really be when prices go up to cover additional benefits? When the main advantage is reduced costs, and these companies now have to increase prices to pay a living wage, are these models even viable?
The problem underneath it all is that most countries have fairly good definitions and jurisprudence for employees versus contractors and what they are entitled to. There is no official classification yet for “gig worker” and so court cases are establishing some boundaries. With technology changing the organization of work, governments have only recently recognized that the law must evolve to keep pace with these platforms.
With new, innovative approaches to work becoming more prevalent, it is more likely that the law will change to mandate the provision of employment-like benefits like sick pay and paid vacation days to gig workers. We’ll also see governments requiring gig platforms to take responsibility for occupational health and safety. Expect to encounter more interesting legal and policy challenges for employment and industrial relations in the next years. And, prepare for a number of these platforms not to make it.