Uber and Deliveroo platforms now required to play by French employment law rules?

For the first time, the highest court in France (the Cour de Cassation - the Supreme Court) has ruled on the nature of the employment relationship existing between delivery drivers and collaborative platforms such as Uber and Deliveroo which operate through a web-based app.

The French Cour de Cassation recently decided that an independent bike driver is in a subordinate relationship with the food delivery platform “Take it Easy” and that therefore an employment contract exists and has to be recognised as such between the parties (Cass. Soc. 28 Novembre 2018 n°17-20.079).

This decision was quickly followed by a decision in the Paris Court of Appeal (CA Paris 10 janvier 2019 n°18/08357) which ruled that an Uber driver operated under an employment contract.

Context

In recent years, web platforms have been introducing radical new business models, including companies such as Uber or Deliveroo, which offer innovative services to customers and have created a new type of flexible working.

However, these new collaborative businesses that use apps to provide services to customers via independent workers for short-term engagements are also causing issues when trying to apply existing employment law to this new type of arrangement.

Insufficient regulation

French legislation has slowly evolved in order to adapt to this emerging market and in doing so, to offer some protection to this new and growing category of independent workers.

Since 2016, the French employment code (articles L.7341-1 and L.7341-6) has provided that technology platforms have a social responsibility towards the independent workers who perform their professional activity. Minimum guarantees must be offered to such workers including work insurance coverage, vocational training or the right to strike.

A new bill has recently been discussed, which purports to impose the adoption of social responsibility charters by collaborative platforms, in order to define better the workers’ rights and guarantees.

The necessary recourse to the Courts

Alongside this developing legislation, employment courts and tribunals are increasingly being asked to deal with the question of whether independent workers in the gig economy can really be considered to be independent contractors or whether they are, in fact, employees. These workers are often obliged to comply with the technology platforms’ ever-evolving requirements and terms of use, while struggling with unregulated working conditions and being exposed to the inevitable competition that the gig economy brings.

The question as to the nature of their employment status is crucial. What is at stake is whether these workers should benefit from the protection of French employment law, instead of merely being offered guarantees, if anything at all.

Unclear case law precedents

The Paris employment tribunal has recently given conflicting decisions on this issue. In December 2016, it decided that an Uber driver had to be considered an employee on the basis that the driver had received instructions from Uber, and in particular, on how to behave towards customers. It also emphasised that the driver was economically dependent upon Uber.

However, in January 2018, the same employment tribunal refused to reclassify an Uber driver’s contract into an employment contract. The employment tribunal ruled that a number of factors were inconsistent with the driver having employment status, including that Uber had no control over the hours the driver worked, there was no obligation on the driver to log on to the app nor a minimum time that he had to be logged on for and he had complete freedom to decide when he worked.

A French Supreme Court decision with significant implications

The lower court judges in the “Take it Easy” food delivery driver case put similar arguments forward. The Court of Appeal rejected the request to requalify the contract on the grounds that the driver was not bound by an exclusivity or non-competition obligation and that he remained completely free to decide whether to work or not and to determine the time slots during which he wanted to work.

The French Cour de Cassation, however, quashed the Court of Appeal’s decision and adopted different reasoning. It decided that a subordinate relationship did exist between the parties since:

• the company had put in place a geolocation system allowing the tracking of the driver’s position and the counting of the number of kilometres travelled;
• the company had disciplinary power over the drivers as “bonuses” could be awarded or the driver could be sanctioned with penalties in the case of contractual breaches (such as late deliveries, failure to respond to telephone calls, etc.). 

The Court of Appeal takes a similar decision in relation to an Uber driver

Following this Supreme Court decision, the Paris Court of Appeal has recently followed a similar reasoning in its decision in a recent case regarding an Uber driver who filed a complaint after having his account deactivated by Uber.

The Court of Appeal ruled that sufficient evidence was gathered to establish a relationship of subordination between the employee and the platform (CA Paris 10 janvier 2019 n°18/08357).

It specified that the driver could not develop his own customer base outside of the app, that he was also not free to decide the price of the fares, nor the conditions under which the service was provided.

It noted that the platform could control the driver’s activity thanks to the geolocation system and that it had the power to sanction the driver by limiting or preventing his access to the app notably in case of “problematic behaviour”.

The Court of Appeal also underlined that the capacity to choose one’s working hours is not in itself inconsistent with the existence of an employment relationship.

More judicial claims to be expected

These decisions are interesting as they imply that gig workers could be considered as a new type of employee who are in fact operating under an existing relationship of subordination, albeit one that is different and evolving.

It also shows that flexibility and the mere capacity to choose when to work is not in itself inconsistent with the existence of an employment contract.

These decisions could in any event open the floodgates to more tribunal claims.

The recognition of an employment relationship has significant consequences for such companies as it imposes the payment of a minimum salary and of full social security contributions. It may lead to the payment of termination indemnities and damages for unfair dismissal or concealed employment.

On a largerscale, this could result in these companies having to reshape their organisation in order to adapt their human resources teams and establish corresponding staff representation.

The issue is that the employment status seems in itself to be conflicting with the business model imposed by those companies. This could mean that these companies are no longer able to exist in their current form if they have to play by employment law rules.

For more information, please contact Kim Campion (kim.campion@crsblaw.com) or Laure de Ganay (laure.deganay@crsblaw.com).