By Aurélien LOUVET, Firm: Capstan

The highest court in France has reclassified the relationship between Uber and one of its drivers as an employment contract, because the driver was not free to set rates, build up a customer base or choose his route and Uber could sanction him for refusing rides or for reported ‘problematic behaviour’. This article sets out the key points of the ruling and provides commentary on its problematic elements.

In a decision handed down on 4 March 2020 and highly publicised in France, the Social Chamber of the Court of Cassation ruled that the arrangement between Uber and a self-employed driver was an employment contract. It specified on this occasion that its consistent jurisprudence relating to the definition of the employment contract must apply to self-employed workers on digital platforms. However the parties describe the contract between them, a person who performs work under a subordinate relationship is an employee. A subordinate relationship is characterised by the performance of work under the authority of an employer who has the power to give orders and directives, to control their execution and to sanction breaches (Cass. Soc., 13 November 1996, n° 94-13.187).

In the present case, in the Court’s view, the following evidence justified the reclassification of the contract between Uber and its drivers as an employment contract:

  • The driver worked with the ride-hailing service created and entirely organised by the Uber platform. According to the Court, that service only exists thanks to the platform, and its use did not enable the driver to build up his own clientele, set his rates freely or establish the conditions under which he provides transport services. The fares were set by Uber by means of a predictive mechanism based on a route over which the driver has no control and the final destination of the journey is sometimes not known to the driver. The driver is therefore not really free to choose, as a self-employed driver would, whether the route suited him or not.
  • Uber had the ability to temporarily disconnect the driver from the application after he had refused three trips and the driver could lose access to his account if a defined order cancellation rate was exceeded or if he had been reported for ‘problematic behaviour’.

Comment

There is scope to criticise this broad view of what legally constitutes a subordinate relationship.

1. The Social Chamber's assessment of Uber's activity appears to be very far removed from how it operates in reality. This is despite the fact that this new and rapidly growing sector of digital networking has been recognised by the legislature, which has adopted several measures specific to the sector.

2. It identifies a number of elements that are characteristic of and essential to the very functioning of digital platforms and necessary for the successful completion of their connecting activity as indications of legal subordination. These elements are not intended to control drivers’ activity, but to allow for connection with end users and for the execution of the ride service.

3. It deliberately refuses to take into account the evidence that indicates drivers are not paid a salary. It also ignores the freedom self-employed workers enjoy on digital platforms, which is incompatible with employee status: in France, what employee can decide when and for how long he or she wants to work? What employee can work with competing companies simultaneously? What employee can refuse to carry out a task?

According to the Social Chamber, a self-employed person is a person who has:

‘ the possibility of building up his/her own clientele, the freedom to set his/her rates and the freedom to define the conditions for the performance of his/her service’.

This definition is clearly restrictive and contradicts the legal definition of self-employed workers on digital platforms established in 2016 according to which ‘the platform determines the characteristics of the service provided or the good sold and sets its price’.

Moreover, in order to justify the classification of Uber’s arrangements as employment contracts, the Social Chamber’s decision deliberately disregards the rules of commercial law, which provide that the principal has a power of control and even of sanction. In this situation the control and sanction function exercised by Uber is by its nature limited to proper performance of the commercial service and cannot constitute a situation of permanent legal subordination.

Does this mean that all self-employed workers on digital platforms or even at Uber are employees? The answer is definitely no. This assessment must necessarily be made by the judge on a case-by-case basis, with regard to the factual situation in which the self-employed worker was placed as an individual vis-à-vis the platform.

The law governing the relationship between ‘matchmaking’ (or peer-to-peer) platforms and self-employed workers is therefore not set in stone, but is still in the process of being constructed. Moreover, the day after the Court of Cassation ruling, the Minister of Labour announced the creation of a task force to devise new rules to promote the freedom of and protection for self-employed workers, noting that the vast majority of them wish to remain self-employed.

To be continued...