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KAVITA V. UBER INDIA: DIVERGENCE OF LIABILITY AND EMPLOYMENT IN THE GIG-ECONOMY?

[Nidhi Agrawal and Sukarm Sharma are undergraduate students at National Law School of India University, Bangalore]


In the recent case of Kavita S. Sharma v. Uber India (“Kavita Sharma”) on 26 October 2022, the Thane District Consumer Forum reached a seminal decision - holding Uber liable for its drivers. This is sharply distinct from the current position of workers at major platforms such as Uber, Ola, Zomato, Swiggy etc. These giants have repeatedly clarified that the workers are merely ‘independent contractors’ and they merely offer technological and algorithm-based solutions to connect the supply and the demand in the market. Since 2020, a writ petition filed by the Indian Federation of App-Based Transport Workers (“IFAT”) is pending before the Supreme Court (“Court”)- on declaring Uber/Ola workers as employees so as to provide them with various social security benefits, including minimum wages. While Uber has managed to keep its drivers as independent contractors and not employees in India, this position has been challenged throughout the world. In this piece, we attempt to analyse the implications of this decision. To this end, we first briefly explain the decision and its reasoning. Secondly, we argue that this decision separated vicarious liability from employment in gig platforms - in effect making the platforms liable for the acts of their agents without formally holding them as employees with its concomitant social benefit schemes. Thirdly, we examine how the Consumer Protection Act 2019 (“CPA”) and its rules may be utilized to hold the platforms liable for its workers, even if they fall outside the contours of a formal employer-employee relationship.


Background of the Decision


In Kavita Sharma, the facts were simple - an Uber driver had been negligent in his conduct, causing its passenger to miss his flight. The passenger consequently sued Uber for deficiency in service under the CPA. Uber, while acknowledging the negligent conduct of the driver, claimed immunity by pleading that the partner drivers were “independent third party contractors who are not employed by Uber” (para 9 in the judgement.). Uber’s rejoinder therefore, mirrored its global position of considering the drivers as third party contractors and consequently attempted to evade liability for the driver’s conduct.


Interestingly, and perhaps seminally, this argument was rejected by the forum. The forum held Uber liable because “the third party contractor (driver) is appointed and managed by the opposite party (Uber) for providing services to the complainant(para 16 in the judgement). The reasoning of the court seems to be based on the degree of control and the appointment procedure; Uber can be held liable for the acts of its agents (i.e., its drivers). In order to ascertain this, the forum highlighted the degree of control exercised by Uber, which is more than a mere facilitator. Three broad factors considered by the court to arrive at this conclusion can be culled out to be (i) the right to determine the total fare, over which the driver has no say, (ii) the right to charge additional amounts in excess of the original agreement, based on the additional services by the driver (such as additional pickups), and (iii) the consideration is not paid to the driver, instead, it is paid to Uber, which then pays the drivers.


This holding has consequently received strong media attention (some examples are here and here), considering its potential impact on the status of gig workers. The judgment, despite holding Uber liable for the acts of the driver, makes no mention of an employer-employee relationship, nor does it delve into the question of social security. In that light, the implications of the Court’s ruling have been discussed in the following segment of this paper.


Platforms Liable for Gig-Workers?


It is pertinent to remember, that the question of Gig workers, is primarily relevant for two purposes - (i) whether the employer would be liable for the acts of the employee and (ii) would the employer be liable to provide social security and other benefits to the employees. Typically, both of these go hand in hand. In an employer-employee relationship, the employer is liable for the acts of the third party and is also responsible to provide the social security benefits. In cases of independent contractors, the hirer is not liable for the acts of his agent, nor is the agent eligible for most statutory benefit schemes.


Big-techs like Uber, Ola, Amazon etc. naturally prefer to keep its workers as independent contractors, because it provides the twin benefit of (i) non-payment of social security and (ii) no liability for the acts of its drivers. For example, in Govind Prasad Sharma v. Board of Revenue, the court held that an agent cannot be held liable for the acts of an independent contractor, except in cases of clear bad faith or collusion with the employer. The district forum however, seems to have ignored the twin nature of employer-liability. In the instant case, the court only ruled on the question of liability. It did not hold that Uber was an employer, quite to the contrary, it continued to refer to the drivers as “third party contractors” (paras 13 & 16 in the judgement).


This leads to a confusing situation - where you’re liable for workers, without the workers being ‘employees’. While it may be debatable if Uber drivers are indeed independent contractors, the court has shown no hesitation in designating them as such. The decision then, seems to go against established principles of vicarious liability and Indian jurisprudence on it (Ram Singh v. Union Territory of Chandigarh, Govind Prasad Sharma v. Board of Revenue.) Intuitively as well, it seems unreasonable to penalize the hirer for independent contractors whom the hirer cannot supervise or control.


Intermediary Liability under the Consumer Protection Act


One potential defense for this holding by the district court - and perhaps a key solution going forward for consumers in the Gig Economy, could be the width of CPA, through which the district forum derives its jurisdiction. CPA provides instances in which an intermediary may be liable for defective goods or deficiencies in services. Moreover, under the CPA E-Commerce Rules 2020. Uber would be a ‘marketplace e-commerce entity’ under Rule 3(g), which defines it as: “an e-commerce entity which provides an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers.” This definition would include Uber, Ola, Amazon and other platforms which claim to merely provide technological solutions. Therefore, Uber, and other platforms would consequently be governed by the E-Commerce Rules, which define the scope of their liability as platforms.


Rules 4 and 5 of the 2020 E-Commerce Rules provide a description of cases where such platforms will not be able to claim immunity as an intermediary under Section 79 of the IT Act. Put simply, this means that if there is a breach of duty by an intermediary meeting the requirements of Rule 4 or 5, the platform can be held liable without there being an employer-employee relationship between the platform and the worker. Although the forum here did not explicitly refer to the E-commerce rules, this seems to be the only justifiable defence to holding Uber liable while also not considering the workers as employees.


This is buttressed by other consumer fora decisions where an intermediary has been held liable through creative interpretations. For example, in Amazon Sellers v. Vishwajit Tapia, Amazon was held liable for manufacturing defects despite being an intermediary, with the Punjab CDRC considering Amazon more than a “mere intermediary” (para19 in the judgement). The reason for the same was that “Amazon is not a neutral or passive, instead it optimizes, promotes and offers for sale and its duties are in the nature of pro-activeness.” (para18 in the judgement). Therefore, it held that an active intermediary could be held liable regardless of no vicarious liability. Similar decisions were given in Amazon Sellers v. Gopal Krishnan and Vadiraja Rao v Flipkart. The rationale is, that under the CPA, the provision of a good or a service by an intermediary can also be used to challenge the intermediary/aggregator such as Amazon, Ola, Uber etc if it plays an active role in the provision of the good/service, making it more than a mere intermediary. Here, the holding of the court in relation to Uber’s control over the driver hints towards a similarly active intermediary role, since a mere technological intermediary would not exercise such a high degree of control relating to booking, consideration etc.


Therefore, through the CPA, major aggregators like Uber, Ola, Zomato etc may be held liable for the acts of their independent contractors, despite them not being deemed as employees. This could open up the big-tech to the liability aspect of employment, even if they do not have to provide social security benefits. While this decision may not be a big victory for Uber workers, who are still not eligible for employee benefits, it is a step forward for consumers. Now, it appears that platforms may be sued for acts of the gig workers, something that the leading platforms, especially Uber, were keen to prevent.


Conclusion and The Way Forward


In this post, we have examined how the current decision is a rather creative divergence from the existing jurisprudence where Uber was neither liable for its employees' acts, nor responsible to provide them social security/minimum wages. While the forum did not venture so far as to make the drivers employees, it held Uber liable for its employees. This is still a major breakthrough - simply because it opens up the major platforms (which are marketplace or inventory e-commerce entities under the CPA) to liability for the acts of its ‘independent’ contractors. This might ensure a great scrutiny in the employment and service practices of the big-tech


Regardless, merely ensure that the platforms are liable for their workers is merely a half measure, a more holistic mechanism would be to provide the workers the status of employees. Countries throughout the world have been moving towards formally designating the platform workers as ‘employees’. Most recently, the UK, Netherlands and the New Zealand courts have held that uber drivers are indeed employees. The benefit of the same would be that aside from holding the platforms vicariously liable, they would also have to provide the employees various social security benefits such as minimum wages, insurance etc. Therefore, while imputing liability is a step forward, there remains much to do in terms of the regulation of the gig-economy.


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