Labour Law Will Have To Address Gaps In Uber, Ola Relationships With Drivers

Ola and Uber Cabs in Delhi. (Sushil Kumar/Hindustan Times via Getty Images)
  • Our regulators have wrongly focused too much on fare regulation, and too little on what the nature of the contract should be between app-based taxi services and their drivers.

    The aim should not be to impose heavy regulation on fledgling sectors, but to provide a modicum of fairness in the job market.

The molestation of a sleepy Ola passenger enroute to the Bengaluru airport on 1 June should throw the spotlight on a new job sector, where regulation is either too restrictive, or too loose. While the offending cabbie has been arrested and the Ola management has claimed “zero tolerance” for such behaviour, adding, for good measure, that the “safety of customers is our top priority”, the reality is that neither Ola nor Uber can be sued by passengers for such incidents. Reason: cab drivers are not employees of the app-based taxi hailing services. They are supposed to be self-employed persons who have merely chosen to plug themselves on to these apps, and they pay for this privilege by giving the company a cut from their fare earnings.

The problem with recently-attempted regulation of such services is that the focus has been more on controlling fares than in defining the real status of the business or the drivers who run these cabs.

The gap in the law affects both parties: while the aggregators have little control over how their drivers behave (they can blacklist them, or delink them from their apps, but not much more), the latter have little bargaining power with the companies over incomes or service conditions, and, therefore, have little reason to abide by the norms set by them. Neither the aggregators nor their drivers have leverage over the other. Even though some drivers have been trying to organise themselves into informal unions, beyond inconveniencing regular customers, they have not made much headway.


The modern economy has seen regular forms of employment contract, and flexible forms and self-employment expansion – providing both a wider range of services for customers, and new earning opportunities for people. What is missing is stability in employment – something humans have always yearned for. When 23 lakh people apply for a peon’s job in Uttar Pradesh, it does not mean that so many people have no sources of income, but that many of them may be hankering after defined service conditions and job security.

Our labour laws protect those who are already well protected, but offer not a figleaf of stability to those slaving away in an Uber or Ola, spending hours with nothing but an app (or a radio) for company. In such work conditions, it is not surprising that you will get drivers who turn rogue.

Our regulators have wrongly focused too much on fare regulation, and too little on what the nature of the contract should be between app-based taxi services and their “contractors,” ie, drivers.


A caveat: such vibrant sectors should be regulated lightly, and not made unviable through the prescription of job protection laws that can kill those very jobs. But, surely, there is a case for defining what the work conditions can be without destroying the flexible nature of these jobs, what the obligations of the companies are to these drivers, and what the counter-obligations are of these “workers” to the companies they are contracted to, and the customers they are supposed to serve. While there are devices like driver rating and customer rating on these apps, this kind of user-generated rating cannot fill the gaps in the law.

In Britain, a panel headed by Matthew Taylor, adviser to former prime minister Tony Blair, authored a report called “Good Work”, which essentially studied the changes in the modern labour market, and how power is shifting away from workers to companies, leading to much unfairness in work conditions.

The Taylor report also looked closely at Uber/Ola type of employment, and came out on the side of defining them as workers, even while retaining the flexibility of employment terms on both sides. In particular, it has sought to relabel the drivers as “dependent contractors”, which would make them employees – without actually being employees.


In the absence of legislation, the courts have been moving into fill the vacuum. Last year, a British appellate tribunal ruled that Uber’s drivers were workers, and hence entitled to protection under minimum wage laws. The European Court of Justice, in another judgement, ruled that Uber is actually a transport services company, despite protestations from the latter that is it only a technology services company.

Clearly, given the pace of technological change, and the arrival of platform technologies, the law is unable to answer basic questions like who is a worker or what business a company is in. The courts are trying to fill in the blanks, but ultimately it is the law and regulation that need to do the heavy lifting.

Many questions arise with technology companies, which have blurred the borders between one kind of business and another. For example, is Uber in the taxi business or merely a platform to match demand for personal transportation with supply? Is Amazon an e-commerce player or merely the provider of a platform for buyers and sellers to do business with each other? In India, it pretends to be the latter, since it cannot do retail business on its own. Google and Facebook are as much in the grey zone as Uber, Ola and Amazon. They now receive more advertising revenues than most media companies, but they refuse to classify themselves as media companies, subject to media-related norms and responsibilities for content.


Technology is making nonsense of the law as it now exists. We now need a full-time expert group to track technology and workplace changes, and keep recommending changes to the law to keep up with changes in business definitions and employment conditions. The aim should not be to impose heavy regulation on fledgling sectors, but to provide a modicum of fairness in the job market.

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