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Opinion | Ola, Uber drivers’ strike exposes the legal gaps in the aggregator business model

Considering the frequency of strikes, the legal ramification may only be to appreciate the legitimacy of drivers’ struggles and giving them their due recognition as a 'worker' under the law

November 04, 2018 / 08:22 PM IST
Cab aggregators Uber / Ola

Cab aggregators Uber / Ola

Puneet Shah | Sanchit Kapoor

The drivers of around 50,000 app-based cabs went on an indefinite strike in Mumbai since early last week under the banner of Maharashtra Rajya Rashtriya Kamgar Sangh, a union registered under the Trade Unions Act, 1926. Their demands include a minimum base fare and an increased per-km fee from cab aggregators.

The growing tension between cab aggregators and drivers has its roots in the constantly changing conditions relating to the incentive payments to these drivers, their work hours, the withdrawal of concession and privileges, to name a few. In order to examine the present situation from a legal perspective, we must first understand the nature of relationship that exist between a cab aggregator and a driver, and the genesis of their demands which led to the ongoing unrest.

Fundamentally, cab aggregators call themselves as technology companies having expertise to act as an interface between the consumers and the drivers. The drivers registered on their platform are known as ‘Driver Partners’ so as to bring in the element of micro-entrepreneurship and shy away from the responsibilities which an employer has towards its workers.

However, this in essence may construe to be a simple employer and worker relationship in terms of Industrial Disputes Act, 1947, where the driver (viz. a worker) is performing a ‘skilled’ work of driving a cab through which the cab aggregator (viz. an employer) is delivering its services to the end consumers and earn profits.


This is fundamentally different from the other aggregators in the market operating e-commerce platforms. The vendors selling their goods or services on e-commerce platforms have a direct contractual link with the consumers for goods and services they supply, and to decide their pricing terms. E-commerce platforms just showcase the products and services and facilitates the conclusion of trade between vendor and consumer through their tech-enabled platforms. Cab aggregators, on the other hand, have direct contractual links with consumers boarding these cabs.

The employer-worker relationship is also established on the fact that drivers are first interviewed and then recruited by cab aggregators to be eligible to be listed on their platform; cab aggregators fix the fare of the trip and do not allow the drivers to negotiate higher fares with the consumers; cab aggregators prescribe the route to be taken for the trip by the driver; cab aggregators impose restrictions on the drivers, whether disciplinary or otherwise; and cab aggregators handle complaints from consumers against drivers and impose penalties on the remuneration/incentives so earned by them.

Hence, by no stretch of imagination can we consider that there is a contractual relationship between the driver and the consumer, as it’s through the cab aggregator that the driver is put in contact with a passenger. Here, the driver cannot negotiate the fare of the trip and is obligated to accept trips strictly in accordance with the terms stipulated by the cab aggregator.

Few judicial precedents highlighting this issue from foreign jurisdictions may be helpful at this stage.

In Barbara Ann Berwick Vs UBER Technologies Inc., the labour court of California and in Mr Y Aslam Vs Uber BV & Others, the employment tribunal of London, both have held that cab aggregators are in essence functioning as an employer of the drivers so registered on their platform. In India also a writ petition was filed with the Delhi High Court in the matter of Delhi Commercial Driver Union Vs Union Of India & Others in the year 2017 where similar issues were raised. However, the petitioner withdrew the writ petition later with liberty to approach the appropriate government for making a reference under the Industrial Disputes Act, 1947. Thus, this issue currently remains pending judicial scrutiny and legislative examination.

Considering the frequency of strikes, the legal ramification may only be to appreciate the legitimacy of drivers’ struggles and giving them their due recognition as a ‘worker’ under the law. This will ensure that their basic rights to job security, paid leave, work timings and social security benefits are safeguarded.

A legislative vacuum should not result in a deadlock between the cab aggregators and drivers as it affects both of them in an irreparable manner. The government has to take into consideration the space in which these start-ups operates today. The start-ups in India are in their gestation period and lack of laws regulating these technology-enabled novel spaces must not hinder their growth. At the same time it must also not hamper the rights of people working for those start-ups.

Needless to mention that aggregation as a business model is a flavour of the season and once the regulatory vacuum in this space is filled with the desired legal framework, it may have to be replicated for other segments as well, such as food delivery, logistics and housekeeping services, to name a few.

It’s time for the government to act fast, because in this battle it is the entrepreneur, the worker and the consumer who is at the receiving end.

(Puneet Shah is partner and Sanchit Kapoor is associate at IC Universal Legal, Mumbai. Views are personal)

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first published: Nov 2, 2018 08:00 am
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