What Uber’s class action lawsuit may mean for those in South Africa’s gig economy

Uber SA may face a class action lawsuit in the Labour Court which is presently being prepared by a Johannesburg based law firm on behalf of South African Uber drivers. This follows a decision passed down by the UK Supreme Court on 19 February 2021 which ruled in favour of granting employees’ rights to Uber drivers, previously classified as independent contractors.

Currently, Uber Head Office in Netherlands (“Uber BV”) and Uber SA’s business model is formulated within the framework of the world’s emerging gig economy, propelled by the fourth industrial revolution, and which has blurred the boundaries between physical, digital, and biological industries. As such, Uber drivers, as other workers in the gig economy, cannot be readily classified under traditional concepts of employment.

In 2016, a case of unfair dismissal against Uber SA was heard in the CCMA, in which the question before the Commissioner was whether drivers of Uber could be classified as employees of Uber SA, despite not meeting the usual characteristics of employment. In a positive outcome, the Commissioner affirmed the drivers as employees of Uber SA, as defined in the Labour Relations Act.

This decision, however, was overturned by the Labour Court on review, which held that the Commissioner erred by failing to distinguish between Uber SA and Uber BV as distinct legal entities. The Court found that Uber SA operates purely as an administrative function providing support to Uber drivers in South Africa, and there existed no contractual relationship between drivers and Uber SA, but rather Uber BV. In addition, the Court found that the material aspects of the drivers’ case pertained to Uber BV and not Uber SA. This was considered a fatal flaw as the applicants had not joined Uber BV to the proceedings.

Further, the Court held that if this critical distinction was maintained the Commissioner would have found that the drivers had failed to establish the existence of an employment relationship with Uber SA. As such, the drivers had no right to refer the unfair dismissal against Uber SA to the CCMA. The Labour Court, however, noted that this left the question of whether drivers are employees of Uber BV undecided.

In coming to its decision, the United Kingdom Supreme Court reasoned that the drivers are burdened with inherently unequal bargaining power. The worker agreement is presented to drivers containing terms which drivers must accept in order to use, or continue to use, the Uber application, with no reasonable possibility to negotiate terms. The Court noted that the very reason statutory protection is enacted is to balance this unequal bargaining power. As such, it held that it would be inconsistent with the purpose of the legislation to treat the contract as the starting point in deciding the matter. Rather, the Court found that a purposive approach which seeks to look beyond the agreement entered into between the parties was necessary to give effect to the purpose of the legislation, which is to protect ‘workers’, as evident by the fact that it is phrased in such wide terms.

Although a decision of a foreign jurisdiction, there exist many similarities between UK and South African labour legislation. Accordingly, drivers will return to the Labour Court in the hopes to secure a similar outcome. Whether the Labour Court will follow similar purposive means of interpretation remains to be seen.  

When instituted, this matter has the potential to affect over 20 000 Uber drivers in South Africa. Dependent on the outcome, drivers could be afforded rights of increased access to healthcare, overtime pay and holiday pay, amongst other benefits. In addition, companies will have to ensure that they comply with employment regulations as set out by the Basic Conditions of Employment Act and Labour Relations Act.

For more information relating to Labour Law and companies or workers in the gig economy kindly email us on info@hjw.co.za.

Written by Dyllon Nicholls – Candidate Attorney

This article is provided for informational purposes only and should not be substituted for legal advice on any specific matter. Any opinions expressed herein are subject to the law as at the time of writing and will change in accordance with any change in the law. We recommend that you contact HJW Attorneys at info@hjw.co.za directly for advice applicable to your specific matter.