Social Security Court Holds that Uber-Drivers Are Employees
In a series of judgments dated December 20, 2021, the Social Security Court of the Canton of Zurich held, with reference to the situation in 2014, that the activity of Uber drivers should be classified as employment.
Uber, on the other hand, sees itself as a mere intermediary between passengers and drivers, because Uber drivers are free to decide whether or not to offer rides, and at what times. Accordingly, Uber claimed that they were not entitled to social security contributions or vacation pay.
Case law holds that the question of whether a person works in an employed or a self-employed capacity is determined not by the contractual relationship between the parties involved, but by the economic circumstances. Relationships under civil law do offer clues as to how the social security situation should be classified, but are not decisive.
Anyone who relies on their employer for the organization of their work and bears no business risks is to be classified as employed. Whether or not these requirements are met depends on the specific circumstances of each individual case.
Anyone who take part in economic trade through the application of labor and capital and are free to organize their activity as they see fit is to be classified as self-employed. According to the Swiss Federal Court, significant investments, own business premises and the employment of personnel are characteristic of the existence of self-employment. Working for multiple customers on one’s own behalf is also indicative of self-employment. The determining factor is whether someone actually works for multiple customers, not whether it would be legally permissible for them to do so (in the absence of any non-compete obligation).
There is an assumption of employment where the conventional elements of an employment contract are present and the person performing the work is incorporated into the employer’s business. Evidence of such incorporation are working to a work schedule, being under a duty to account for the work performed and using the employer’s infrastructure.
The key question is whether the persons working for a company are in a so-called “relationship of subordination” and whether the company has the right to issue instructions.
For Uber, the situation is (or was at the material point in time) that the relevant contracts did not contain any sections about the issuance of instructions or defining the position of employees within the company; in fact, they emphasized the independence of the drivers. In the view of the Social Security Court, however, certain provisions in those contracts, under closer examination, pointed in a different direction. Although Uber works by making mere “recommendations” to its drivers, these recommendations are enforced against the drivers like instructions, using control and evaluation mechanisms that involve the passengers.
Even though the Court conceded that some criteria for employment were not met (e.g., a non-compete obligation or mandatory attendance), the pronounced relationship of subordination and the concealed authority to give instructions would prevail. Furthermore, the Court held that, by virtue of the specific circumstances, drivers were in a relationship of both economic and legal dependence on Uber, so they should be classified overall as employees.
Clarification is still due on this issue from the Swiss Federal Supreme Court, as are clear guidelines as to how Uber and comparable platform operators can structure their business model without being legally classified as employers for social security purposes.