The Regulatory Challenges of Uberizationn in China: Classifying Ride-hailing Drivers

Abstract

Like many other countries, the digitalisation of the Chinese economy arising from swift advances in information and communication technology has attracted substantial policy attention. China’s own ‘Industry 4.0’ is taking place against the backdrop of deep structural economic reforms that involve a fundamental shift from an export-led, manufacturing growth strategy to a domestic consumption-driven and service economy. The government has strongly encouraged the generation of new jobs through ‘mass entrepreneurship and innovation’ and the emergence of ‘new market entities’. New business models, production processes, and work organisation arising from the digitalisation push in China have posed challenges for a labour regulatory framework that has already experienced dramatic transformations in recent decades. An emergent group of workers in the growing ‘gig economy’ or ‘sharing economy’ are those carrying out various types of services through online platforms, such as ‘crowdwork’ and ‘work-on-demand’ via mobile applications such as Uber, Lyft, Task Rabbit, Upwork, and Amazon’s Mechanical Turk. As observed in other jurisdictions, a contentious issue is the legal classification of workers’ statuses: are they deemed as ‘employees’ or self-employed contractors? Although this is not a new question from the perspective of labour law, the novel aspect of regulating digital work is arguably the role and function of online digital platforms in the employment relationship or other forms of contractual relationships, and accordingly, the material conditions and rights that these workers are entitled to.This paper aims to understand how Chinese courts have so far addressed the legal classification of drivers working in platform-based ride-hailing services, in the context of unclear legislative and policy guidance. This sector has experienced dramatic expansion in China, with the meteoric rise of local market leaders such as Didi and the entry of international competitors such as Uber. The nature of these drivers’ relationship with the companies that own the platforms has found its way into a growing number of court cases in recent years. In this paper, I analyse a cross-section of 20 cases from 2013 to 2016 brought before the local people’s courts in several large Chinese cities. These cases raise multifaceted issues concerning the existence of an employment relationship, liability over traffic accidents, insurance claims for repairs, and the inclusion of drivers’ income in divorce settlements. Analysing the different types of disputes can help shed light on the type and extent of legal obligations of platform-based companies and the rights of drivers. Despite the presence of some basic criteria in Chinese labour law for determining an employment relationship, there is considerable uncertainty and inconsistency in the application of such criteria in practice, especially across the variety of claims involving these drivers. This inconsistency may ultimately be resolved by a new opinion issued by the Ministry of Transport and other departments in July 2016, which will allow these companies to legally operate through a licensing system and abide by certain rules that include the conclusion of labour contracts with its drivers. Nevertheless, this continues to be a highly contentious and hotly debated issue at the time of writing.