Labor relationship on online platforms
time:2019-03-04 Source:The Supreme People's Court of The People's Republic of China  

Editor's Notes: In recent years, the internet and traditional industries have increasingly become integrated. A new and complicated type of labor dispute has risen to determine whether online platforms and their employees are in a labor relation.

Due to the flexibility and diversity of their employment models, there remain various possibilities in determining the two parties' legal relations and a labor relation are one of them. Under this circumstance, in order to protect the legitimate rights and interests of employees, judges should comprehensively consider the platforms' diverse models of employment, and simultaneously comprehend and apply them to the labor law. We should use the standard of subordination to conduct substantive review and determination of the existence of a labor relation between both parties.

This case is about the determination and judgment of the labor relation between the online express platform and its drivers in the context of the Internet Plus employment model. The author therefore has summarized the judging ideas and keynotes of such case.




FlashEx is an application platform that is operated by TongchengBiying Technology Co., Ltd. Li independently downloaded FlashExand and registered to be a driver. Since May 29, 2016, he started taking orders. On July 24, 2016, Li had a traffic accident during his work, which led to leg fracture.

He therefore filed a petition to the court to confirm the existence of a labor relation with the company from May 29, 2016 to March 30, 2017. The company argued that the two parties were in a cooperative relationship and claimed that it had already bought commercial insurance for Li and other drivers.

Li downloaded the FlashEx APP and registered to be a driver. He purchased the delivery vehicle by himself and offered service after getting an order. Li had no basic salary. 80 percent of the delivery income went into his own APP account; the remaining 20 percent to FlashEx.

The platform gave Li a badge of "FlashEx driver", on the back of which the serving procedure is specified. It had no restrictions on his amount of work, time logged in online or service area. However, there were specific regulations on the delivery time for each order, and fines for time out and damage to goods. Drivers were not allowed to serve other platforms at the same time.

FlashEx also bought commercial insurance for him. The insurance company paid Li's first medical bill but refused to claim the second surgical bill. After investigation, it was found that since May 29, 2016, he registered to be a driver and began to take orders until a traffic accident occurred on July 24, 2016. During this period, he had completed 410 orders, with an average of more than 200 per month, exceeding the average number of orders of all drivers on the platform; his weekly earnings ranged from 1189.2 yuan ($186) to 1717.2 yuan.

Grounds of decision The court holds that the nature of legal relationship shall be examined and confirmed based on facts and that the parties shall not exclude the application of labor law in the agreed manner.

FlashEx's operation model is to make profits through providing a mass of goods-transportation services. Thus, it is not an information service company, but rather a goods-transportation company. The role of the drivers is to provide transportation services so that the company can fulfill its contractual obligation to transport goods in the contract of goods transportation.

In this case, the company requested on the recruitment that drivers like Li should wear a badge during their service and follow the specific requirements of its serving procedure. During Li's period of work for FlashEx, he did not engage in any other work. His remuneration from FlashEx was his main labor income. Hence, Li was subordinate to the company and the two parties were in a labor relation.

The judgment therefore determined that there existed a labor relation between Li and the TongchengBiying Technology Co., Ltd. After the judgment, neither partyg has indicated whether they would appeal or not.



Key Notes 

1. Through the platform "FlashEX", the company not only gains the information of freight transportation need which was sent out to the FlashEX drivers, but also regulates the rights and duties of the freight transportation contract, including service standard, charging standard and so on, and actually organizes the whole freight delivery process.

In fact, the relationship of the freight transportation contract is formed between the platform company and the customers instead of the drivers. Therefore, the company is not an information service company, but rather a company engaged in freight transportation. The defense of the platform company that it only charges the brokerage fee and the relationship between the FlahsEX driver and the company is the brokerage contract relationship cannot be set up.

2. In accordance with the nature of Labor Law of the People's Republic of China,the two parties should not exclude the application of labor law through mutual agreements. One should start with the factum juridicum and base it on the relevant legal rules to decide the nature of the legal relationship between the two parties. If the nature of the legal relationship directs to labor relationship, the protocol to exclude the main rights of the workers made by employer through standard terms is void.

3. The relationship between the FlashEX drivers and the platform company in this case has the trait of subordination and complies with the labor relationship regulated by legal rules. The company manages and supervises the service process of the drivers and asks them to provide services according to the company's regulations and rules. The drivers delegate the company to provide the services. The fruit of labor belongs to the company. The labor provided by the driver is an integral part of the company's business. The earnings gained through flash express delivery are the main labor income of the driver.

4. The relationship between the two parties, possessing the characteristics of flexibility which can not hinder the determination of the relations, is different from traditional labor relationship.

Firstly, the FlashEX driver is free to decide whether to receive an order or not. But once he or she is registered as a driver and lives on this, he or she must earn a living by completing a certain amount of work. Therefore, from the perspective of every single flash express order, drivers have the right to decide whether to receive an order or not. But from the perspective of the whole trade, they do not have much choice autonomy.

Secondly, drivers can decide their own working hours and the company does not check attendance. If drivers want to keep their level of income, they do not have too much choice autonomy. The characteristic of flexible working hours itself does not exclude the existence of labor relationship.

Thirdly, drivers can decide using which means of transportation while the company does not offer them the labor tools. However, in this case, in the new employment mode in the Internet economy, the primary means of production is not the so-called means of transportation, but the information mastered by the platform operator via the internet. However, the drivers are not capable of providing the information and the technical means to gain the information. With the help of the control of information and its technical means, the platform company occupies the dominant position in the employment relationship with its drivers.

5. It is necessary to apply the labor law to protect the driver in this case. When the driver is injured in the process of working for the company, it is apparently not enough for the company to only offer business insurance.

The company benefits from the labor of the driver, so it should undertake the relevant legal and social responsibilities. If it was allowed to employ drivers at low cost, the company would lack in the initiative of preventing the employment risk and the positivity of adopting labor safety protection measures, which would result in the increase of social problems. Internet enterprises should not evade their legal and social responsibility just because they can now adopt new technical means and new business modes.

6. The court found that the driver had a labor relationship with the platform company, which did not mean all the drivers did. As a company operating with new technical means, the platform company can totally apply information technology to achieve legitimate operation and management. The court can not entirely deny the labor relationship due to the different situations between drivers.

7. The court should not deny offering relief of basic right to drivers just because the corresponding supporting system is not perfect. For example, in this case, the driver claims to determine the labor relationship in order to obtain the basic right of the treatment of industrial injury insurance.



Judging ideas 

First, we should take a comprehensive look on the diversity of the APP platform employment models and strengthen the judicial review of individual case facts. APP platforms have diverse models of employment, in which a large number of entities are involved and the nature of legal relationships has multiple possibilities.

Judicators should comprehend the existence of their differences, review new types of disputes from a fresh perspective, and proactively master the organizational structure of online platforms, their employment models and ways of management. They should focus on examining and analyzing individual case facts, case by case, to avoid generalization.

Second, judicators should make substantive determination of labor relations by the standard of subordination and avoid formalistic adherence to the contract. Some online platforms may sign untruthful cooperative agreements or unilateral statements with their employees.

Judicial reviews should not simply make judgments by the agreements, but should comprehensively consider the platform's management and control level of the employees, the income distribution method, the platform's control and supervision over the serving procedure, and the platform's management and punishment for customer complaints. Based on the above factors, judicators make substantive determination of the existence and degree of subordination to identify whether there is a labor relation between the platform and the employee.

Third, we should make equal judgment between protecting the legitimate rights and interests of employees and helping develop new types of economy. Many employees of online platforms drive the rise of the Internet industry in China. However, their labor safety and regulatory safeguard measures should not be missing; their personal and property security should also be fully considered.

Therefore, online platforms should shoulder the dual responsibilities to protect and manage their employees. At the same time, online platforms also create a large number of job opportunities and promote social and economic prosperity. Judicators should uphold the idea of supporting development, exploring new ways of legal remedies, adapting to the diversity of responsibility forms, and avoiding unfavorable demonstration effects caused by unbalanced interests of the judgment.

In addition, judicial advice, industry legal lectures and other relevant activities can attract the platforms' attention to raising the level of social security of their employees. We should use judicial power to promote the innovation of the social security mechanism for "basic life needs" and advance the healthy and orderly development of the online application platform industry.

Contact us
Mr. Deng Guangming, Assistant Prosecutor, Division Chief of International Cooperation, General Office
The People's Procuratorate of Guangxi Zhuang Autonomous Region
Tel: +86-771-5506175 E-mail:dmg2939@163.com
Address:3 Fengxiang Road, Nanning, Guangxi P.R. China