Labor Court Hands Down First Ruling against Transportation App

A well-known transportation application was sentenced by the Argentine National Labor Court in a case brought by one of its associated drivers with whom it had a standing independent contractor agreement for four months. Under the contract, the driver was required to bill the Company for a percentage of the fares he collected. The dispute began with the driver’s formal request to the Company to be registered as an employee. The Company denied the request, and, in turn, the driver filed for constructive termination and initiated legal action.

During the proceedings, the Company acknowledged the existence of the contract. However, it contended that its nature was that of an independent contractor agreement and not an employment contract. The Company also contended, among other things, that (i) the driver used his own vehicle, (ii) was responsible for its maintenance, (iii) was not required to follow orders from any member of the Company, (iv) was not required to follow a work schedule, and (v) was the holder of a professional driver’s license, independently from the Company, authorizing him to transport passengers. At all times, the Company highlighted that it was an intermediary between passengers and drivers, based on supply and demand, through its platform.

The Court, however, emphasized that, under the Labor Contract Law, the provision of a service establishes an employment relationship, unless the specific circumstances, relationships or causes for the services prove otherwise. In its judgment, the Court held that the Company did not provide supporting evidence to demonstrate that the relationship between it and the driver was not a typical employment (under legal, economic, and technical subordination criteria). The existence of a commercial contractor agreement and the fact that the driver billed the Company for services rendered were not deemed relevant by the Court when weighted against the plaintiff’s claim (this responds to an Argentine labor law principle known as the “principle of primacy of reality”).

Thus, the Company was held by the Court to be the driver’s employer and awarded the driver the compensation provided by labor regulations in addition to pending vacation days, supplementary annual salary, and compensatory fines, among other monetary items. The Company’s chairman was held jointly and severally liable for damages under the terms of the General Law of Public Limited Corporations. The decision was appealed before the Argentine National Labor Appeals Court, and judgment is still pending. 

The legal system applicable to digital platform drivers is still an unresolved matter in Argentina since neither statutory nor case law have definitively closed disputes on the subject, with reasonable contentions being made on both sides.

The matter is so controversial in fact that a comparative law assessment of different countries demonstrates inconsistent case law and criteria, as the nature of these commercial ties renders it impossible to successfully pigeonhole them in any classic Labor Law devices. In Spanish case law, for example, there are recent Social Court judgments in both directions. For its part, the Supreme Court of the United Kingdom handed down a leading judgment in February this year in which it held that drivers should be considered as dependent workers and not independent self-employed contractors. The judgment applies only to a group of drivers who provided services in 2016 and were party to the dispute. However, it enables others to resort to the courts to claim vacation pay and minimum wage.

(“BJL c/ MSB y otros sobre despido,” Casefile No. 43,998/18, SD 39,351 of August 31, 2021)