Transportation APP: Self Employment or Employment Relationship?

by Fernando Munhoz

The Regional Labor Court of the 3rd Region recognized in July that there is an employment relationship between the driver and the transportation app, basing this argument on the fact that the company “selects its drivers; establishes  rules, even when it comes to the cars they must use when providing the service; receives complaints from users and decides about them; is allowed to reduce the ride fare, which directly impacts on the driver´s remuneration; in other words, the company dominates the entire system”.

That´s one more decision among many cases that have arisen since this new service providing method started its operation in Brazil. Given the fast modernization of relations and interactions among companies, collaborators and clients, it´s natural to see debates arising, even in the Judiciary, regarding concepts and job modalities that already exist.

On one hand, a great amount of drivers claims that they work under all determinant elements that characterize an employment relationship, specially the juridical subordination, because they need the app to develop their activities, and they are subject to the company´s analysis, which evaluates their performance as a requirement to develop the activity.

On the other hand, the companies contest the existence of an employment relationship since they just intermediate the process to attract clients. It´s up to the driver the choice of schedule and work days, as well as the rides they are going to get, and which they can also refuse. In this sense, the Regional Labor Court of the 15th Region understood in February that it´s clear the non-characterization of the requisites, given that more than one person can drive the same car by just having a new registration in the app.

The Consolidation of Brazilian Labor Laws (CLT) determines that, in order to characterize an employment relationship, some conditions have to be proved. For example, demonstrate that a natural person provides a service on a non-sporadic basis, under the dependency of an employer and wage payment, in the terms of article 3rd from the CLT – Consolidation of Brazilian Labor Laws. It´s important to highlight that the Labor Justice considers the reality of the relations before making a decision, and not what is eventually in contract. So, the most recent decisions are based on what effectively happens among drivers, the app company owner and clients.

Consequently, while the Superior Courts don´t reach an agreement or eventually the government doesn´t implement some regulations, the judges are the ones who should evaluate the fact conditions. The existence of another income source, the completion of working hours every days of the week with a minimum quantity of hours to be accomplished regularly (even when not required), and the eventual contractor´s interference to validate or not the drivers activities are examples of some aspects to be observed to justify a decision.

In this sense, the 2nd Section of the Superior Court of Justice judged a case in September recognizing that the drivers who use the Uber app to provide transportation services do not have an employment relationship with the company, determining that those conflicts shall be addressed to the ordinary justice in order to be solved.

Although this is not a binding decision, it´s an important precedent of the Superior Court. This subject is yet to be decided and agreed by the judicial system, and eventually through legislation, which will provide more juridical security to the drivers and companies that provide those services.

Fernando Munhoz is an expert in labor law in collaboration with João Guilherme Rossi at Almeida Prado & Hoffmann Advogados Associados office.