With the promotion of the national strategy of “Internet+” and the popularity of Internet technology, the sharing economy has become the new norm of China’s macro economy and penetrated into all aspects of life. In this process, a large number of new businesses that operate using APPs have emerged and developed very rapidly, especially in the industry of tailored taxi service and door-to-door service. For instance, “Didi”, a taxi-hailing APP, is now operating its business in more than 400 cities in China, with 300 million users registered. This new business model has greatly changed the traditional market and promotes the development of economy. However, on the other hand, these new businesses also encounter many difficult problems. One is the employment issue between the new businesses and their service staff such as drivers providing taxi hailing services. As the new businesses often do not have employment contracts with the service staff, or make social insurance contributions for them, labor disputes have happened frequently and whether an employment relationship exists is a primary issue in most cases.
In practice, labor arbitrators and judges always consider the three elements provided by the Circular as stated in Paragraph II to determine whether the driver is an employee or an independent contractor. For example, Mr. Liu was a salesman of a sales company. His flexible working hours enabled him to drive between clients frequently. In order to make more money, he registered himself on a taxi-hailing APP as a part-time driver. He realized that he could make more money by being a tailored taxi driver than being a salesman, so he quit his job at the sales company and requested confirmation of his employment relationship with the taxi-hailing APP company. However, the labor arbitrator held that no employment relationship existed between Mr. Liu and the taxi-hailing APP company, because Mr. Liu only uploaded the photocopies of his driver license and car license to the taxi-hailing APP to become a driver, and was never under the management of the company with his remuneration paid through Wechat. Another case is about Mr. Wang who found a job in a taxi-hailing APP company through a recruitment advertisement. The advertisement said that the remuneration for a driver included base salary, service award, security award, full attendance award, overtime allowance, and parking allowance. In addition, the driver must work six days per week and be on line from 6:30 to 9:00 AM and from 17:30 to 22:00 PM every working day. Then in a wage dispute between Mr. Wang and the APP company, the labor arbitrator held that the relationship between the two parties met the basic characteristics of an employment relationship and therefore supported Mr. Wang’s claims for the payment of wage. The cases above reflect the application of the determination rules of employment relationships, however, the Circular was released about ten years ago and the market has greatly changed. The employment mode of the new businesses such as APP Companies is also quite different from that of traditional businesses.
Therefore, it is questionable whether the rules provided by the Circular should be used to determine an employment relationship in the labor disputes between new businesses and the service staff.
In order to better regulate, manage and guide the tailored taxi service in China, the Ministry of Transport and other six ministries issued the Interim Administration Measures for Network Booking of Taxi Business Services (hereinafter referred to as the “Interim Measures”) in July 2016. The Interim Measures expressly require taxi-hailing APP Companies to sign employment contracts or other agreements with drivers according to drivers’ working hours, service frequency, and etc. This means the taxi-hailing APP Companies are not mandatorily required to establish employment relationships with the drivers, and it would still be a difficult issue to determine whether a driver is an employee or an independent contractor when there is no employment contract.