São Paulo Labor Judge Rules Uber Must Pay Full Employee Benefits to Drivers

RIO DE JANEIRO, BRAZIL – A first instance Labor Court judge in São Paulo partially granted a petition that recognizes a formal employment link between drivers and Uber. Judge Raquel Marcos Simões analyzed the statutory requirements for defining the employment relationship and ruled that the company must pay drivers the mandatory employee benefits such as advance notice, a 13th-month salary, vacation 1/3 bonus, and the FGTS contributions, plus 40 percent indemnity upon termination, for drivers who worked in the period between June 2016 and February 2018.

In the ruling, the judge stresses that Uber is not merely a technology company, given that no revenue is earned from the license to use its software, which is provided free of charge to both customers and drivers. “Considering that there is no compensation in the defendant’s business for the license to use the app, one must question the nature of Uber’s income, which is charged to drivers,” says the judge’s decision.

It was also noted that Uber determines the details of the relationship between passengers and drivers, thereby not only acting as an intermediary but also defining the value of the service provided – and it may “unilaterally alter the service fee at any time and at its sole discretion”.

According to the judge, the relationship between Uber and drivers involved factors such as personhood, regularity, salary, and subordination, thereby typifying the employment relationship defined by the Consolidated Labor Law (CLT).

In a note, Uber clarified that it will appeal the decision, “which is by a lower court and represents an isolated understanding, contrary to that of several cases already judged by the Regional Labor Appellate Court of São Paulo since 2017.

The company also stated that “the Brazilian courts have been building up solid case law precedent confirming the fact that there is no employment relationship between Uber and its partner drivers, pointing out the inexistence of salary, regularity, personhood and subordination, requirements that would typify the employment relationship.”

Regarding the employment relationship between the company and drivers, Uber states that partner drivers are neither employees nor provide services to Uber, since they can freely choose the days and times they use the app, whether or not they accept trips and, even after doing so, they may still cancel them.

Source: Exame