What has happened so far
In 2019, the Compensation Office of the Canton of Zurich determined for the drivers of UberX, UberBlack, UberVan and UberGreen that they were engaged in dependent employment for Uber B.V. based in Amsterdam. The Compensation Office subsequently levied the old-age and survivors’ insurance (OASI) contributions for 2014 on Uber Switzerland GmbH, which is based in Zurich. Neither the Compensation Office nor the two Uber companies (Uber B.V. and Uber Switzerland GmbH) agreed with the decision of the Cantonal Insurance Court of Zurich, which was subsequently appealed to. The Federal Supreme Court therefore had to examine whether Uber B.V. was subject to the OASI obligation.
In the parallel proceedings, in which the relationship between UberPop drivers and Rasier-Operations B.V. - a subsidiary of Uber B.V. - had to be assessed, the question of the determination of the contribution status also arose.
Uber drivers are not self-employed
In its decisions published on 22 March 2023, the Federal Supreme Court decided that Uber's drivers are engaged in paid employment (decisions 9C_70/2022 and 9C_71/2022 of 16 February 2023, intended for official publication). In this regard, the court first reiterated once again that the question of whether the individual case is a self-employed or dependent employment is not assessed on the legal nature of the contractual relationship between the parties. Rather, the economic circumstances are decisive (cons. 6.2).
The Federal Supreme Court weighed the various characteristics that speak in favor of self-employment or dependent employment, whereby the characteristics of dependent employment clearly dominated in this case (cons. 7.5):
- The Uber companies have the right to issue instructions to the drivers, because the behavioral requests formulated as recommendations constitute binding instructions. Uber can monitor compliance with these instructions via an app and even deny the drivers access to Uber services if the drivers' rating is poor. Numerous regulations further restrict the drivers’ freedom of decision, namely in the choice of vehicle and during the transport service (cons. 7.2 ff.).
- The drivers are also subordinate to the Uber companies in essential areas: There is no substantial freedom in pricing, especially since Uber can unilaterally adjust the fee. It is therefore not a price negotiated between equal parties. The evaluation system also primarily pursues the purpose of enforcing uniform standards that serve customer satisfaction as well as ensuring quality. Furthermore, Uber monitors the drivers by means of GPS. Moreover, since a driver only learns the destination from the passenger herself or from the app when the passenger accepts a ride, this makes it impossible to accept only financially rewarding rides and to freely schedule the rides (cons. 7.3 ff.).
- Finally, the drivers also lack the entrepreneurial risk. Buying and maintaining a vehicle is not a significant investment. In addition, Uber provides the IT infrastructure and software in the form of the Uber app. Furthermore, the collection and bad debt risk borne by the driver is low. Finally, the drivers do not act in their own name, because only Uber acts in dealing with the passenger (cons. 7.4 ff.).
An individual examination of the relationship with Uber must therefore only be carried out in the case of drivers who employ their own staff or conduct the Uber business via a legal entity (cons. 8 ff.).
Secondly, Uber B.V. is to be regarded as the employer of the typical UberX, UberBlack, UberVan and Uber-Green drivers. Based on the agreed contractual provisions, the company has such extensive rights to issue instructions that the drivers are significantly dependent on the respective company in terms of business management and organization (cons. 9 ff.).
Finally, the Federal Supreme Court held that the permanent establishment was the driver's contact point, which was the address of Uber Switzerland GmbH. Uber had power of disposal over the permanent facilities there, and the business activity also took place there, at least in part. Irrespective of the nationality of the drivers, Uber B.V. and Uber Switzerland GmbH are therefore liable for OASI contributions as employers with a permanent establishment in Switzerland (cons. 10 ff.).
The two companies must now hand over to the Compensation Office the documents containing the wages paid to the drivers so that the Compensation Office can calculate the OASI contributions (cons. 11.7).
The Federal Supreme Court also ruled in the same way in the parallel proceedings: Rasier Operations B.V. is to be considered as the employer of UberPop drivers (decisions 9C_75/2022 and 9C_76/2022, not yet published).
Previous Uber decisions: Employment relationship between Uber drivers working in Geneva and Uber B.V.
Already at the end of May 2022, the Federal Supreme Court decided that Uber drivers in the canton of Geneva had entered into an employment relationship with Uber B. V. (decision 2C_34/2021 of 30 May 2022). Uber B.V. is thus obliged to comply with the legal obligations and the working conditions customary in the industry.
On the other hand, the Federal Supreme Court ruled while couriers of the food delivery service Uber Eats were to be considered employees, but that they did not have a contract for the hiring of staff with the respective restaurants (decision 2C_575/2020 of 30 May 2022).
Consequence for providers of comparable services
There are numerous service companies with Uber-like business models. Due to the now consolidated federal court case law, it makes sense for these companies to review their contracts and remuneration or compensation systems and adapt them to the new legal circumstances.
Our labour law experts will be happy to assist you with questions on this and other labour law topics. We look forward to hearing from you.