India: Gig Workers Engaged by Taxi Aggregators can be Considered “Employees” Under Indian Sexual Harassment Law

Authors: Avik Biswas, Ivana Chatterjee, Animay Singh

In a recent matter, the Karnataka High Court (“HC”), on 30 September 2024, examined a petition filed by a female customer seeking an inquiry into her sexual harassment complaint filed before a taxi aggregator’s Internal Committee (“IC”).

 

Background

The petitioner was sexually harassed during a ride in a taxi booked through the aggregator’s platform and had subsequently raised a complaint on the platform. However, she was dissatisfied by the remedial measures taken by the aggregator and filed a complaint under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”).

In response, the IC stated that its policy under the POSH Act did not allow non-employees to file a complaint. The IC also mentioned that it did not have the jurisdiction to take cognizance of her complaint as the drivers engaged by the aggregator were independent contractors and not its employees. While the petitioner pursued criminal action against the driver parallelly, the aggregator and its IC reiterated that they lacked the jurisdiction to take cognizance of her complaint under the POSH Act and also claimed that the driver in question was an impostor who was driving the vehicle without authorization. Based on this, the IC also argued that the driver could neither be considered an employee nor an independent contractor.

Aggrieved by this, the petitioner approached the HC claiming that the drivers of the aggregators are its employees and that the IC should take cognizance of her complaint under the POSH Act. The aggregator argued that since it entered into a subscription agreement with its drivers on a non-exclusive basis and given the fact that the drivers were free to determine their working hours, place of work, and availability on its platform, the control and supervision necessary to establish an employer-employee relationship did not exist.

 

Whether an IC under the POSH Act is subject to writ jurisdiction under the Constitution of India?

The HC noted that the POSH Act and the rules framed thereunder are considered a self-contained code enacted to create safe and secure workplaces for women. In light of certain specific obligations cast on aggregators to ensure the safety of the passengers using their platform, the HC observed that the statutory obligation on employers to constitute an IC under the POSH Act is a duty owed to the public at large. Additionally, the HC noted that sexual harassment constitutes a violation of various fundamental rights guaranteed to women under Articles 14, 15, 19(1)(g), and 21 of the Constitution of India and held that the duty cast on an IC to inquire into complaints of sexual harassment and take remedial measures are public duties. Based on this, the HC ruled that, in this case, the IC is subject to its writ jurisdiction under the Constitution of India.

 

Whether the aggregator’s drivers are ‘employees’ under the POSH Act?

The POSH Act inclusively defines the term ‘employee’[1] to include workers engaged on a contract basis, temporary workers, and any person employed at a workplace whether directly or through an agent or contractor. Further, the POSH Act also defines the ‘term’ employer[2] inclusively to mean any person responsible for the management, supervision, and control of a workplace and includes the persons or bodies responsible for the formulation and administration of organizational policies. Based on these provisions under the POSH Act, the HC observed that the above terms are defined to cover all possible modes of engaging a person as an employee at a workplace.

The HC held that the aggregator is an ‘employer’ under the POSH Act and proceeded to scrutinize the terms of the subscription agreement between the aggregator and its drivers to determine whether they are independent contractors or employees. The HC made the following observations in respect of the subscription agreement between the aggregators and its drivers:

• Drivers must have a device, either their own or one issued by the aggregator to use the platform. The aggregator has final say on the device’s installation, maintenance, repair, and other incidental matters.
• The responsibility to maintain the vehicle and costs associated with it are on the driver, who must also ensure that the vehicle’s registration and permits are renewed and updated at all times.
• Even though the contract for the cab service is solely between the driver and customer, service requests are allotted by the aggregator’s platform to its drivers, and they are prohibited from cancelling them unless there are exceptional circumstances in respect of which they have provided a justifiable explanation. Further, the drivers have no choice in selecting the customer, the drop location, or the fare being charged for the trip.
• A driver’s registration can be terminated by the aggregator without assigning any reasons.
• The aggregator’s terms require drivers to strictly follow norms relating to uniform, availability, behaviour, routes for trips, and driving speed.
• The receipt of payments, sharing of commissions, deductions from fees, changes in rates, payments of statutory dues, and settlement of disputes regarding payments, are all at the aggregator’s sole discretion.
• While the agreement provides that no employment relationship is deemed to exist between the driver and the aggregator and that the drivers are independent contractors, they hardly have any independent discretion under the subscription agreement.

Based on the above, the HC observed that the subscription agreement clearly sets out the supervision and control that the aggregator has over a driver and the manner in which they render services. Further, the HC observed that the aggregator also restricts the driver from having any liberty in accepting bookings, deciding the route, negotiating fares etc. The HC also placed reliance on judicial precedents which have established that an independent contractor who is substantially responsible for the main and sole business of an employer would be considered an employee.

Given the control and supervision exercised by the aggregator over its drivers, the HC ruled that an employer-employee relationship exists between them and that the drivers will be considered ‘employees’ for the purposes of the POSH Act as they render services directly in connection with the aggregator’s commercial activities. The HC observed that a failure to adopt this interpretation would render the POSH Act’s purposes and object ineffective.

 

Whether the aggregator breached its statutory obligation under the POSH Act?

The HC noted that the aggregator had established a ‘Zero Tolerance Policy’ and observed that this means an absolute and total refusal to accept behaviour that is contrary to the law, especially laws protecting the safety of women and children. This was interpreted to mean that if an individual is in violation of the policy, not only are they to be deprived of any leniency under law, but the bodies which are responsible for the implementation of the policy are also to be held responsible for any proven failure on their part to carry out their duty.

The HC held that the aggregator and its IC had failed to comply with the provisions of the POSH Act as they refused to accept the petitioner’s complaint and conduct an enquiry by claiming that their drivers are not their employees. Further, the HC also held that the IC should have examined the liability of its subsidiary that owned the vehicle and the impostor driver instead of denying the petitioner’s complaint. Finally, the HC also noted that the aggregator had acted insensitively in relation to the petitioner’s complaint and failed to uphold the assurance of safety that it provided to its customers.

Based on the above, the HC held that the aggregator and its IC have violated the provisions of the POSH Act and ruled that they are also guilty of deliberate negligence and inaction in relation to the petitioner’s complaint. The HC concluded by inter alia directing the IC to enquire into the petitioner’s complaint within a period of 90 days and ordering the aggregator to pay a sum of INR 5,00,000 (USD 5947) as compensation for the mental trauma and hardship faced by the petitioner.

 

Current Status

An appeal has been filed by the aggregator against the above decision in this matter and an appellate bench of the HC has stayed the decision pending further hearing.

[1] Section 2(f) of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

[2] Section 2(g) of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.