Malaysia’s position on e-hailing services
THE trend towards a gig economy has become increasingly popular and significant in today’s digital era. There are a number of driving forces behind the popularity of short-term employment, the main factor being the workforce in this day and age is increasingly mobile and work can now be done from any location, resulting in jobs and locations being decoupled.
With the emergence of app-based companies such as Uber, Grab, Kaodim and Airbnb, which build online platforms connecting individual service providers to the public, service providers are now able to provide their services to the public as and when there is demand for them.
There is a common misconception that individual service providers are considered as self-employed persons as they have the freedom to select the types of temporary work or projects they are interested in without being bound by the standard restrictions which apply to employees, e.g. standard working hours, fixed places of work and the manner of how the work is being performed. However, this is not always the case.
In many sectors, the distinction between an employee and a self-employed independent contractor is often blurred, particularly in instances where the independent service providers offer their services via digital platforms. This is because, in most cases, individual service providers will have to agree to certain terms and conditions prior to registering with the digital platform in order to provide their services to the public.
Despite Uber’s assertion that Uber drivers are free to work whenever and wherever they wish and that Uber is merely a technology company and not in the business of providing transport services, the London employment tribunal on Oct 28, 2016 made a ruling against Uber and held that Uber drivers are classified as “workers” within the meaning of the Employment Rights Act 1996 rather than self-employed independent contractors. This means that Uber drivers are entitled to certain benefits such as minimum wage, holiday pay and paid rest breaks.
In its decision, the tribunal further explained that Uber drivers are deemed workers under the employment of Uber so long as the driver: has the Uber app switched on; is within the territory in which he is authorised to work; and is able and willing to accept assignments. Having said this, it should be highlighted that Uber has been granted the right to appeal the above ruling by the tribunal later this year.
In Malaysia, independent service providers or self-employed persons do not fall within the definition of “employees” under the Employment Act 1955. The drivers who have registered themselves with e-hailing services such as Uber and Grab in Malaysia are considered as self-employed and are not considered as employees of these companies. Therefore, they are not entitled to the benefits accorded under the Employment Act 1955.
Nevertheless, in an effort to offer better protection to the self-employed drivers, the government has recently passed the Self Employment Social Security Bill 2017 on April 6, 2017 for the purposes of providing Social Security Organisation (Socso) protection to self-employed drivers.
Pursuant to the Bill, all self-employed drivers registered with the Land Public Transport Commission are required to contribute 1.25% of the monthly income to Socso on a monthly basis. In exchange, all the drivers will be covered under the Employment Injury Scheme, a form of protection for the drivers should they be involved in an accident while on duty.
The Employment Injury Scheme provides the drivers with, amongst others, medical benefit, temporary and permanent disablement benefit, dependent’s benefit, funeral benefit, education benefit and facilities for physical and vocational rehabilitation.
The government has announced that the initial aim of the Bill is to provide Socso protection to self-employed taxi drivers and drivers of e-hailing service providers. Moving forward, the government is contemplating extending this protection/ right to self-employed persons in other sectors as well and it will be interesting to see how this is implemented.
Contributed by Calvin Lau Jia Boon of Christopher & Lee Ong (www.christopherleeong.com).