Taiwan - Determining The Service Relationship Between Food Delivery Business And Its Couriers.

Legal News & Analysis - Asia Pacific - Taiwan - Regulatory & Compliance - Labour & Employment

9 December, 2019

 

The food delivery industry expands quickly in Taiwan in 2019.  More and more consumers choose to order meals through the food delivery business, thus creating demands for the couriers.  The service relationship between the food delivery business and the couriers did not attract attention from the general public and the consumers until this October, when two couriers died of accidents on their way of delivering meals.  After the accidents, the labor authority conducts an investigation to review the nature of such service relationship.

 

On this issue, almost all food delivery businesses share the same position, arguing that couriers are independent contractors, and not employees of the food delivery businesses.  It should be noted that the couriers discussed here do not include the couriers who regularly deliver meals for a single restaurant (e.g., couriers delivering pizza for Domino Pizza).  There is no dispute that those couriers serving a single restaurant are employees of the restaurant.

 

Based on the “Conclusion of the Special Investigation on the Food Delivery Business” conducted by the Occupational Safety and Health Administration of the Ministry of Labor, the criteria established by the court precedents are applied to analyze the service relationship between food delivery businesses and the couriers: whether such service relationship possess the element of “subordination”.  The substance of “subordination” could be further divided into three sub-categories: personal subordination, economic subordination, and organizational subordination.  In No. 740 Judicial Interpretation rendered by the Constitutional Court concerning the issues of service relationships between insurance solicitors and insurance companies, the Constitutional Court stated that “it shall take into account the direction and supervision relationship with regard to the time, location or specialty of the provision of service under the concept of personal subordination (or called personal character subordination), and the burden of business risk in making the decision.”  Based on this guidance, we could infer that personal subordination is the most important criterion among the three criteria.  Below is a brief explanation on the three sub-categories of subordination:

 

  1. Personal subordination: meaning whether the service receiver can direct and supervise the way of provision of service by the service provider; whether the service provider has the sole discretion to decide when, where and how to perform the service; and whether the service must be provided personally by the service provider or it could be delegated to and provided by others.

  2. Economic subordination: meaning whether the service provider is operating his own business, or is attaching himself to and making contribution to the service receiver; whether the service provider owns the production equipment; and whether the service provider undertakes the risk of service receiver’s business operation.

  3. Organizational subordination: meaning whether the service provider is integrated into the production system of the service receiver, and collaborates with other service providers; whether there is any requirement on service hours; and whether the service receiver has disciplinary power over the service provider.

 

Because the “subordination” is not an all or nothing concept, each type of service relationship does contain a certain degree of subordination.  Therefore, the determination of the service relationship shall be made by a  comprehensive consideration of the level of personal, economic and organizational subordination on a case-by-case basis.  To protect the laborers, court has ruled that “Any contract for the provision of service which bears the characteristics of subordinate laboring shall be considered an employment contract even though contemporaneously bearing the characteristics of hire of work or mandate.  

 

In addition, where there is difficulty in distinguishing one type of contract from the another, the contract should in principle be viewed as an employment contract in light of the policy to protect the labor and the consideration that an employer is more able to adapt to the risk of disadvantage incurred from the classification of an ambiguous type of service relationship,”

 

From the press release of the “Conclusion of the Special Inspection on the Food Delivery Business” issued by the Occupational Safety and Health Administration of Ministry of Labor, it could be observed that in cases where the food delivery business’s service relationship with courier is identified as employment relationship, they possess the following features:

 

(1) the couriers have to complete the delivery by themselves, and cannot assign others to deliver the meals without the permission by food delivery business;

 

(2) the food delivery business has a clear regulation and management code governing the couriers;

 

(3) if the couriers reject the delivery order, they will be subject to disciplinary action; (4) couriers are integrated into the production system of the food delivery business and collaborate with other couriers of the food delivery business.

 

On the other hand, the major reason that some food delivery businesses were not found to have employment relationship with their couriers is that “there is no requirement on the couriers to deliver the meals personally, the couriers can take on other food businesses’ works simultaneously, there is no punishment and point deduction mechanism, and the level of personal subordination is weak.”  The result shows that the personal subordination may indeed be a vital indicator to identify the employment relationship.

 

Since the business model of the food delivery business will be significantly impacted by the determination of the service relationship between the food delivery business and the couriers, it is foreseeable that the food delivery business will challenge the decision made by the Occupational Safety and Health Administration of Ministry of Labor, and the dispute will have to be finally resolved through court proceedings.  It is worthy to follow up on this issue to see whether courts will apply the traditional criteria prescribed by the previous precedents and the Judicial Interpretation, what will be the result of such application, and whether the court will adopt different types of criteria.

 

 

For further information, please contact:  

 

Hector Chin, Tsar & Tsai Law Firm

law@tsartsai.com.tw