The Taipei High Administrative Court Handed Down a Decision Finding that the Relationship Between a Specific Digital Delivery Platform and a Delivery Person Is Employment

June 2022

Elizabeth Pai and Weke Chen

Concerning the controversy of whether the service relationship between a digital delivery platform and a delivery person is employment or independent contractor relationship, the Taipei High Administrative Court rendered the 109-Su-1046 Decision of March 17, 2022, concluding the employment relationship between the specific digital delivery platform (hereinafter, the “Platform”) and the delivery persons for the facts related to this case.  Although the specific agreement and the de facto service relationship between various digital platforms and delivery persons may be different from those in this case, not to mention that a final decision in this case is yet to be rendered. However, this decision specifically indicates the standard and contains the finding that the service relationship existed between the parties still has a certain value for reference.  This decision is highlighted below:

I. The parties in this case disputed “if the contract between the Platform and the delivery persons was ‘an agreement that established an employer-employee relationship’ with subordination under the Labor Standards Law (labor contract or employment contract).” The decision in this case referenced the reasoning of Judicial Interpretation No. 740, the gist of the 109-Shang-664 Decision of the Supreme Administrative Court, and the Guidelines for Determining Employment Contracts (the Lao-Dong-Guan-2-Zi-1080128698 Circular of November 19, 2019 from the Ministry of Labor) in pointing out the criteria for determining if the facts and the overall contract was an employment contract, including: (1) the existence of personal subordination, (2) the existence of economic subordination, (3) the existence of organizational subordination, and (4) performance by the individual in person.

II. The Platform and the delivery persons had personal subordination.

(1) The delivery persons in this case were only responsible for providing services (by delivering meals from restaurants to customers) and were also required to pick up and deliver meals according to the specific instructions given by the Platform, which specifically stipulated the entire meal delivery service process and steps comprehensively, for instance, meal pickup, thermal bags, dressing code and mannerism, personal hygiene, meal delivery, interactions with customers, etc. For customers’ questions, it was necessary to respond by indicating the requirements of the Platform and report them back to the custom service to address the questions. Based on the foregoing, it is clear that the delivery persons in this case did not have the right to “independently decide how to provide services.”

(2) The Platform provided very specific instructions to delivery persons in terms of service regulations and processes, including “no collection of extra cash, no private solicitation, or no bonus abuse fraud,” “prohibition against the use of other’s accounts and unregistered vehicles,” “no unauthorized use of the company’s brand,” “verification with the customer service or partner centers for unclear information,” “no infringement or violation of the privacy and freedom of others,” and “compliance with the relevant laws of the Republic of China,” etc. Those who violated would be punished. Therefore, the delivery persons in this case neither had the freedom to decide how to provide meal delivery services nor were subject to the non-competition obligation, and must perform tasks in person. As a result, they are deemed to have personal, economic, and organizational subordination.

(3) If the delivery persons in this case repeatedly delivered meals incorrectly or had a user rating below a certain level, their accounts would be suspended with bonuses deducted. This shows that the Platform had the authority to discipline and punish the delivery persons for failing to meet the standards or for violating the rules, and this attests to the personal subordination of the delivery persons in this case.

III. The Platform and the delivery persons had economic subordination.

(1) In this case, the basic fare and incentive plan payment to the delivery persons were settled by the Platform by calculating the quantity of their services, and compensation was paid periodically to the delivery persons, who did not need to issue invoices for payment. In addition, the compensation was not payable only on the last day stipulated in the contract. This meets a criterion for determining that the employment contract has economic subordination.

(2) For the calculation of the basic fare, the Platform had clear regulations that applied to all delivery persons according to the actual meal delivery distance rather than negotiating with the delivery persons individually. The delivery trip bonus was also calculated by a method unilaterally set by the Platform. Therefore, the delivery persons in this case better meet the characteristics of “persons employed by the employer to perform work.”

(3) The daily trip bonus designed in the App of the Platform and the fee details, recent transaction information, and additional bonus information disclosed in the App allowed the delivery persons to understand how to earn more, making the delivery persons more willing to take orders online during certain hours. Therefore, it is sufficient to conclude that the delivery persons in this case have more reliance on, and are highly subordinate to, the Platform.

(4) Finally, the income of the delivery persons in this case was calculated based on the meal delivery service provided by the persons, who had no need to bear financial risk by themselves, and the delivery persons had to complete the delivery service within a very short period or to work longer hours to maintain a subsistence income level. This attests to economic subordination.

IV. The Platform and the delivery persons had organizational subordination.

(1) The business of the Platform was by nature similar to that of a cargo delivery company, where the goods delivered were meals and the delivery persons were the drivers. The delivery persons must receive approval to join the Platform to begin using the platform and get the opportunity to deliver meals. When delivery persons provided the meal delivery service according to all kinds of instructions and regulations of the Platform, this meant that they represented the brand of the platform (which provided meal delivery services through digital technology), not the name or brand image of the delivery persons.  Under the framework, the delivery persons in this case are all incorporated into the structure of the Platform with organizational subordination.

(2) In case of any delivery issue or emergency confronted by the delivery persons in this case, they needed to be addressed by the customer service personnel of the Platform, not be the delivery persons themselves. This shows that the delivery persons in this case were incorporated into the organization of the Platform and were part of the completion of the meal delivery services together with the personnel of other departments.

(3) Since the Platform incorporated the delivery persons into its organization and imposed penalties such as suspension of rights or deduction of bonuses on those who did not meet its work regulations, instructions, or requirements or had poor performance. This attests to organizational subordination.

V. Delivery persons were required to perform tasks in person.

(1) The provider ID allocated after delivery persons signing the delivery person agreement in this case was not permitted to be shared with any third party. The specific devices provided by the Platform could not be assigned, leased, lent or sold in any way, and the provider App (or any related data) could not be provided or distributed to, or shared with, any third party. Nor could such provision, distribution, or sharing be authorized.  In addition, delivery persons who failed to perform the delivery services in person could face suspension of rights or other restrictions.

(2) In addition, the Platform imposed requirements for the qualifications and service level of the delivery persons in the delivery person agreement and required the delivery persons to neither log in to nor use an account other than their own nor lend their accounts to others, and the delivery persons could only use their own accounts to register vehicles. Furthermore, if they needed to change vehicles, they were required to do so only in their accounts. All these suggest that the delivery persons were required to perform the tasks in person.

VI. The relationship between the Platform and the delivery persons was not independent contractor relationship.

(1) The delivery persons in this case signed an agreement with a third-party distribution company, which meant that the delivery persons were independent contractors and had an independent contractor relationship with the third-party distribution company for the performance of the delivery services. However, based on the principle that “the employer-employee relationship should be determined by fact,” Since the Platform actually recruited the delivery persons directly, obtained the information about the delivery persons, provided education, training, and instructions to them, and paid compensation to the delivery persons without the involvement of the third-party distribution company. It is still concluded in the decision of this case that the delivery persons and the Platform had a direct employer-employee relationship.

(2) After joining the Platform, the delivery persons in this case were required to accept the assignment of cases as much as possible instead of refusing to do so, and to maintain the minimum rating standard in the service area.  Otherwise, they could be suspended from continuing to work as delivery persons and could not receive service compensation for failing to meet the standards imposed by the Platform.  Therefore, it is sufficient to conclude that the delivery persons in this case did not have the right to independently decide whether to “accept orders” or “go online,” which was different from an independent contractor relationship.