EMPLOYMENT LAW UPDATE
4th October, 2024
Issue No. 18/24-25
KARNATAKA HIGH COURT RECOGNIZES OLA DRIVERS AS EMPLOYEES UNDER POSH ACT
In a landmark ruling, the Karnataka High Court has affirmed that drivers working for app-based ride-hailing services such as Ola and Uber are to be considered employees under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“PoSH Act”). This judgment not only holds these companies accountable for their drivers’ actions but also reinforces the legal protections available to women in the workplace.
BACKGROUND
The case originated in 2018 when a woman passenger booked a ride through the Ola app in Bengaluru. During the ride, the driver exhibited inappropriate behavior, including staring at her through the rear-view mirror and watching porn on his phone. When the passenger requested to exit the vehicle, the driver refused, insisting on completing the ride to her specified destination. Disturbed by this experience, the passenger filed a complaint through the Ola app.
In response, Ola informed her that the driver had been “blacklisted” and would receive counseling and further training. However, the company requested that she close the complaint, which she found unsatisfactory. The passenger insisted on formal disciplinary action against the driver. Ola maintained that it bore no responsibility for the driver’s conduct, asserting that it did not have an employer-employee relationship with him and that he was a “fraud” without authority to drive the cab.
COURT’S FINDINGS
The Karnataka High Court dismissed Ola’s arguments and held the company responsible for the driver’s behavior. The ruling clarified that ride-hailing aggregators are not merely intermediaries but actual employers of their drivers, thereby obligating them to ensure the safety of passengers.
The court emphasized that the Internal Complaints Committee (ICC) within Ola must investigate complaints under the PoSH Act and submit its findings to the district officer within 90 days. In reaching this decision, the court referenced various provisions of the PoSH Act, underscoring that private entities can be subject to writ petitions if they owe a public duty, especially in circumstances involving public safety.
EXTENDING THE DEFINITION OF “EMPLOYEE”
The court found that the language of the PoSH Act was designed to cover various modes of engagement, and in this case, the relationship between Ola and its drivers was indeed one of employer and employee. The ruling indicated that not extending this definition to include driver-subscribers would undermine the intent of the PoSH Act, particularly in sectors dominated by gig economy platforms.
The court closely examined the Subscription Agreement and determined that Ola retains complete control over all revenue generated from its operations. This includes setting ride fares, managing payments and receipts, determining commission distributions, and handling any adjustments to rates or statutory dues. Additionally, Ola has sole authority over resolving disputes and implementing any resulting decisions. The court also noted that the provision for paying incentives to the Transport Service Provider is entirely at Ola’s discretion. Ola’s authority to set ride rates, manage payments, and administer incentives further substantiated its role as an employer. Consequently, the court concluded that the driver-subscriber’s services were rendered directly in connection with Ola’s commercial activities, thus qualifying him as an employee under the PoSH Act.
CONCLUSION
This ruling carries significant implications for the gig economy, particularly for ride-hailing companies and also food/grocery deliverymen. By establishing that drivers are employees under the PoSH Act, the Karnataka High Court has set a precedent that could influence similar cases in the future. The decision compels these aggregators to rethink their operational structures and to prioritize safety and legal compliances.
Moreover, the ruling underscores the necessity for companies in the gig economy to acknowledge their responsibilities toward their workers and customers. With the court holding that Ola is not merely an intermediary, it challenges other companies in the sector to reassess their relationships with service providers and to ensure that adequate safeguards are in place. This decision not only strengthens the protections afforded to women in the workplace but also serves as a reminder to companies about their responsibilities toward all stakeholders involved.
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