LABOR Secretary Silvestre Bello 3rd has ordered an investigation of the food delivery app provider Foodpanda in the wake of scandalous behavior on the company's part to ban 43 of its riders in Davao City after they took part in a protest action over changes to their payment scheme.
Bello's order is most timely, and his stated aim, that the Department of Labor and Employment (DoLE) should create a policy that will once and for all clarify the employment status of food delivery and similar workers, is something that should be accomplished as soon as possible.
The scandal erupted last week when Foodpanda announced changes to the payment provisions for its riders, which a number of Foodpanda riders complained would reduce their compensation. A group of about 100 Foodpanda riders subsequently staged a public protest in Davao City, prompting the company to slap a 10-year ban against them. The number of suspended riders was subsequently reduced to 43.
Bello evidently sees the Foodpanda issue as a test case for appropriate labor regulations governing this particular and very important class of workers, commenting, "This is a very good occasion to come up with an advisory in order to guide the employees and the employers on this issue."
We believe it is as well. What the inquiry, which is to be led by Labor Undersecretary Ana Dione, will result in remains to be seen, but the issue boils down to a question of whether riders or drivers of app-based services such as Foodpanda are employees of the app providers, or, as the companies contend, independent contractors who are not subject to the same regulations as regular employees.
As several legal experts have explained and as labor chief Bello himself alluded to in his statement, there are a number of factors that are considered in determining whether an employer-employee relationship exists. These include whether the app provider hires the workers, manages their compensation, controls the working conditions and has the power to end the employment of the riders.
Companies have argued that they do not employ their drivers or riders but simply provide the app in order to connect them with clients, making the drivers or riders independent contractors. However, based on the above factors, it is apparent that they are in fact employees, and courts in other countries have seen it that way as well. Last year, a court in the state of California ruled that drivers for the ride-hailing apps Uber and Lyft must be classified as employees rather than independent contractors. That ruling was followed by a similar decision by the Supreme Court in the United Kingdom early this year, which recognized Uber drivers in that country as employees.
The issue is also timely because of the push by some legislators to pass the Freelancer Protection Act. The bill, which has versions in both the House and the Senate, is long overdue and will extend basic labor protections to the Philippines' freelancer workforce, which is estimated to be at least 1.5 million people. If the law were already in place, situations such as the controversy involving the suspended Foodpanda riders would not occur, as the rights and responsibilities of both employers and employees in such working relationships would be more clearly defined.
Whatever sanctions the DoLE may eventually decide to impose against Foodpanda might pale in comparison to the reputational harm its actions have done. Although the company issued a statement explaining that it "made the difficult decision to offboard a small number of riders who violated their agreement with Foodpanda by calling for disruptions that may affect the wider ecosystem (other riders, vendors and customers)," the public impression has been decidedly unfavorable.
The sharp increase in online commerce as a result of the Covid-19 pandemic has been a boon to Foodpanda and similar companies, and its actions, whatever their justification, are not seen as concern for customer service, but rather oppression of workers exerting a great deal of effort to maintain a livelihood under conditions that are difficult for everyone. Foodpanda can do much to repair its damaged reputation by cooperating fully with the DoLE investigation and complying with any directives that result from it.