With the rapid development of global sharing concepts and Internet technology, the digitization in various economic sectors of society is increasingly intensified, followed by emerging new formats of operation through online platforms. The employment gradually demonstrated huge difference from the traditional standard labor relationship in terms of work content and professional characteristics, etc. The increasing complexity of employment relations has led to the continuous changes of the relationship among workers, employers and employment platforms, which poses new challenges to the identification of traditional labor relations models under China’s labor law. At present, there are different perceptions in this regard in the theoretical community and judicial practice. Proceeding from employment platform, this paper attempts to give a brief discussion and analysis of the identification of employment relations in the context of “Internet+”.

I. “Internet+” employment platform

Development status and mode of operation

(I) The causes of the development of the “Internet+” employment platform-the employment dilemma of enterprises

Following the fundamental changes in China’s demographic structure, the demographic dividend is gradually disappearing. In the context of policies such as social security income tax and personal income tax reform, the hidden costs of enterprises have increased, and the sharp increase in labor costs has gradually become a bottleneck of enterprises’ development. Coupled with the transformation of the employment concept of young groups, diversified and flexible employment methods have become an inevitable choice for enterprises to optimize the allocation of human resources.

(II) The development status of the “Internet+” employment platform

On July 17, 2019, Premier Li Keqiang of the State Council presided over an executive meeting of the State Council to determine measures to support the healthy development of the platform economy, and identified it as a new momentum for upgrading and increasing employment with a superior structure.

On August 1, the General Office of the State Council issued the Guiding Opinions on Promoting the Standardized and Healthy Development of Platform Economic. The first point of Article 5 clearly stated: It is necessary to speed up study and improvement of the social security policies for flexible employees and employees of platform enterprises, carry out pilot occupational injury protection, and actively promote the national insurance plan to guide more platform employees to participate in insurance. It can be seen that the protection of the legitimate rights and interests of platform economy participants needs to be gradually improved. It will take time for formulation and implementation of relevant regulations, but legislation and regulation are an inevitable trend. Therefore, it is urgent for labor law scholars and judicial practice to explore the way for the follow-up legislative process and provide practical guidelines.

(III) The operation mode of the “Internet+” employment platform

Under the “Internet+” business model, in addition to vertically refined O2O platforms in the service field (such as Didi, Meituan, Ele, Ishansong, etc.), platform companies with innovative employment models (such as Jianzhimao, Ant Skilled Workers, 51Haohuo, Linggongyun, Zhiyouren Work, etc.) have been born. The labor relations under the “Internet+” platform model are briefly divided into full-time model and part-time model:

Full-time mode: a model under which a worker specifically assumes a certain position in the employing unit, and usually have to work full-time according to the requirements. The examples are the relationship between Shouqi car-hailing and Shenzhou special car and its special car drivers in the common online car-hailing B2C model, and the third-party full-time delivery on Meituan platform or platform full time delivery. Generally speaking, in full-time work, a written labor contract is generally signed between the service provider and the employing entity. Once the labor contract is signed, the disputes over the labor relations are easily recognized, so it is not discussed herein.

Part-time model: a model under which a worker does not specifically assume a certain position in the employing unit, nor should the worker work full-time. The examples are C2C online car-hailing and the part-time delivery model. Under this model, the demand side posts the information on the platform; the platform provides only a large number of sources of information; and the service provider chooses to accept the order independently. In part-time work, a written labor agreement may be reached between the service provider and the employing unit. However, in more cases, it is often an oral agreement or a cooperation agreement, such as labor agreement, etc. Therefore, the agreement between the part-time service provider and the employing unit in the “Internet+” platform is difficult to clarify or speculate. As a result, disputes are prone to occur, and the relationship between related rights and obligations is difficult to clarify. In this paper, the relationship of these rights and obligations are the focus of the discussion herein.

II. Criteria for determining whether a labor relationship is established or not

(I) Elements of recognition of labor relationship

From the perspective of labor law, the development of Internet technology gave birth to new business models, and the later further spawned new employment models which are different from traditional labor relations. In order to reduce labor costs and adopt flexible employment, the “Internet+” platform characterizes service providers as “partners”, intending to reflect the equality of the two parties in the relationship and the flexible work forms (not limited by time and place or controlled by the platform). There is an attempt to define the relationship between the platform and the service provider, the employer and the platform as a cooperative relationship between equal civil subjects. Therefore, the basis and focus of such disputes are whether the service provider has established a labor relationship with the platform or the employer.

Judging from judicial theory and practice, the current determination of the labor relationship between workers and the employing unit is still based on the “three elements” in the “Notice of the Ministry of Labor and Social Security on Matters Related to the Establishment of Labor Relations (LSBF [2005] No. 15), that is, “The establishment of labor relations requires the satisfaction of all the following conditions: (I) The employing unit and the laborer are qualified subjects stipulated by laws and regulations; (II) The various labor rules and regulations formulated by the employing unit in accordance with the law apply to workers, and workers are subject to the labor management of the employing unit and engage in paid labor arranged by the employing unit; (III) The labor provided by workers is an integral part of the employer’s business.” In other words, the three elements in labor relationship identification can be summarized as “qualified subject, agreement, and subordinate.”

In terms of the qualifications of the subject, the employing unit should be an economic entity registered and established in accordance with the law and have the qualifications of an independent employer; for workers, they are workers of the right age and have the ability to work, that is, they have the qualifications of a labor.

In terms of “agreement”, the agreement reached between the laborer and the employing unit can be divided into express and implied agreement. Express agreement mainly includes the signing of a labor contract or an oral agreement between the laborer and the employing unit; implied agreement generally refers to the de facto labor relationship.

Subordination can generally be divided into personal subordination, economic subordination and business subordination. Personal subordination mainly focuses on the management of workers by the employer, and the obedience of workers to orders or work tasks assigned by the employer, especially acceptance of the constraints of the employer’s rules and regulations; economic subordination mainly refers to the employer’s provision of working conditions for workers, and workers’ receipt of remuneration from the employer as the economic source of life; business subordination refers to the fact that the labor provided by workers is an integral part of the employer’s business and that the work of employees is part of the company’s overall work.

(II) The dilemma in determining labor relations under the “Internet+” employment platform model

As far as the subject’s qualifications are concerned, there is not much difference in the labor relationship between platform employment and traditional industries. Therefore, not much discussion is made herein. The main difficulties lie in: 1. The agreement is vague. The agreement between the service provider and the employing unit is not clear regarding whether a labor relationship is reached. Even if the two parties express in writing that it is not a labor relationship, it cannot be ruled out that the two parties have a de facto labor relationship recognized by law; 2. There is uncertainty of subordination. On the one hand, service providers usually accept the rules and regulations of the employer or platform enterprise. For example, Didi Driver’s requirements on number of orders, response time and customer appraisal will affect the income of the service provider. Given this fact, it is not improper to determine the existence of subordination between the service provider and the employer or the platform enterprise. On the other hand, the service provider is not strictly restricted by working conditions or workplaces. The employer pays the platform fee in the name of the information service fee, and the platform pays the fee to the service provider after withdrawal of the information service fee on a per-order basis. There is no guarantee of a fixed salary, and the service provider has the right to determine whether to provide services and choose the customers. Hence, there are many uncertain factors in judgment of subordination.

Therefore, the “subject qualification, agreement, and subordination” in identification of labor relationship obviously longer adapt to the identification of labor relations under the new business model, that is, for the complete definition of the overall flexible labor relations under the “Internet+” employment platform, the state needs to introduce laws and regulations to make the clarification.

III. Identification in judicial practice

(I) Cases of recognition of labor relations

Case 1 [(2017) H 0112 MC No. 8441]: The plaintiff Ma claimed to be a food deliveryman for the online food ordering platform Ele at Defendant A’s company Fengniao Delivery. During the period of work, the Defendant did not sign a labor contract with the Plaintiff, nor did the Defendant pay social insurance for the Plaintiff, only except for the group personal insurance. The two parties signed an Agreement on Team Member Work System. The Plaintiff’s salary was without a performance salary or base salary. The forms of payment by the Defendant include Alipay transfer, WeChat transfer, bank transfer, cash payment, etc. The Defendant argued that he provided the Plaintiff Ma with an APP link service. The Plaintiff could make the delivery for Ele, or for other Apps; the Plaintiff could also choose to make the delivery or not, that is, the content of the work can be determined by the Plaintiff himself. Therefore, there was no labor relationship between the two parties.

The court’s view: The Agreement on Team Member Work System makes a clear agreement on the rules and regulations that the Plaintiff should abide by. Given the fact of the Defendant’s purchase of commercial insurance for the Plaintiff, the Plaintiff's provision of delivery services for Ele, the applicability of the Defendant’s rules and regulations to the Plaintiff, the Plaintiff’s subjection to the Defendant’s labor management and engagement in the Defendant’s arranged paid labor, the Plaintiff’s delivery services as an integral part of the Defendant’s business, it was determined that there was a labor relationship between the Plaintiff and the Defendant.

Case 2 [(2017) J 03 MZ No. 11768]: Company B operates an APP called “Good Chef”, which allowed online appointments of chefs to provide cooking services. Zhang has signed a business cooperation agreement with Company B, under which it was stipulated that Zhang needed to provide customers with on-site cooking services booked through the platform. Company B provided Zhang with professional cooking tools and timing rental services, and both parties shared 50% of the service fee. After Company B collects the service fees from the consumer, the cooperation fees such as excess-order rewards and card registration were paid to Zhang on a monthly or weekly basis.

The court’s view: The legal relationship stipulated in the cooperation agreement between the two parties does not directly or indirectly constitute a labor relationship. Of course, the establishment of a labor relationship must respect the autonomy of the parties, but the labor legal relationship is different from the general civil and commercial legal relationship. The labor relationship is subject to mandatory recognition norms, and cannot be ruled out merely by the written agreement between the parties. It must be determined in combination with the “cooperation” model of the two parties and the specific work content.

In this case, 1. Zhang accepted the labor management by Company B, and Company B assigned or dispatched the work, or gave reward or impose punishments, paid a relatively fixed monthly remuneration, and arranged the work place for Zhang; 2. Zhang engaged in paid labor arranged by the company on behalf of Company B; 3. Both parties satisfied the main qualifications of the employer and the laborer stipulated by relevant laws and regulations; 4. Company B only operated a chef business platform and Zhang mainly provided cooking skills. The labor provided by the worker matched the nature of the employer’s business. Taking into account the above factors, the court determined that there was a strong affiliation between the two parties which was the essential feature of the labor relationship. Therefore, the relationship established by the two parties is in line with the characteristics of labor relations.

(II) Cases of non-recognition of labor relations

Case 1 [(2017) S 0114 MC No. 2886]: The plaintiff Sun was employed by the Defendant Company C to engage in installation and maintenance of air conditioners, and the two parties did not sign a written labor contract. The working mode is as follows: the customer places the order to Company C; Company C publishes the work on the APP; and the worker receives the order from the mobile application, completed the work at the client’s place, and collects and transfer the payment to Company C. The labor remuneration was settled in proportion to the amount of the order received, and the Defendant promised that the skilled workers would earn not less than 8,000 yuan per month. Company C argued that the labor relationship between the Plaintiff and the Defendant was not a labor relationship, but an unfixed cooperative relationship, similar to the operating model of Meituan Takeaway. According to the time and place, the Plaintiff could choose whether to accept the order. There was no personal attachment between the Plaintiff and the Defendant. The Plaintiff did not have a basic salary, and the two parties shall divide it in an agreed proportion according to the Plaintiff’s workload.

The court’s view: In this case, the Plaintiff and the Defendant did not sign a written labor contract, and the Defendant did not pay social insurance premium for the Plaintiff; the Plaintiff did not receive basic salary from the Defendant, and the two parties completely shared the income based on the business volume; the Defendant did not provide the Plaintiff with a fixed workplace, and the means of transportation and some labor tools used by the Plaintiff for work are owned by the Plaintiff; the Plaintiff had the right to choose whether to receive orders from the App or not; in conclusion, it can be seen that there was no personal attachment relationship between the Plaintiff and the Defendant. The court believed that the Plaintiff and the Defendant had established a new type of cooperative relationship in the era of the Internet economy. The Plaintiff established working contacts with the Defendant through the online information platform; the Defendant provided service information through the online platform; the Plaintiff relied on the platform to obtain work information; and the two parties divide the work income according to a certain proportion. The Plaintiff was not bound by the various labor rules and regulations formulated by the employing unit in accordance with the law, or was the Plaintiff subject to the labor management by the employing unit. Since there was no personal attachment between the two parties, no labor relationship was established between the Plaintiff and the Defendant.

Case 2 [(2018) Lu 0702 MC No. 2505]: Meng registered as a Didi driver through the “Didi Driver APP”. The software only required that Meng had to log in the APP for more than two hours within one month, otherwise the account would be frozen and orders would be restricted. No labor contract was signed between Meng and Company D, and Company D did not pay social insurance premium for him. Company D argued that they signed the Labor Service Agreement, under which Meng’s work content is completely free. In terms of workplace and work tools, Meng was free to decide on the workplace and needn’t to work in the workplace designated by the Defendant. Furthermore, the Defendant did not provide labor tools.

The court’s view: Although Company D entrusted a third party to carry out the interview and provided business training for the driver on behalf of the Defendant, and the work content of the driver was also subject to the relevant regulations of the “Didi Driver” online platform to a certain extent, Meng was still given considerable personal freedom after the registration as a “Didi driver” as he still can decide whether to log in to the platform, the work time, the acceptance of orders, the offline time, and whether to engage in other part-time jobs; the “Didi Driver” online platform’s interviews, related training and constrains for Didi drivers were reasonable for the service contract, and do not reflect the personal subordination between Meng Xianbao and the Defendant. The fees earned by Meng from his own account from time to time were not fixed income, which is enough to prove that the remuneration was irregular and unstable and was not in line with the general characteristics of labor contracts. In summary, the Plaintiff and the Defendant did not satisfy all the requirements for the establishment of the labor relationship.

Based on the aforementioned cases, under the “Internet+” employment platform model, “subordination” should be the core of determining the essential characteristics of the labor relations. “Subordination” is the most important feature that distinguishes labor relations from other legal relations that contain labor payment. “Subordination” in the traditional sense refers to workers working for the employing unit under the command and supervision of the employing unit. During the labor, the performance of workers’ obligations is closely inseparable from the behavior of the employing unit, and under the new employment model, this concept of “subordination” in the traditional sense is gradually being diluted and even becomes difficult to discern. Therefore, reconstructing the “subordination” is the focus and key point in correctly sorting out the employment relationship.
 

IV. “Internet+” employment platform

Notes for determination of labor relations

(I) The risks and challenges of enterprises’ adoption of the “Internet+” platform for employment

Although it seems that the use of the “Internet+” platform for flexible employment is a better choice to reduce costs and increase efficiency, and that some judicial jurisprudence seems to send a signal of relaxation to the “Internet+” flexible employment model, this does not represent the current nationwide judicial trial caliber. This new type of employment model is still in the stage of exploration and run-in, and the relevant safeguards and regulatory measures have not been fully available. At present, courts in different regions may draw different conclusions on the same case, which also reduces the guidance and normative functions of the law at this stage.

Take “platform + service provider” model of a cooperation agreement, although it is nominally called “cooperation agreement” or “labor contract”, there are actually agreed terms with the characteristics of labor relations. Therefore, the agreement is very likely to be recognized as a labor relationship. The written agreement of the parties does not exclude the identification of labor relations; although the traditional “three elements” can no longer be accurately applied to this new business model, in the judgment, the court often determines whether it has the essential characteristics of labor relations based on the employment model and the specific work content, such as: whether the salary payment is fixed, whether it is effectively managed, whether the work content is restricted, whether the working hours and places are fixed, whether the labor relationship is fixed, whether the content is a business component, and other specific dimensions. Therefore, the employer still has potential employment risks.

In the stage of performance of the agreement, if a platform cooperative relationship is adopted, the enterprise should fulfill its obligations in accordance with the agreement, play the right role of a “collaborator”, give the service provider full choice in the design and application of the platform system, and avoid dominating the personal freedom of the service provider in disguise.

(II) The legitimate rights and interests of workers cannot be protected

On the surface, although the definition of workers in the “Internet+” employment platform as independent contract workers adapts to the current demand for flexible employment and allows workers to have more flexible working hours and locations, this also leads to the stratification of rights among workers. Some regular workers enjoy the rights in labor law, but the workers in the “Internet+” employment platform are deprived of these rights.

If a platform denies the status of its employer and avoids the formation of a labor relationship with the worker by signing a contract similar to a service agreement with the worker, and in practice, there are indeed courts that believe that the relationship between the two should be so determined based on the agreement between the two parties, such as the Jiangsu Provincial Court’s judgment that the two parties constituted a contractual relationship, etc., the workers are unable to negotiate with the platform given their vulnerability. Actually, the platform restricts the labor content and conditions. For example, the platform can unilaterally determine the wage level, the code of conduct, and restrict the workers taking accepting orders from the platform due to low star ratings or bad reviews.

Most importantly, since the existing laws and regulations are not strong enough to regulate the flexible employment model of “Internet+”, the protection of rights and interests between existing workers/service providers is vague. Even worse, the most basic labor protection and remuneration payment, etc. are uncertain or missing, which can give raise to or expand social contradictions.

V. Conclusion

At present, it seems that due to the shortcomings of the traditional criteria for determination of labor relations, there are common situations of same cases with different judgments. Coupled with the gaps in the labor law system at this stage, workers and employers cannot judge their own code of conduct in accordance with the law, which can cause many unintentionally infringement on the legitimate rights and interests of workers or disputes over compensation standards after casualties.

Therefore, we call on the legislature to regulate and legislate the existing emerging flexible “Internet+” employment model as soon as possible, which is necessary for voidance of damage to the interests of all parties in economic development due to lack of applicable laws and for promotion of healthy and orderly development of the national economy.