Developments in the Classification of Gig Workers and Its Impact on Tech Platforms by Sunday-Ayegba Grace
Gig workers can loosely be defined as people who do short-term or freelance jobs through digital platforms, like ride-share drivers or delivery workers. They usually do not have long-term contracts or employee benefits.
The gig economy has seen remarkable growth in recent years, challenging traditional labour markets and employment models. This expansion has been significantly driven by tech platforms such as Uber, Bolt and Upwork, among others, which connect freelancers and independent contractors with short-term job opportunities. However, as the gig economy continues to grow, so does the legal implications that comes with the classification of gig workers. The question of whether these gig workers should be classified as independent contractors or employees has become a central issue in legal debates worldwide, including in Nigeria.
Classification of Gig Workers
The classification of gig workers is critical, as it determines the legal obligations of employers and the rights of these workers. Typically classified as independent contractors, gig workers are not entitled to the same benefits and protections afforded to traditional employees under labour laws. This classification allows tech platforms to avoid the costs and responsibilities associated with traditional employment models.
Despite the growth of the gig economy in Nigeria, brought about by the increased number of digital platforms facilitating gig work, the legal framework governing gig work remains underdeveloped. Nigerian labour laws, primarily designed to protect traditional employment relationships, have not yet evolved to address the unique challenges posed by the gig economy. Consequently, most gig workers in Nigeria continue to be classified as independent contractors, lacking the benefits and protections of employee status.
There has been a growing movement to reclassify gig workers as employees rather than independent contractors. A notable example is the case of Oladipo Olatunji & Anor (Representing themselves and other Uber and Taxify Drivers in Nigeria in a Class Action) v. Uber Technologies System Nigeria Limited & 2 Ors, Suit No. NICN/LA/546/2017, where the National Industrial Court was asked to determine the employment status of Uber drivers under Nigerian labour law. The claimants argued that Uber drivers should be considered employees under Section 91 of the Labour Act, given Uber’s significant control over their work.
The Court dismissed the case due to insufficient evidence but acknowledged that the nature of work was changing, and that the traditional distinctions between workers and employees are increasingly blurred. This case portrays the ongoing legal debate surrounding the classification of gig workers, one which continues to challenge and reshape existing labour law frameworks.
As the gig economy expands, the need for a clearer and more adaptable legal framework becomes increasingly urgent. Addressing these classification issues will be crucial to ensuring fair treatment and protections for gig workers in Nigeria.
Impact on Tech Platforms
The classification of gig workers has profound implications for tech platforms operating in Nigeria and beyond. If lawmakers move towards reclassifying gig workers as employees, tech platforms could face significant financial and operational challenges.
Increased cost: Reclassifying gig workers as employees would significantly impact the finances of tech platforms. This shift would mandate platforms to provide workers with a range of benefits which typically would have been reserved for traditional employees. These additional expenses could lead to higher prices for consumers to offset the increased cost of labour and reduced profitability for the platforms.
This change could also influence the competitive landscape, as smaller platforms might struggle to absorb the added costs, which further limits their ability to seek a greater share of the market.
Operational Challenges: Tech platforms would also need to adapt their business models to comply with employment laws, potentially leading to a reduction in flexibility for both the platforms and the workers. For example, platforms might impose stricter schedules or limit the number of workers they engage in order to manage costs and comply with labour regulations. This shift could also result in less autonomy for workers, who currently enjoy the freedom to choose when and how much they work
Legal Risks: As the legal environment evolves, tech platforms may face increased litigation risks as workers seek to assert their rights. Platforms would need to be prepared for potential legal battles and the associated costs. Additionally, the uncertainty surrounding the legal status of gig workers could deter investment in the sector, as potential investors may view these risks as too high.
The classification of gig workers is a crucial issue that will significantly impact the future of the gig economy in Nigeria and worldwide. While reclassification may offer greater protections for workers, it also presents substantial challenges for tech platforms. Therefore, lawmakers must approach this matter with careful consideration.
