Tuesday 6 June 2023

30,000 Uber drivers on the verge of unemployment due to indecision of politicians for almost eight years

If the company is forced to suddenly recognize benefits of thousands of drivers, it is likely that it will leave the country

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6 June 2023 - At The Banks - Source: BCCR

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QCOSTARICA – It’s been almost eight years since UBER, the collaborative mobility platform, arrived in Costa Rica and almost eight years of disinterest and indecision on the part of politicians regarding the regulation of collaborative mobility platforms.

This non-action by the governments of the day and legislators, in addition to the Labor Court ruling earlier this week, could lead to “a devastating” increase in unemployment overnight.

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Read more: Court ruling: UBER must pay vacations, bonuses and social security to its drivers

Though the company is expected to appeal the ruling, if the decision by the Labor Court that requires it to recognize an employment relationship with a former driver is upheld, it is likely that UBER will leave the country.

But UBER is not the only one to be affected by the court decision.

“The sentence of this labor judge would have devastating consequences if it were a final sentence. Fortunately, there is appeal. Why devastating? Because it would mean the loss of tens of thousands of job opportunities from the use of technological platforms such as UBER, DIDI, RAPPI, GLOVO. It would also seriously affect all users of transportation, courier and home food delivery services. There would be fewer and much more expensive services. Summary: we lose consumers and thousands will be left without being able to generate income with these services,” said former legislator and perennial presidential candidate, Otto Guevara.

UBER has suffered legal problems in all parts of the world, such as in the United Kingdom, where it twice lost permission to operate in London or in Barcelona, Spain, where it even threatened to leave due to regulations and bans.

However, at the end of the day, particular regulations have been established in each country, in such a way that the company has continued to provide the service, although with specific security rules, rates and other details, which allow competition with conventional taxis.

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Currently, there is no UBER in countries like Cuba, North Korea, Syria and Crimea, while the company operates in more than 600 cities around the world.

The problem is that the presence of UBER and other platforms in Costa Rica has been surrounded by legal uncertainty since 2015 when it first began to operate in the country.

This, because legislators and the last two governments have presented various proposals to regulate UBER and other platforms, but none have managed to overcome the painful legislative process.

Likewise, on several occasions, their actions have been declared illegal by the Executive Branch.

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“I think that the government of Carlos Alvarado (2018-2022) did not have real political will on this issue and did not promote its discussion as it should have been done; likewise, we legislators were also somewhat to blame, because the truth is that Congress could have reached agreements willingly, but we did not do so,” said Roberto Thompson, who was a PLN legislator in the previous period and who gave these statements to La Republica one month after leaving office.

More recently, President Rodrigo Chaves presented a proposal that is just taking its first steps, so in principle, it is like a clean slate.

On the other hand, UBER announced on Wednesday that it will appeal the  Monday ruling.

Likewise, it stressed that the ruling applies to a particular case (a former driver) and therefore cannot be extended to all driver-partners.

“This resolution is of the first instance and is not definitive. We will be presenting an appeal before the corresponding Court to assess the legal foundation of the sentence. In any case, what is dictated in this process would apply only to the particular case of this person (who filed the lawsuit),” said UBER.

In Costa Rica, it is estimated that UBER has about 30,000 driver-partners.

“We celebrate the decision because now UBER will be on an equal footing with the other companies in Costa Rica. The purpose of this case is not for the company to leave the country, it is for labor rights to be respected, as the rest of the companies do. This is a regional precedent to be able to advance in the use of technologies while respecting people’s rights and particularly labor rights,” said David Delgado, a partner at the Más Legal Asesores, the firm that handled the case.

Controversial ruling

The ruling of the San Jose Labor Court in favor of a man identified with the last name Morales, would change the relationship between driver-partners and the company, in such a way that it would be considered a formal job.

These are the details of the ruling in the first instance:

  • Uber must pay the plaintiff ¢802,000 colones for vacations, for all the time of employment
  • The company will also have to pay Morales ¢1.7 million for Aguinaldo (Christmas Bonus)
  • Likewise, it must pay the corresponding contributions to the Disability, Old Age and Death Regime, of the Caja Costarricense de Seguro Social (CCSS), to the Labor Capitalization Fund (FCL), Compulsory Complementary Pension Regime (ROPC) and Job Risks.

The above are all mandatory payments of employers during the term of employment, and severance pay, based on their time with the employer, in the event the employee is fired or quits.

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