China’s top court wants to protect gig workers without hampering tech platforms’ development, aiding Meituan and Didi

  • A justice on the Supreme People’s Court said the court will help regulate the ‘healthy growth’ of platforms while protecting gig workers’ ‘legitimate rights’
  • The statement offered relief to platform operators after the government expanded protections for delivery workers and ride-hailing drivers in July

China’s Supreme People’s Court is seeking to strike a balance between protecting gig works and ensuring the country’s internet platforms can continue to develop and offer flexible employment, a top judge said, suggesting companies like Meituan and Didi Chuxing might avoid having to cover all the workers on their apps as full employees.

Executive vice-president of the Supreme People’s Court He Rong said during a press conference on Thursday that the country’s top judiciary has clarified labour rules for those working in the “new form of employment”, which includes delivery workers, ride-hailing drivers and live-streaming e-commerce hosts.

The court wants to ensure that the government is “regulating platforms into healthy growth” while also “protecting workers’ legitimate rights”, He said, which some lawyers took as a sign that the court will take tech platforms’ interests into consideration regarding new labour rules.

“As many labour disputes are decided by the courts, the statement from the Supreme People’s Court indicates that the court will likely take a more interventionist approach in deciding disputes relating to gig workers,” said Angela Zhang, an associate professor at the University of Hong Kong’s Faculty of Law. This marks a different approach for Beijing, which used to avoid taking a clear stance on the issue, she added.

Following the press conference, Meituan and Didi shares saw moderate gains. Didi rose 2.76 per cent on the New York Stock Exchange on Thursday, while Meituan gained 3 per cent in Hong Kong on Friday morning.

The court’s new approach comes after multiple central ministries jointly published new guidelines on protections for gig workers in July, reflecting Beijing’s resolve in regulating the sector and reigning in Big Tech platforms.

If platforms like ride-hailing giant Didi have to treat millions of gig workers as employees, it would mean paying huge sums to mandatory pensions and health care contributions, weighing on profits and possibly negating the entire business model.

In the July guidelines, regulators identified three different categories of workers in the gig economy: those who qualify for establishing formal labour relations, those who do not qualify but are still managed by internet platforms, and those who operate autonomously from the platforms.

Companies must have labour contracts with the first group, according to regulators, making the workers full employees. For the second group, companies must have a signed agreement with workers, and they must consult civil laws when dealing with those in the third group.

You Yunting, a senior partner at Shanghai Debund Law Firm, said the judiciary statement suggests most gig workers belong to the second category, sparing platforms from more burdensome financial commitments.

“The message here is actually that the courts will consider the platforms’ benefits in deciding cases,” You said. “This is a sign of authorities taking half a step back after hearing complaints from platforms.”

Charles Yu, head of Pillar Legal’s Shanghai office, also said that Beijing is leaving some wiggle room for tech companies to avoid driving up costs while “still trying to strike a balance” with protecting workers.

However, new rules are still broadening protections for gig workers, said Laura Wei, a lawyer at W&H Law Firm. This will likely mean higher operating costs in the future, she said.

Author: Josh Ye, SCMP

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