What does the $1 billion fine and Uber CLT drivers represent?

On the 14th of this month, the São Paulo Labor Court ordered Uber to employ all drivers associated with the platform by unifying labor laws and pay one billion Brazilian reais in compensation for collective moral damages. The decision applies throughout Brazil, and the company has six months after the resources run out to implement the measures.

Uber has already said that it does not intend to abide by the decision! The company stated in a statement that it will not take any measures until all resources are exhausted. The big question is: What would happen if the decision was maintained after that?

The great irony is that the drivers’ unions have spoken out saying they do not want to be appointed by the CLT! But this does not mean that they are satisfied with their current working conditions.

Whatever the outcome of these appeals, this case serves to discuss the applicability of Brazilian labor laws to today’s world. Uber and many companies that are part of our lives follow the concepts of the sharing economy. It expects vendors and service providers to engage with their customers, made possible by digital platforms.

The problem is that this model conflicts with CLT on many points. At a time when the federal government is seeking to bail out items such as the union tax, one has to wonder what will govern labor relations among millions of Brazilians in the near future.

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Brazilian legislation is one of the most protective in the world. Among the many provisions of Social Security, benefits such as 30 days of paid leave (plus an additional third) after one year of admission are luxuries that would be unthinkable in other countries. All of this has a cost, which is paid by the professionals themselves, especially companies. As a general rule, for every real salary paid to an employee, the company spends another amount on labor costs.

“This decision was made not to be implemented,” says José Issias Hoffman, director of monitoring at the corporate consulting firm. He wonders: “Operationally, how will Uber allow more than a million drivers via CLT?” He believes that if she is forced to do so, she will end up leaving the country, leaving a trail of unemployment behind.

The weight of fees and other work obligations has caused changes in Brazil’s employment profile for about two decades. Increasingly, companies are seeking, whenever possible, to replace the CLT model with single-employee outsourcing companies, the famous “PJ.” In this way, employers free themselves from burdens and bureaucracy, and have professionals at their disposal.

Some workers also prefer this format, especially since it gives them flexibility, especially working hours. This is the case for application professionals, such as drivers and delivery workers. “People want a flexible life,” says career strategist Tisiana Arnault. “If they have to work as a CLT, they will go back and look for a job, and they will be drivers for a company,” he suggests.

The main conflict between the rules of CLT and the rules of the sharing economy is that the former considers the professional to be an employee, while the latter considers him to be an independent contractor and sometimes not so: he acts as an informal provider, who can work. At the same time to countless contractors. This flexibility has become so valued by workers across the board (after all, there are so many services in the sharing economy), that many are foregoing the protections and generous benefits that CLT provides for it.

However, be careful, not everything that glitters is gold!

Kindness can mask abuse

There is no doubt that the sharing economy is a unifying phenomenon that brings many benefits to service providers and customers. Uber is as instructive as it is popular, as it has redefined urban mobility and is used by a large proportion of the population of major cities. But there are many other great names, such as Airbnb, Mercado Livre, iFood or Rappi. It’s hard to think of modern life without them, and the pandemic has made this even more apparent.

However, you cannot be impressed by its undeniable advantages. Hey DigiLabor Research Laboratory He continually investigates the impact of disruptive platforms and technologies (such as AI) on the world of work. They criticize, for example, that these platforms call drivers “partners” or “freelancers,” when, in fact, they do not even have the autonomy to determine the value of rides or the percentage they will receive for them. They also state that “self-entrepreneurship” hides an unequal employment relationship, where the professional bears all the risks of the entrepreneur, but acts as an employee, but without any benefits or protection.

actually Verwerk Institute, associated with the University of Oxford (UK), has established five principles essential for decent work: fair pay, fair working conditions, fair contracts, fair management and employee representation in the process. in Research they conducted in 2021, platforms in Brazil were among the worst in the world: on a scale of up to 10 points in these aspects, iFood and 99 scored 2, Uber got 1, while Rappi, GetNinjas and UberEats did not come from zero. The results are similar to those achieved by other countries in Latin America, but lag behind the results of operations in Africa, Asia and Europe.

It’s important to remember that when Uber started operating in Brazil, in 2016, driving for it seemed like a good deal: the company took only 7% of trips (today it can be up to 50%) and offered many rewards to drivers. The flights were cheap and the service was high quality.

This is what explains the “successful sharing economy”: it must be beneficial for everyone involved, i.e. the customer, the seller or service provider, and the platform. When Uber drivers started getting very little, it all fell apart!

“In fact, the legislation needs to be updated to understand this new global dynamic,” says Hoffman. He concludes: “It requires that it be fair to those who provide the service, to those who receive it, and to the economy, so that no one is harmed by this.”

“We need to try to negotiate to reduce these fees and be something that is a win-win for everyone, not just one party,” Arnault explains. For her, “If Uber has to adhere to the CLT, other companies will also have to do the same.”

It is a time of paradigm shift in the way we work. Insisting on the rigidity of the CLT, which was created in 1943, would run counter to the interests of many workers. On the other hand, leaving everything in the hands of the platforms would be like “asking the fox to guard the chicken coop.” It is essential that we strive to achieve this missing balance, because the sharing economy is already working. We, as customers, need to push for this solution.