Curia decided: currently known platform-based food delivery is not an employment relationship, but legal safety net would be needed according to labour law expert

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The Curia has not classified platform-based, self-employed food delivery as employment relationship in a case that has also raised public concern, which means that in Hungary so-called platform workers are excluded from the labour law protection. According to Kapolyi Law Firm’s expert, it is reasonable that not all forms of employment are necessarily employment, but there is a need for an intermediate category or legal safety net to manage the inequality between dominant large companies and self-employed workers.

In its final judgment in December, the Curia did not classify food deliveries as an employment relationship. According to the Supreme Court, no broad right of instruction and control necessary for the classification of an employment relationship existed, since, for example, in the case before the court, the courier could refuse to do the job in question and there was no hierarchical relationship or interdependence. (For details of the Curia’s decision, see “Background: this is why the Curia ruled as it did”.) According to Dr. Zsófia Somlóvári, labour law expert at Kapolyi Law Firm, the decision is particularly important because Hungarian labour courts could previously reclassify hidden employment relationships on the basis of such characteristics, however, after the decision of the Curia, this cannot be done in the future in the case of similar facts.

According to the labour law expert, platform employment is a new area that mixes labour law and business-based employment. For example, food delivery workers take on a task through an app, but using branding elements defined by the employer, they are now working in an “independent” entrepreneurial capacity. The expert points out, however, that in many cases, food delivery and similar workers are heavily dependent on their employers, yet are not protected against them. A common view in the legal literature is that this form of employment is essentially a form of employment bypass: some schemes take advantage of the fact that many people work regularly of their own volition and in fact for more hours than labour law would allow, due to competition between colleagues, for example.

Nevertheless, Kapolyi Law Firm’s expert believes that it is not necessary to exclude all forms of employment from the umbrella of agency/entrepreneurial/contractual relationships, even if they are even slightly similar to employment, as this would also reduce the choice of the employees. Rather, a safety net would be necessarily developed in order to manage the inequality between dominant large companies and self-employed workers. This could include, for example, a fixed minimum hourly rate or the creation of an ‘intermediate’ category that assesses the dominance of the parties vis-à-vis each other. Few would argue that in such a case the self-employed person has no real bargaining power vis-à-vis his large business client, therefore he cannot raise the price of his service, for example. Moreover, there is no possibility of collective redress, even though they work in masse for the same employer in, essentially, the same structure, since only employees can form trade unions.

Background: this is why the Curia ruled as it did

The Curia made its decision with reference to Act I of 2012 on the Labour Code (hereinafter referred to as „Labour Code”). In the case, the Court had to examine whether there was a broad right of instruction and control, including the place, time, and manner of work, which would justify a subordinated and superior hierarchy between the employee and the employer, Kapolyi Law Firm’s lawyer recalls. The Curia, however, found that the circumstances assessed jointly in the present case, do not constitute qualifying features on the basis of which an employment relationship could be established:

  • According to the Labour Code, the fact that the employer supervises and determines the way food delivery workers perform their duties (e.g. wearing a corporate identity) and that it expects them to accept a delivery within 75 seconds does not constitute a broad employer instruction, since if the courier does not accept the task, he is not obliged to perform the work.
  • Although the principal is not deprived of the right to give instructions, even in the case of a contract for work, in the present case the instructions did not cover all the phases and elements of the work. The food delivery worker received the tasks through an application, which in itself does not justify subordinated and superior hierarchy. In addition, the food delivery worker decided for himself whether and how much active time he would take, allocated his own time when taking on tasks, and this was not monitored or accounted for by anyone. According to Dr Zsófia Somlóvári, Hungarian labour law does not recognise any type of employment relationship in which the number of working hours is exclusively adapted to the needs of the employee, i.e. there is no fixed working time, even in case of a working time frame or flexible working hours.
  • In the Curia’s view, the proof of performance was the verification that the delivery had taken place.
  • A further objection to the employment relationship was that the element of employment in the organisation was missing, no hierarchical relationship or interdependence existed, which could be a qualifying element of an employment relationship.
  • The principal settled with the food delivery worker on a fortnightly basis, and the remuneration was partly based on the remuneration for the tasks undertaken and completed, and partly on an hourly rate, but the remuneration was neither fixed nor capped by the parties. The Curia did not consider this regular remuneration as a basis for establishing the existence of an employment relationship either, since regular remuneration is also common in long-term agency relationships. This is the case, for example, of a fixed monthly fee paid in return for invoices to be paid on a continuous basis and for services rendered.
  • Lastly, the food delivery worker carried out the activity using his own means, and the resources strictly necessary for the performance of his tasks were not provided by the principal.