In a significant legal development,the Karnataka High Court (“HC”) inMs. X v. ANI Technologies Private Limited (“Respondent“) and Others[1] inter alia held that the driver-subscribers of the Respondent were its ‘employees’ for the purposes of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”), and hence, the Respondent was in violation of the POSH Act for not taking any action against a driver-subscriber despite several attempts of the aggrieved customer to seek redressal (“Petitioner”). The writ petition was filed by the Petitioner, pursuant to inaction on the part of the Respondent and the internal committee (“IC”) constituted by it under the POSH Act, to consider the Petitioner’s request to inquire into her complaint of sexual harassment on the grounds that the IC lacked jurisdiction to do so as the said accused driver was not an ‘employee’ of the Respondent, but an independent contractor.
Brief summary of the decision:
- The HC reviewed the definition of ‘employee’[2] under the POSH Act and noted its broad scope to hold that the usage of the term was intended to encompass various kinds of relationships between the employer and another individual related to the employer’s business activities (including contractors, contract workers, apprentices, etc., none of whom share an employment relationship). The HC opined that to advance the purpose and intent of the POSH Act, it was necessary to extend the definition of ‘employee’ to cover individuals such as driver-subscribers.
- The HC scrutinised the subscription agreement executed by the Respondent with its driver-subscribers and noted how the Respondent exercised control over every aspect, such as determining rates, charges for the ride, nature, extent and manner of service offered, usage, maintenance of cars, receiving and declining bookings, payment of consideration, manner and method of payment, cancellation policies, etc., and restricted drivers from making independent decisions. The HC found that this clearly demonstrated that the relationship between the Respondent and the driver-subscriber went beyond the mere usage of its platform as an intermediary.
- The HC placed reliance on various judgments of Indian courts such as Silver Jubilee Tailoring House and Others v. Chief Inspector of Shops and Establishments and Another[3] and Royal Talkies Hyderabad and Others v. Employee State Insurance Corporation[4],which have laid down various factors, including the test of control and supervision to determine who constitutes an ‘employee’ under Indian labour laws. A particular reference was also made to an observation in Indian Overseas Bank v. Workmen[5],which held that if contractors were substantially responsible for the main and sole business, they would be treated as workers. Applying these principles, the HC found that the Respondent’s control over the driver-subscribers was evident in several ways, which supported their status as employees under the POSH Act.
- On the contention of the Respondent that the actual perpetrator was an impersonator, who was unauthorisedly driving the vehicle, due to which the IC could not proceed with an inquiry against him, the HC held that the IC is required to conduct an inquiry as the offender is ascertainable, and because the term ‘employee’ under the POSH Act would include a person employed on contract, with or without the knowledge of the principal employer.
- The HC also referred to relevant international cases, including the decision of the Supreme Court of the United Kingdom (“UK SC”) in Uber BV & Others v. Aslam & Others[6] (“Uber v. Aslam”). The UK SC examined the terms of the agreement between Uber and its drivers and concluded that Uber controlled and defined the services offered by the drivers. Consequently, the UK SC held that the drivers qualified as workers employed by Uber. Reliance was also placed by the HC on Commissioner of State of California in Barbara Berwick v. Uber Technologies[7], and Uber France v. Mr. AX[8], where similar conclusions had been arrived at.
- The HC referred to the Respondent’s zero tolerance policy, which was aimed at ensuring the safety and security of its customers and held that the Respondent was not only in contravention of the POSH Act, but also its own policy. It pointed out that there was no mention on the Respondent’s website or in any agreements that it would not accept complaints or be held responsible for any incidents during rides due to the assertion that its driver subscribers were not its employees. The HC further noted that the Respondent had failed to disclose that the vehicle involved in the incident belonged to ‘Ola Fleet Technologies Private Limited’, a subsidiary of the Respondent, a fact which further evidences the Respondent’s close connection with the matter.
Based on these findings, the HC inter alia directed the IC of the Respondent to hold an inquiry into the complaint of the Petitioner as per the POSH Act. It also directed the IC and the Respondent to pay a sum of INR 5,00,000 to the Petitioner, towards compensation, and an additional INR 50,000 towards litigation expenses.
Analysis and Conclusion:
The HC’s analysis in this decision was primarily focussed on interpreting the definition of ‘employee’ under the POSH Act, thereby giving the impression that only an employer is only required to look into complaints against employees. The HC did not discuss the point that the POSH Act envisages situations where a respondent may not necessarily be an employee and an aggrieved woman may still file a complaint against him, which would have to be dealt with by the employer. As per the POSH Act, where the perpetrator is not an employer, the employer may either deal with the complaint directly (which in some cases could admittedly result in some difficultly in implementing the recommendations of the IC, since there would be no disciplinary control over the respondent – though that would not be an issue here), or if so requested by the complainant, to initiate action in the workplace at which the incident of sexual harassment took place (not relevant for this case).[9]
The HC has placed heavy reliance on the test of control and supervision to assess whether the driver-subscribers were in fact ‘employees’ under the POSH Act. While the control and supervision test is often used to determine an employer-employee relationship, it is not the sole exclusive test for such analysis and Indian courts have held that several factors need to be considered and an integrated approach must be adopted to examine whether or not an employer-employee relationship exists[10], such as whether the personnel are fully integrated into the employer’s concern[11], whether the employer has economic control over the workers’ subsistence, skills and continued employment[12], who owns the assets with which the work is to be done[13], and who has the power to make key decisions in relation to these personnel[14].
The HC also placed reliance on international cases, including the decision of the UK SC in Uber v. Aslam. It is relevant to note that the issue to be determined in Uber v. Aslam was limited to whether Uber drivers were “workers” under Section 230(3) of the UK Employment Rights Act, 1996, and the statutory definition of “worker” as provided under the said provision under UK law is not comparable to any definition of “worker” or “employee” under the labour laws in India.
Although the HC’s analysis was limited to the POSH Act, in the absence of any jurisprudence by Indian courts on the status of gig workers, this reliance on the established test of control and supervision and other such factors raise the possibility of broader implications for gig workers under extant labour laws in India. That said, it is worth mentioning that the definition of “employee” under the POSH Act is fairly broad and includes contractors, contract workers, apprentices, etc., none of whom would be considered to have a traditional employment relationship, therefore, there may be limited implication of this judgement beyond the POSH Act. Further, the Code on Social Security, 2020, which is yet to be implemented, recognises gig and platform workers as a separate category of workers, falling outside the traditional employer-employee relationship. The HC’s evaluation of the relationship between gig workers and aggregators against the tests laid down to determine an employer-employee relationship could be seen as divergent from the legislative intent. It is also relevant to note that there is a landmark matter pending before the Supreme Court, involving various digital aggregators, including the Respondent, on the question of whether driver-subscribers and delivery partners should be considered as employees and be granted employee benefits[15].
The HC’s decision nevertheless highlights the need for businesses to rethink their duties and obligations, especially in relation to sensitive issues like prevention of sexual harassment, in models where companies act as digital intermediaries, or otherwise deal with personnel (especially in large numbers) without having a traditional employer-employee relationship.
The HC’s decision has currently been stayed in appeal before a division bench of the same court.[16]
For further information, please contact:
Bishen Jeswant, Partner, Cyril Amarchand Mangaldas
bishen.jeswant@cyrilshroff.com
[1] Order dated September 30, 2024 in WP No. 8127 of 2019.
[2] Section 2(f) of the POSH Act defines “employee” to mean a person employed at a workplace for any work on regular, temporary, ad hoc or daily wage basis, either directly or through an agent, including a contractor, with or, without the knowledge of the principal employer, whether for remuneration or not, or working on a voluntary basis or otherwise, whether the terms of employment are express or implied and includes a co-worker, a contract worker, probationer, trainee, apprentice or called by any other such name.
[3] (1974) 3 SCC 498
[4] (1978) 4 SCC 204
[5] (2006) 3 SCC 729
[6] UKSC/0002/2021 UKSC.
[7] Case no. 11-46739 EX.
[8] Court of Cassation in France, No. ECLI:FR:CCAS:2020:SO 00374.
[9] Section 19, POSH Act.
[10] Balwant Rai Saluja & Anr. v. Air India Ltd. & Ors. 2014 LLR 1009.
[11] Ram Singh And Others vs. Union Territory, Chandigarh And Others, 2004 AIR SC 969 ; Workmen of Nilgiri Co-op. Mkt. Society Ltd. v. State of Tamil Nadu and Ors., AIR 2004 SC 1639.
[12] Hussainbhai, Calicut v. The Alath Factory Thezhilali Union, Kozhikode And Others, (1978) 4 SCC 257.
[13] Sushilaben Indravadan Gandhi v. The New India Assurance Company Limited, 2020 (3) ABR 732.
[14] Workmen of Nilgiri Co-op. Mkt. Society Ltd. v. State of Tamil Nadu and Ors. AIR 2004 SC 1639.
[15] The Indian Federation of App-based transport workers and others v. Union of India and others, WP (Civil) No. 1068/2021.
[16] ANI Technologies Private Limited v. Ms. X, WA 1493 / 2024.
