7 October, 2015
INTRODUCTION
This legal update provides a brief overview of the new legal framework over third-party taxi booking service providers in Singapore.
On 1 September 2015, the Third-Party Taxi Booking Service Providers Act 2015 (No. 17 of 2015) (“Act”) officially came into force, after being passed by Parliament on 11 May 2015. Subsidiary legislations, including the Third-Party Taxi Booking Service Providers (Registration of Registered Providers) Regulations 2015 (“Regulations”), also came into operation on the same date. In addition, the Land Transport Authority ("LTA") has also published a summary of the key conditions for third-party taxi booking service providers (“Key Conditions”). These Key Conditions will be included in the Certificate of Registration issued to registered providers registered under the Act.
BACKGROUND
At the second reading of the Third-Party Taxi Booking Service Providers Bill, the former Minister for Transport Mr Lui Tuck Yew explained that the Act was drafted to grant LTA powers to regulate third-party taxi booking services.
The Minister cited several market examples of such services, including smartphone applications like MoobiTaxi, GrabTaxi, Easy Taxi, uberTAXI and Hailo. 20% of all taxi trips are made through phone or application bookings, while 80% are street-hailed. Out of those phone or application bookings, about 80% are made through the taxi companies. The remaining 20% are made through third-party applications. In short, about 4% of taxi trips are made through such third-party applications and the number is growing.
AMBIT OF THE THIRD-PARTY TAXI BOOKING SERVICE PROVIDERS ACT 2015
The Act regulates the provision of third-party taxi booking services for journeys within, or partly within, Singapore. The Act is designed under a light-touch approach and imposes only basic requirements necessary to protect commuter interests and safety, but at the same time it aims to preserve the fundamental tenets of Singapore’s taxi regulatory policies.
The Act presently governs booking services for taxis. Hence, service providers offering booking services for taxis are required to register under the Act. Service providers offering booking services for non-taxis only (such as private limousine services) are not regulated under the Act. Most service providers in Singapore (such as Uber which offers uberX and uberTaxi services) offer both taxi and non-taxi booking services, and hence will need to register under the Act.
REQUIREMENT OF REGISTRATION
Pursuant to the Act, all third-party taxi booking service providers with more than 20 participating taxis are required to register with LTA, in order to operate in Singapore. To facilitate transition into the new legal framework, the Act permits the continued operation of unregistered third-party taxi booking services for a period of three months from 1 September 2015 to 1 December 2015.
The Act goes on to provide the definitions of the following terms. Where a person provides all of the following, he would be found to be a provider of a taxi booking service:
(a) facilitate bookings for taxi services;
(b) send information about bookings for taxi services to taxi drivers;
(c) assign bookings for taxi services to taxi drivers; and
(d) assign taxis to persons making bookings for taxi services.
This must be read with the definition of “third-party taxi booking service”, which means a taxi booking service:
(a) that can be accessed by taxi drivers who are not employees of, or hirers of taxis from, the provider of the taxi booking service;
(b) that facilitates bookings for taxi services; and
(c) that has a number of participating taxis equal to or greater than the threshold number, stipulated to be 21.
With regard to limb (c) above, where the licensed taxi driver or drivers licensed under the Road Traffic Act (Cap. 276) to drive a particular taxi has access to the third-party taxi booking service and receives information about bookings for taxi services from that service, that particular taxi will be counted as a participating taxi with regard to that third‐party taxi
booking service.
The requirement to register under the Act applies to the provision of any third-party taxi booking service operated from outside Singapore, or partly inside or partly outside Singapore, for journeys by taxis within, or partly within, Singapore.
Therefore, where a Malaysian third-party taxi booking service operated from within Malaysia provides services wherein taxis are driven for journeys within Singapore, from Malaysia to Singapore, or from Singapore to Malaysia, such a service provider will have to be registered under the Act. Apart from this, foreign registered vehicles are also regulated by LTA. Where the taxi is West Malaysian-registered, application for a public service vehicle permit will have to be made to LTA.
Anyone providing an unregistered service and is not legally exempted from the registration requirement is liable to a fine not exceeding S$10,000, or imprisonment for a term not exceeding six months, or both.
Currently, an application fee of S$200 is payable with respect to an application to become a registered provider. The application form and the application guidelines for registration can be accessed here.
LTA DISCRETION TO GRANT OR REFUSE REGISTRATION
LTA will have regard to the following matters in deciding whether to grant or refuse registration, and any conditions to be imposed on the applicant:
(a) the financial standing and business experience of the applicant and the
applicant’s ability to provide a third‐party taxi booking service that is safe, reliable and efficient;
(b) the demand for third‐party taxi booking services in Singapore;
(c) the appropriate class or classes of registration for the applicant; and
(d) any other matter that LTA considers relevant.
EXEMPTION FROM REGISTRATION REQUIREMENT
Taxi service operators licensed under the Road Traffic Act providing taxi booking services to their own taxi drivers are not required to register under the Act.
CLASSES OF REGISTRATION
A registered provider can be registered under different classes of registration. This depends on the type of third‐party taxi booking service it provides. The two classes of registration are as follows:
(a) Class 1 — for providing one or more independent mobile application services, with or without providing integrated mobile application services or other third‐ party taxi booking services not using mobile application software; and
(b) Class 2 — for providing one or more third ‐party taxi booking services, none of which is an independent mobile application service.
In respect of the above classes, “independent mobile application service” means a third‐party taxi booking service, that is provided or to be provided using mobile application software and is not integrated with a taxi booking service of a taxi service operator. An “integrated mobile application service” means a third-party taxi booking service, that is provided or to be provided using mobile application software and is integrated with a taxi booking service of a taxi service operator.
An application to vary any class of registration of a registered provider can be made, and a variation application fee of S$200 is payable.
REGISTRATION TERMS AND RENEWAL
The registration certificate is only valid for three years and may be renewed with a renewal fee of S$200 (for renewals made three months before the expiry of registration).
PERIODIC FEES PAYABLE
LTA takes active steps to supervise the operations of the registered provider. These steps include:
(a) auditing the registered provider’s operation, monitoring and supervision of the registered provider’s third‐party taxi booking services to assess whether the registered provider is providing safe, reliable and efficient third‐party taxi booking services;
(b) monitoring and analysing data obtained from the registered provider’s provision of third‐party taxi booking services to assess whether such third‐party taxi booking services are responsive to the demand for taxi services in Singapore; and
(c) evaluating compliance by the registered provider with the conditions of registration, codes of practice, directions and compliance orders applicable to the registered provider.
The registered provider is required by the Act to pay to LTA a periodic fee for an accounting period in respect of LTA’s regulatory activities above. The periodic fee payable will be equal to 0.1% of the audited gross revenue of the registered provider for the accounting period. It should be highlighted that in computing the periodic fee that is payable, “gross revenue” instead of “net revenue” is used. Following this, even if the service provider suffers a net loss after deducting all the expenditure and costs incurred for the business operation, the service provider is still liable to pay the periodic fee.
KEY CONDITIONS TO BE COMPLIED WITH SUBSEQUENT TO REGISTRATION
The certificate of registration issued to registered providers will specify certain conditions to be complied with by the registered provider. LTA may modify the conditions of registration. LTA has published a summary of Key Conditions for service providers. They include the following:
- Bidding, pre-trip tipping, booking fees, fare information and receipts
To ensure that taxi services remain a mode of public transport equally accessible to all members of the public, bidding and pre-trip tipping for taxi services will not be allowed. Hence, the registered provider is not allowed to enable bidding and pre- trip tipping for taxi services. Registered providers are required to implement measures to restrict its passengers and drivers from inducing pre-trip tipping through their platforms. For example, free- text fields meant to specify the exact pick-up location may be misused for pre-trip bidding.
In addition, the booking fees charged by third-party taxi booking services cannot exceed the booking fees charged by taxi companies. This is to avoid price escalation by taxi companies in reaction to fare increases from third-party taxi booking service providers.
Fare information shall be specified to commuters upfront before commuters accept dispatched taxi. These include the flag-down fare, distance and time rates, the booking fee charged by the service provider, and where applicable, peak period and location surcharges. Receipts detailing the different fare components must be provided to the passenger upon request.
- Licensed taxis and drivers
Taxi drivers in Singapore are required to hold "Taxi Driver’s Vocational Licences". If the commuter requests only taxis, the registered provider can only dispatch licensed taxis and drivers holding valid Taxi Driver’s Vocational Licences. The registered provider must also maintain accurate records of its taxis and drivers.
If the registered provider has non-taxi booking options, allowing commuters to request for non- taxis like private limousines, it must clearly differentiate these from the taxi booking option (for instance, by using separate and distinct icons). The differences in charges between these services must also be highlighted upfront and highlighted clearly.
Destination specification
The registered provider cannot require commuters to specify their destinations before making the bookings. The intention behind such a condition is to prevent drivers from cherry picking their fares. However, registered providers can allow commuters, if they choose to do so, to specify their destinations, if they think that this will increase their chances of getting a ride.
This is different from the present business model adopted by most service providers which typically require commuters to specify their destinations upfront when making a booking. Hence, changes to the operating platforms of service providers are advisable to ensure compliance with the conditions of registration.
- Customer service
The registered provider must provide either a telephone number or an electronic communication
channel, such as an email address, website or via a smart application, to receive feedback, enquiries, complaints and requests for assistance. The registered provider must also provide a local correspondence address.
The registered provider must further provide priority assistance to passengers who have left their property in participating taxis. It is also required to provide passengers the ability to indicate special needs (eg wheelchair or bulky luggage).
Notification on change in service or charges.
For any change that affects the delivery of service or the booking fees, fares and/or surcharges payable by passengers in using the service, registered providers shall give LTA 14 days prior notice and all its registered drivers and passengers at least seven days prior notice before the change take effect.
- General obligations
The registered provider must furnish information specified by LTA relevant to the proper discharge of its functions. These include, but are not limited to:
(a) details of taxis and drivers registered with the provider;
(b) booking information; and
(c) number of registered end users.
The registered provider must also investigate and report on all incidents affecting its booking service as required by LTA.
Finally, the registered provider must allow LTA or its appointed firm to conduct audits relating to the third-party taxi booking service.
CODE OF PRACTICE
LTA is empowered under the Act to issue codes of practice concerning the provision of third‐party taxi booking services applicable to all registered providers or any specified class or classes of registered providers. Every registered provider must comply with the relevant codes of practice applicable to the registered provider, except when a waiver is granted by LTA.
DIRECTIONS, COMPLIANCE ORDERS, AND REGULATORY SANCTIONS
The Act provides LTA with a wide range of regulatory and enforcement powers.
LTA may (without compensation) give any direction to a registered provider to do or refrain from doing something, if it has reasonable grounds to believe that:
(a) the registered provider is providing a third-party taxi booking service in a manner that may adversely affect the availability of taxi services for hail on roads in Singapore;
(b) the registered provider is providing a third-party taxi booking service that is not responsive to the demand for taxi services in Singapore; or
(c) there is an emergency for which the direction is necessary to alleviate or minimise any serious risk to public safety.
Breaches of any condition of registration, directions given by LTA, or any provision of a code of practice applicable, may further result in the imposition of a compliance order on the registered provider.
More egregious conduct or lapses on the part of the registered provider may result in the imposition of regulatory sanctions by LTA. Such sanctions can include a financial penalty not exceeding S$100,000 for each instance of contravention or non-compliance; suspension of a registered provider’s registration for not more than three months; and the revocation of a registered provider’s registration.
LIABILITY OF OFFICERS, MEMBERS AND PARTNERS, ETC
Where offences under the Act have been committed by corporations, partnerships, or unincorporated associations, the same offence may be imputed to its officers, members, or partners (as the case may be) (the "individuals"),
if these offences have been committed with the consent or connivance of such individuals, or are attributable to any neglect on the part of such individuals.
COLLECTION OF PERSONAL DATA
Third-party taxi booking service providers must comply with all applicable laws, such as the Personal Data Protection Act 2012 (No. 26 of 2012), and ensure that the privacy of commuters is appropriately safeguarded, as well as the data that they hold.
TAXI SERVICE OPERATORS
Related amendments have been made to the Road Traffic Act, which previously defined a taxi service operator to be a person that, in the course of business, owns more than one taxi and leases all or any of such taxis to individual drivers for the purpose of providing a service whereby:
(a) the taxis ply the roads for hire or are available for hire from designated taxi stands; or
(b) bookings for the use of such taxis are accepted and taxis are assigned to persons making such bookings.
However, with the growth of third-party taxi booking services, it is possible that taxi companies’ operating models may also evolve.
The Road Traffic Act has thus been amended to broaden the definition of a taxi service operator. Section 111A of the Road Traffic Act now reads as follows:
Taxi service operator
111A.—(1) For the purposes of this Part, a person operates a taxi service if, in the course of business —
(a) the person owns more than one taxi; and
(b) the person causes or permits individuals to drive taxis owned by that person for one or both of the following purposes:
(i) the taxis are for hire for journeys within, or partly within, Singapore;
(ii) the person provides taxi booking services to individuals driving such taxis.
(2) For the purposes of this section, a person provides a taxi booking service if the person does all of the following in the course of business:
(a) facilitate bookings for taxi services;
(b) send information about bookings for taxi services to taxi drivers;
(c) assign bookings for taxi services to taxi drivers;
(d) assign taxis to persons making bookings for taxi services.
This will enable LTA to regulate taxi service operators with contractual arrangements with their drivers which are different from the more common hirer model. It will also prevent taxi companies from by-passing regulations by adopting different contractual arrangements with their drivers.
As a result of the amendments, businesses providing services which fall under the expanded taxi service operator definition above will need to obtain a license from LTA, as prescribed under the Road Traffic Act.
CHAUFFEURED VEHICLE SERVICES
Some third-party taxi booking services in the market today, such as GrabCar and uberX, provide booking options for chauffeured vehicle services. Chauffeured vehicle services in Singapore are already regulated under the Road Traffic Act. These services must be pre-booked and cannot be hailed on the streets or pick up passengers at taxi stands like taxis – which is the primary distinction between taxi services and chauffeured vehicle services. Nevertheless, through the use of third-party taxis booking services applications, the distinction between traditional taxis and chauffeured vehicle services have been gradually blurred.
TAXI HIRING AGREEMENTS
In Singapore, inducing a breach of contract is a tort that can give rise to a civil claim for damages or other remedies. Where A knows that a contractual relationship exists between B and C, and A by word or conduct procures or induces C to breach his contract with B without any reasonable justification or excuse and as a result B sustains damage, then A has committed a tort against B. This may entitle B to file for a claim for damages. If damages would not be an adequate remedy, the Court may grant injunctive relief to restrain A from future interference.
Most taxi operators in Singapore generally enter into taxi hiring agreements with their taxi drivers who are hirers of the operators’ taxis. Hypothetically, if a taxi operator, through this taxi hiring agreement, forbids their hirers from the use of third-party taxi booking services, the hirer would be in breach of contract should they utilise such third-party taxi booking services to supplement their income. Additionally, this may also give rise to a potential civil claim for the inducing of a breach of contract. However, the set of hypothetical facts above has not yet been tested in court. Moreover, most taxi operators in Singapore do not contractually forbid their drivers from utilising third-party taxi booking services to source for more passengers.
CONCLUSION
The Third-Party Taxi Booking Service Providers Act 2015 comes at a time when similar services in foreign countries have been met with strong opposition from traditional taxi drivers and unions. In France, under the “Thévenoud Law” that came into force earlier in 2015, drivers for ride-matching services like Uber are required to comply with many of the same regulations applicable to traditional taxi drivers, such as licensing and insurance requirements. Additionally, the new law also prohibits ride-matching services from using geolocation to show available cars on a smartphone application, and requires drivers to return to a garage between fares in many circumstances. In a blog post, Uber lamented the onerous nature of the new law – while it had begun to license its drivers as stipulated under the new law, the process can take six months, require 250 hours of training, as well as a down payment of Euros 1,500.
The European Commission has expressed its concerns to the French government in May this year for a potential infringement of EU law.
In Malaysia, Uber and GrabCar are legal although drivers with no proper public service licences face the risk of arrest by Suruhanjaya Pengangkutan Awam Darat, the Land Public Transport Commission.
In Singapore, the Third-Party Taxi Booking Service Providers Act 2015 was introduced only after extensive consultation with commuters, the National Taxi Association, third-party taxi booking services and taxi companies, and has received the general support of the Members of Parliament during the second reading of the bill in May this year.
On 2 October 2015, the Minister for Transport Mr Khaw Boon Wan announced that the Government will be reviewing the competitive practices of private car hire services in Singapore, which will include services like uberX and GrabCar. Earlier this year, LTA was deliberating over implementing rules for the vocational licensing of private chauffeur drivers, who are not presently required to be licensed unlike taxi drivers.
The Third-Party Taxi Booking Service Providers Act 2015 is a timely and welcome legislation and its minimalist regulatory approach is likely to please establishment-disrupting industry players. Nevertheless, the limited coverage of the Act, a testament to the Government's reluctance to discourage innovation and competition in the emerging asset sharing economy, has raised concern about driver standards and public safety. Taxi drivers in Singapore are required to undergo a "Taxi Driver Vocational License Course" conducted by the Singapore Taxi Academy comprising an approximately 60 hours session classroom training. Taxi rental fees charged by taxi operators are also generally more expensive than vehicle rental fees payable by drivers using ride- matching applications. Taxi drivers are understandably crying foul over the perceived unfairness of these disparities. It appears that there is more work to be done in terms of establishing a level playing field for private chauffeurs to compete fairly with taxi drivers, and at the same time, maximising consumer welfare by creating a public transportation system that is both safe and efficient for its users.
For further information, please contact:
Siew Ling Yap, Director, Drew & Napier
siewling.yap@drewnapier.com
