Israel's National Labor Court is set to rule on the status of the country's Wolt couriers, after a request by a former courier to conduct a class action suit to recognize couriers as employees was approved. Meanwhile in Finland and the UK rulings have been accepted recently recognizing the digital platform's couriers as self-employed.
Wolt began operating in Israel in 2018 and grew phenomenally during the Covid pandemic and currently employs 17,000 couriers around the country. The court petition will determine how the job market in Israel on new business models looks and will have broad consequences. The Attorney General Gali Baharav-Miara is due to hand down her opinion by the middle of March.
The dispute over the status of the platform's couriers in what is known worldwide as the gig economy has gained momentum recently. In the absence of appropriate legislation, the courts are required to rule on whether the couriers are employees or self-employed. According to the business model of Wolt, Uber and other such companies, the couriers are not the company's employees but self-employed.
This model has advantages the main one of which is the flexibility and freedom of the worker who decides when to work without making any commitments. On the other hand, the worker does not benefit from social rights like minimum pay, pension contributions, unemployment pay and more.
At the end of last week an important ruling was made in Finland, the home base of Wolt. According to Finnish public broadcasting company YLE, the court ruled that there is no employer-employee relations between the couriers and the company, overturning the government decision that there were employment relations between the company and couriers.
A similar ruling supporting the business model was handed down in November 2023 by the UK's Supreme Court regarding Deliveroo's couriers, saying that they were not employees of the company.
On the other hand, the Brussels Labor Court in Belgium ruled last December that 28 couriers of Deliveroo were employees. Deliveroo is appealing the ruling.
The legislation in Europe is stuck
Wolt operates in Japan and 26 European countries and its business model exists in rival companies in many other countries. In Germany Wolt's couriers are employees due to that country's laws. The EU has been trying for three years to impose order on the matter but no binding regulations have been introduced because of disputes.
In June 2023 there was a breakthrough when countries reached an initial agreement that required approval by the Council of Europe on a labor law that would apply to these companies and would grant workers social rights that they were not previously entitled to. Digital platform companies like Wolt opposed the initiative. Under the terms of the proposal, three out of seven criteria need apply for a worker to be considered entitled to social rights. An agreement has yet to be reached.
The request to approve a class action suit was filed in Israel in August 2020 by Golan Hazonovitch, a former Wolt courier through Adv. Jacob Spigelman, Amit Ido and Ahia Rabinowitz. In the request it was claimed that Wolt employs its couriers as self-employed despite the fact that there are work relations and therefore the couriers are entitled to social rights.
In August 2022, Judge Ariella Gilzer-Katz approved the request. The judge together with the public representatives ruled that the fact that it is a flexible job does not negate an employment relationship. It was ruled that "It can be determined at this stage that there is a reasonable possibility that it will be established that a working relationship existed between the plaintiff and the group and the respondent".
The court relied on the fact that couriers do not act on their own, and is only responsible to Wolt and not to the restaurant or the customer; that Wolt is the one that determines their salary, and has the power to change it; and that "Wolt has no business without the couriers." Another test was control and supervision. It was ruled that Wolt has the ability to supervise the couriers through the app in real time, and they are rated in the feedback by the customers. Wolt's claim that the company serves only as an intermediary between the couriers and the restaurants was dismissed, since the company is responsible to the restaurant and the customer for providing the delivery.
The appeal: Flexibility will be harmed
On appeal Wolt's lawyers from Herzog Fox Neeman claimed that the flexibility in the current employment model is what makes the position attractive and brings thousands to want to work as couriers. They say that if the claim is accepted, the couriers will be charged with duties arising from the employment relationships, in which there is an obligation to work at certain times, and thus flexibility will be harmed.
They also claim that the regional labor court did not consider the challenge in the innovative employment model, but chose to include it in the traditional tests for having an employment relationship. "The regional court was expected to hold an in-depth discussion of the innovative model, its essence and unique characteristics."
In recent years, an inter-ministerial committee was established by the Ministry of Economy, but no recommendations were made, and the committee did not promote regulation in the field. In June 2023, an appeal hearing was held before Court President Judge Varda Wirth Livne, and Judges Roy Polyak and Ilan Itach, as well as two public representatives. After the hearing, it was ruled that the state will submit its position on the issue and the inter-ministerial committee by July 27, 2023. Since then, postponements have been requested time and time again, the war has begun that has led to further postponements, and now the Attorney General is expected to submit her position by mid-March, and Judge Wirth-Livne said that "another extension will not be granted."
Published by Globes, Israel business news - en.globes.co.il - on February 26, 2024.
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