Contract LawTechnology

Gig Economy App Services: Licence to Disrupt

gig economy sharing

Gig Economy

We are living in the age of the gig economy. It is causing disruption all around us. Technology, the online marketplace, and the internet of things (IoT) is rapidly changing the status quo at a phenomenal and unyielding rate. The so called ‘gig economy’ (also know as the sharing economy) and its apps are becoming bigger and bigger. But existing laws are struggling to keep pace with offerings for taxi services (Uber), sleeping accommodation (Airbnb) and even legal services (LegalZoom) that are connecting people in new ways.

Is your gig economy App a licensed service provider?

A free market economy should applaud such entrepreneurial spirit. However, the fact remains that in the case of Uber and Airbnb ordinary people provide the services. The organisations are not licensed as taxi companies to carry passengers and their users are not licensed taxi drivers or hoteliers.

The owners of these internet business see the services as the democratisation of personal freedom and service. These gig economy services essentially connect people. In economic terms they establish markets between individuals and allow them to trade. One of the reasons these new business models have been so successful is because they have removed barriers to entry. In other words, they allow an individual to easily do business with someone else. But are these new gig economy businesses dangerous and are they operating in accordance with law?

Is Uber an actual taxi service?

If Uber is a taxi service then it is subject to the various legislation and regulation governing taxi companies, car and drivers. But taking Ireland as an example, Uber is not licensed by the appropriate regulatory body in Ireland, which for taxis is the National Transport Authority.

It should be noted that, from a legal perspective, the gig economy service provider make this clear. LegalZoom states on its website that it is “not a law firm” and Uber argues in its press releases that it is a “ride-sharing app” rather than a taxi service.

In this way, Uber frames itself as a technology company that connects people rather than a company in the business of offering transportation services that require it to provide licensed cabs. Essentially, anyone with a car and a smartphone can be an UberX driver.

Why is this gig economy disruption happening?

But why is this disruption happening? Is it because taxi fares so expensive? Or is it the convenience that Uber offers by hailing an UberX car at the touch of a button through its App.

Travellers need a place to stay and a way to get there. Airbnb and Uber argue that they stop this inefficiency and allow the traveler to make use of otherwise empty seats in a car or dormant beds. They are also convenient as they are available on a user’s smartphone or connected device and instantly show other users offering the room or car space.

Why does it cost €20 for a 10 minute taxi ride the in Dublin? One of the main reasons is the cost of commercial transport insurance and annual service licence charges. The disruptive online service providers use this reasoning in their counter-claim that it is the regulators who need to evolve.

Who is liable when an Uber driver has an accident?

Uber states that it is not liable for acts or omissions of its users. Despite this, Uber’s website claims that it offers “best-in-class insurance coverage”.

However, the issue of liability and claims in the case of an accident involving an UberX driver is a grey area and a legal quagmire. The law has not kept pace with these new models of delivering services and connecting people.

Insurance companies have always included provisions in individual car and home-owner policies that mean claims arising from business activities are ineligible. But few, if any, insurance companies directly address ride sharing or apartment sharing Apps in their policies. Which means there is a risk that your next Uber ride could be uninsured.


Photo credit: Pixabay

3 thoughts on “Gig Economy App Services: Licence to Disrupt

  1. Hi Mark – what is your view on imposing liability on the drivers just through tort?! As that would apply whether they were professional taxi drivers or just normal people (although I guess the standard of care would be different!). Thanks!

Leave a Reply