APP-BASED WORKER CLASSIFICATION DEBATES IN PAKISTAN

Introduction

The rapid growth of ride-hailing applications, food-delivery platforms, courier services, and other digital labour platforms has created a new legal issue in Pakistan concerning the status of app-based workers. Drivers, riders, couriers and other platform workers are frequently described by digital platforms as “partners,” “service providers,” or “independent contractors.” However, the actual nature of their relationship with the platform may contain several characteristics traditionally associated with employment.

The principal legal question is whether an app-based worker should be classified as an employee/workman or as an independent contractor. The answer is important because employee or workman status may determine access to statutory wages, social security, employment injury protection, termination remedies, collective labour rights and other employment benefits.

Pakistan does not yet have a comprehensive statutory framework specifically designed for platform workers. Consequently, existing labour-law principles and judicial tests concerning employment relationships may become important in determining their status.

1. Meaning of App-Based Worker

An app-based worker is a person who performs services through a digital platform or mobile application. Examples include:

Ride-hailing drivers;

Food-delivery riders;

Courier workers;

E-commerce delivery workers;

Online service providers; and

Other on-demand platform workers.

The platform generally connects customers with workers through an application and may control important aspects of the transaction through digital systems.

2. Employee or Independent Contractor?

The central classification debate concerns the distinction between a contract of service and a contract for service.

A contract of service generally indicates an employment relationship in which the worker performs duties under the direction and control of an employer.

A contract for service generally describes an independent contractor who operates an independent business and undertakes to provide particular services.

In platform work, the distinction becomes difficult because the worker may have some independence while simultaneously being subject to substantial platform control.

3. Importance of the Control Test

The traditional control test examines whether one party exercises control over the manner in which another person performs work.

In the platform economy, control may exist through:

Allocation of rides or orders;

Fare or payment structures;

Performance requirements;

Customer ratings;

Incentive schemes;

Acceptance-rate requirements;

Algorithmic monitoring;

Suspension; and

Deactivation of accounts.

Therefore, the absence of a traditional human supervisor does not necessarily mean that the platform lacks control.

4. Substance Over Form

One of the important principles in employment law is that the actual nature of the relationship may be more significant than the terminology used by the parties.

Case Law: United Bank Limited v. Jamil Ahmed

2024 SCMR 164

The Supreme Court of Pakistan emphasized that determination of worker/workman status depends substantially upon the nature of duties actually performed rather than merely upon the designation or nomenclature given to the position.

This principle may be relevant to app-based workers. Merely describing a driver as a “partner” or “independent contractor” would not necessarily settle the legal question if the factual relationship demonstrates characteristics of employment.

5. Nature of Duties Test

Case Law: Mukhtar Ahmad v. Punjab Labour Appellate Tribunal

1992 PLC 154

The case reflects the principle that the nature of the work actually performed is important when determining whether an individual falls within the scope of labour-law protection.

For platform workers, the court may therefore examine the actual services performed, the manner in which those services are organized, and the degree of control exercised by the platform.

6. Control and Supervision

A court considering an app-based worker's status may examine:

Who determines the manner of work?

Who determines payment?

Who assigns customers?

Who monitors performance?

Who determines incentives?

Who can suspend the worker?

Who can terminate access to the application?

Whether the worker is economically dependent upon the platform.

The greater the platform's control and supervision, the stronger the argument that the relationship possesses characteristics of employment.

7. Algorithmic Management

Algorithmic management is one of the most important new issues in platform labour.

Traditional employers may give instructions personally through supervisors. Digital platforms can perform similar functions through software.

An algorithm may:

Allocate work;

Determine priority;

Calculate remuneration;

Monitor acceptance rates;

Record customer ratings;

Determine incentives;

Measure performance; and

Restrict or suspend accounts.

Thus, the legal concept of employer control may need to be examined in light of technological forms of management.

8. Economic Dependence

Economic dependence is another relevant consideration.

A worker may technically be free to work for several applications, but in practice may obtain most of his income from one platform.

Relevant questions include:

Can the worker negotiate payment?

Can the worker independently determine prices?

Does the worker have an independent customer base?

Does the worker bear genuine entrepreneurial risk?

Can the worker freely provide services outside the platform?

Is the platform the worker's principal source of income?

These factors may assist in determining whether the worker is genuinely operating an independent business.

9. Case Law on Contractual Labour

Case Law: IFFCO Pakistan v. Ghulam Murtaza and others

2024 SCMR 1548

The jurisprudence concerning contractual and outsourced labour demonstrates the importance of examining the practical relationship between the parties, including questions of control, supervision and responsibility.

Although the case did not specifically concern a digital platform, its reasoning may provide useful principles when determining whether a contractual label accurately reflects the real relationship.

10. Case Law: State Oil Company Limited v. Bakht Siddique

2018 SCMR 1181

Pakistani jurisprudence concerning workers engaged through contractual arrangements recognizes the importance of examining the substantive relationship rather than relying exclusively upon formal contractual terminology.

This principle may become relevant where a platform describes workers as independent contractors but exercises extensive operational control over their work.

11. Case Law: Abdul Ghafoor

2018 SCMR 157

The case forms part of Pakistani jurisprudence concerning contractual labour and the determination of the actual employment relationship.

Its broader relevance to platform work lies in the judicial examination of the real relationship between the worker, contractor and principal organization.

12. Case Law: Fauji Fertilizer Corporation Ltd.

2013 SCMR 1253

The case contributes to Pakistani jurisprudence concerning contractual labour arrangements and the determination of the relationship between workers and the principal enterprise.

Its principles may assist courts when examining whether an alleged independent contractual arrangement genuinely operates independently in practice.

13. Case Law: ICI Pakistan Ltd. v. Appellate Authority EOBI

2024 PLC 188

The case concerns the legal characterization of workers in relation to an organization and illustrates the importance of examining factors such as appointment, payment, control and responsibility.

Such considerations can potentially become relevant to disputes involving digital platforms and their workers.

14. Factors Indicating Employee Status

The following factors may support classification as an employee/workman:

15. Factors Indicating Independent Contractor Status

On the other hand, the following circumstances may support independent-contractor classification:

Freedom to determine working hours;

Ability to work for several platforms;

Ownership of vehicle or equipment;

Ability to refuse assignments;

Absence of guaranteed remuneration;

Bearing operating expenses;

Bearing commercial risks; and

Ability to operate an independent business.

No single factor necessarily determines the issue in every case.

16. Consequences of Employee Classification

If an app-based worker is legally recognized as an employee or workman, applicable labour legislation may provide protection concerning:

Minimum wages;

Working conditions;

Social security;

Employment injury;

Statutory benefits;

Termination;

Grievance procedures;

Collective bargaining; and

Other labour protections.

The precise rights would depend upon the applicable federal or provincial legislation and the particular facts of the employment relationship.

17. Consequences of Independent-Contractor Classification

If the worker is treated as an independent contractor, conventional employment protections may not automatically apply.

The worker may instead rely primarily upon:

The contractual agreement;

General contract law;

Commercial remedies;

Applicable social-protection legislation, where available; and

Other laws applicable to independent service providers.

This difference makes legal classification particularly significant.

18. Absence of Specific Platform-Worker Legislation

Pakistan's traditional labour laws were primarily designed around conventional employment relationships. The emergence of digital platforms has therefore created a regulatory gap.

The absence of a dedicated platform-worker statute creates uncertainty concerning:

Minimum earnings;

Social security;

Accident protection;

Algorithmic transparency;

Deactivation procedures;

Collective representation;

Data protection; and

Dispute-resolution mechanisms.

19. Possible Judicial Approach

When determining whether an app-based worker is an employee or independent contractor, a Pakistani court may consider the totality of the relationship, including:

Nature of duties;

Degree of control;

Supervision;

Method of payment;

Economic dependence;

Ability to work for other platforms;

Ownership of equipment;

Algorithmic management;

Account suspension and deactivation;

Integration into the platform's business;

Continuity of work; and

Actual operation of the contract.

The contractual description would therefore be only one part of the overall analysis.

20. Major Legal Challenges

The classification of app-based workers raises several legal challenges:

A. Technological Control

Courts must determine how traditional concepts of supervision apply when control is exercised through algorithms.

B. Contractual Classification

Platforms may classify workers as independent contractors, while workers may argue that the practical relationship resembles employment.

C. Social Protection

Workers classified outside conventional employment may face difficulties obtaining social-security and employment-injury protection.

D. Deactivation

Account suspension or permanent deactivation may raise questions concerning procedural fairness and termination rights.

E. Collective Rights

The classification of workers may affect their ability to organize and collectively negotiate with platforms.

Conclusion

App-based worker classification is an emerging issue in Pakistani labour law. The central question is whether a platform worker is genuinely an independent contractor or whether the platform exercises sufficient control, supervision and economic authority to create an employment relationship.

Pakistani judicial principles concerning the nature of duties, control, supervision, contractual substance and the real relationship between the parties provide an important framework for addressing this question. The decision in United Bank Limited v. Jamil Ahmed (2024 SCMR 164) is particularly relevant because it emphasizes the importance of the actual nature of duties rather than merely the designation given to the worker.

However, app-based work presents new issues that traditional labour law did not specifically contemplate, particularly algorithmic management, digital monitoring, automated ratings, account deactivation and economic dependence.

Accordingly, the classification debate demonstrates the need for Pakistani labour law to address the changing nature of employment in the digital economy while ensuring that the legal status of workers corresponds with the actual substance of their working relationship.

Important Case Laws

United Bank Limited v. Jamil Ahmed — 2024 SCMR 164

Mukhtar Ahmad v. Punjab Labour Appellate Tribunal — 1992 PLC 154

IFFCO Pakistan v. Ghulam Murtaza and others — 2024 SCMR 1548

State Oil Company Limited v. Bakht Siddique — 2018 SCMR 1181

Abdul Ghafoor — 2018 SCMR 157

Fauji Fertilizer Corporation Ltd. — 2013 SCMR 1253

ICI Pakistan Ltd. v. Appellate Authority EOBI — 2024 PLC 188

Final Legal Principle

In app-based worker disputes, the decisive consideration should be the substance and actual operation of the working relationship rather than the contractual label alone. The degree of control, supervision, economic dependence, integration and nature of duties can be central to determining whether the worker falls within the protection of labour law.