Labour Court ruled that a Cabify driver was misclassified and should be registered as an employee.
On 31 August 2021, in re "Bolzan José Luis vs. Minieri Saint Beat Guillermo Mariano and others", the First Instance Argentine Labour Court ruled that a driver of Cabify was misclassified as contactor and therefore, was under an unregistered employment relationship with Cabify, ordering payment of severance compensation, labour fines and salary differences due to his misclassification.
Section 23 of the Argentine Labour Contract Law No. 20,744 set forth that any provision of services by an individual to a third party in a regular manner, allows for the legal presumption of the existence of an employment relationship, unless otherwise proven. Based on such legal rule, the company to which an individual provides services has the burden to prove that no employment contract has been entered.
In this case, the First Instance Argentine Labour Court considered that even though the driver used his own car, he was performing Cabify´s business activity and that the company was unable to rebut the legal presumption provided by Section 23 of the Argentine Labour Contract Law No. 20,744. The Court also ruled that said presumption also applies even if a services agreement was put in place and even if the individual issue invoices, by virtue of the principle that substance prevails over the form.
These circumstances led the Argentine Labour Court to conclude that plaintiff was entitled to claim his registration as employee and to consider himself dismissed in constructive basis and therefore, was entitled to collect severance compensation for dismissal, salary differences (13th salary and paid vacations), as well as labour fines provided in favor of the employee for defective registration of employment.
The defendants have filed an appeal against the First Instance Court ruling, which is pending before the Chamber of Appeals.
In conclusion, companies should be very careful at the time of engaging in contractor agreements in Argentina, due to the risks of misclassification and its consequences.
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