App-based Drivers in Vietnam: More Workers than Contractors
There has been a vigorous debate in Vietnam as to whether drivers for digital platforms are workers or contractors. They should be classified as the former.
Are app-based drivers — those who perform ride-hailing and delivery services for digital platforms such as Grab and Gojek — workers or independent contractors? To what rights and protections should they be entitled? Over recent years, this question has come to the fore of global debates and struggles in the gig economy.
Drivers tend to argue that they are workers who are dependent on the platforms for work and wages, and thus entitled to associated rights and benefits such as minimum wages, sick pay, and protection against unfair dismissal. Platforms, in contrast, fight to keep drivers classified as independent contractors who are not entitled to such benefits. From various accounts, there is a growing recognition that they should be recognised as workers — and rightly so.
Major legal and policy battles over the issue have occurred in many places, including Asia. In Singapore, the Ministry of Manpower has established a Platform Workers Advisory Committee to consider legal changes to protect such workers. China’s Ministry of Human Resources and Social Security has proposed new guidelines aimed to strengthen protections for these workers. Meanwhile, the Indian Federation of App-based Transport Workers is appealing to the country’s Supreme Court, arguing for basic employment rights and benefits.
In Vietnam, one of Grab and Gojek’s biggest markets, stakeholders are also debating the same issues. The country has around 200,000 app-based drivers — 95 per cent of whom are men — largely concentrated in Hanoi and Ho Chi Minh City (HCMC). Half of them drive for the Singapore-headquartered company Grab, by far the industry’s most dominant player in Vietnam.
Currently Vietnamese drivers are treated as independent contractors, when by all appearances, they are being treated like employees by digital platforms.
A particularly dramatic example of the tension caused by this occurred in August 2019, when Grab drivers became subject to a new tax policy, which would tax app-based drivers as independent contractors rather than workers — drivers earning over VND100 million (US$4,310) per year would suddenly be charged VND60,000 (US$2.60) per day in extra tax. Hundreds of Grab drivers in HCMC went on strike by simultaneously turning off the app, saying the policy was unfair and not transparent. In a subsequent meeting between drivers, the company and city authorities, one driver said they could not afford to pay the high taxes given all the other costs, such as bike and phone maintenance. Another said that they are classed as ‘independent entrepreneurs’ (cá nhân kinh doanh) but are in reality closer to the bottom of society, having to work 10-12 hours per day regardless of weather conditions to make enough to live on. A representative from the HCMC tax department commented that things needed to change as the policy was right according to the country’s regulations, but was unreasonable in reality —perhaps an oblique way of suggesting that treating drivers as independent contractors is wrong. One driver quipped that the state has a policy of sustainable poverty eradication, but the current policy would sustain poverty.
The topic of legal status, rights and protections for app-based drivers in Vietnam have become hotly debated over the past few years, and are only set to become more urgent as increasing numbers of people move into the gig economy.
The Vietnam General Confederation of Labour (VGCL), the country’s state-led union federation, has not developed an official position on whether they think app-based drivers are contractors or employees, but some of its high-level officials, such as Vice President Ngọ Duy Hiểu and deputy director of the labour relations department Lê Đình Quảng, have suggested that such drivers are actually workers and should be recognised as such. This is based on the fact that they have an actually existing ‘employment relationship’ with platforms — the drivers are given instructions by the company on where to go, what to do, what to wear, and how much they will be paid. In early 2020, the Ministry of Labour, Invalids and Social Affairs (MOLISA) Minister Đào Ngọc Dung told Grab that they should focus more on the rights and interests of their drivers, and suggested the company be a pioneer in paying an hourly minimum wage, indicating that he was leaning towards treating drivers as employees. Vietnam’s minimum wage is currently only set at a monthly level. The government had expected to introduce an hourly minimum wage in 2020, but plans were disrupted due to the Covid-19 pandemic. An hourly minimum wage could be implemented this year.
It is unclear whether such a wage would apply to app-based drivers. For its part, Grab continues to refer to them as ‘partners’ (đối tác) rather than workers, saying that the company merely provides a service linking drivers to customers. This is an argument made by Gojek, too, and also used by other digital labour platforms around the world.
The topic of legal status, rights and protections for app-based drivers in Vietnam have become hotly debated over the past few years, and are only set to become more urgent as increasing numbers of people move into the gig economy. The scales seem to be tipping in favour of treating drivers as employees, as they should be, given that they are entirely dependent on the platform companies, who decide which jobs drivers get, how much they will be paid, and other conditions of work. Classifying drivers as employees would also give them access to minimum wages and standards, reducing the precarity and anxiety associated with never knowing if or how much you will earn each day.
There is already some momentum towards providing more protection to gig workers. In May 2022, the VGCL sent a document to MOLISA, proposing policy reforms to improve working conditions and access to social protection for app-based drivers, most of whom lacked knowledge of the social and health insurance policies available to them. The confederation suggested that the Ministry make such policies more expansive and flexible, allowing drivers to access social protection with greater ease. The VGCL also said it would expand the drivers’ union network to increase support for app-based drivers.
Companies such as Grab and Gojek, though, would not accept drivers being classified as employees without a fight. In jurisdictions that have enacted such regulations, such as California, the United Kingdom, the Netherlands, and Spain, companies have fought back in fierce legal battles to avoid providing drivers with minimum standards. In Vietnam, both drivers and policymakers need to be ready for a struggle — the outcome could shape the future of labour regulation in the country for decades to come.
Joe Buckley was Visiting Fellow at the Vietnam Studies Programme, ISEAS – Yusof Ishak Institute.