Is This the End of Transportation Apps?

Who hasn't used a transportation app or seen someone else using it? If you haven't, then you might as well be living under a rock.

Today, we have a variety of transportation apps, some well-known and others not so much, like Uber, 99 Taxi, Lady Driver, and Cabify.

Before we delve into the crux of the matter, it's important to clarify that we are strictly talking about transportation apps, not carpooling services.

Now, onto the main issue. The current president of Brazil, Luiz Inácio Lula da Silva - hereafter referred to simply as Lula - has introduced a bill, under an urgent review and approval regime by our legislative houses, aimed at regulating the profession of "app-based drivers."

In our view, this law does not aim to regulate in order to improve the service for either consumers or drivers.

This perspective initially comes from a public consultation on the matter, where it's apparent that the majority of drivers disagree with the bill. Let's delve into the reasons why.

The law stipulates in its Article 3: "The worker who provides the service of private individual passenger transportation in a four-wheeled motor vehicle, intermediated by an app operating company, will be considered, for labor purposes, an autonomous platform worker and will be governed by this Complementary Law whenever they provide the service, as long as they have full freedom to decide on the days, hours, and periods in which they will connect to the app." It's noted here that drivers can set their schedules, however, paradoxically, limitations are created.

The worker would not have an exclusivity bond, potentially making it an "informal second job."

Furthermore, the same article suggests that app drivers would not have a minimum working time, again seeming to uphold the principles of economic freedom, yet the phrase "for show" applies here.

Additionally, the law mandates the creation of a union to, supposedly, create conventions in favor of drivers.

For Drivers

We can observe that new obligations for drivers will come into effect:

• If a union is established, drivers will have to contribute to it or go through a Herculean effort to exempt themselves;
  

• The time drivers can work is limited to 12 hours;
  

• There will be a minimum of R$ 32.10 per ride;
  

• They will have a 7.5% social security deduction from their "salary" (equivalent to 25% of the gross value earned by the worker in the month).

In other words, drivers will end up earning less or find this second source of income not worthwhile.

For Companies

• Companies will continue with their current obligations;
  

• They will now have to comply with union agreements;
  

• Poorly performing drivers in terms of user service can no longer be excluded from the platform, as Article 6 of the project strictly lists the reasons for exclusion as fraud, abuse, or misuse of the platform;
  

• A minimum remuneration for drivers is established, which, due to this minimum, currently set at R$ 32.10 (composed of R$ 8.03 as compensation for services rendered and R$ 24.07 as reimbursement for costs incurred by the worker in providing the private individual passenger transportation service), creates a greater financial burden for the platform;
  

• They will have to make social security deductions amounting to 7.5%.

For Consumers

• Travel costs are likely to increase due to the new obligations that have been introduced, as well as the imposed time restrictions, which could reduce the number of rides due to these time limits.

For the Government

• An initial significant revenue of 279 million is estimated for the public coffers.
  

• In essence, the government is not concerned with public opinion but only interested in imposing its will on everyone, whether it's businesses, consumers, or drivers.

Regarding the Legal Insecurity for Transportation Companies

Currently, app-based transportation companies are suffering greatly in our country, as the Supreme Court has already ruled that economic freedom must be preserved. In plain language, the driver accepted the platform's terms and uses it, with no interest in contributing to social security, no interest in unions, and no interest in a CLT (Consolidation of Labor Laws) analogy, essentially as a "self-employment" with their own schedules and costs, whether they want to work 18 hours or just 3 hours a day.

However, labor courts are still challenging these higher court decisions, which should not happen in a country that respects the separation of powers. Thus, we have a conflict within the judiciary itself, where one does not want to adopt the understanding of the other, thereby creating significant legal insecurity.

Added to this, we are currently under a left-wing government for CLT workers, where the executive branch is challenging the understanding of economic freedom, attempting, through the Presidency - executive branch - to pass legislation in the Legislative branch to circumvent the principles of free economy outlined by the judiciary.