The Option to Protect Platform Workers against Vocational Injuries in China ()
1. Introduction
The boom of platform business in China has attracted a large volume of labor entering this sector. In 2020, it was estimated by the China E-Business Research Center that there were approximately 6.31 million platform workers in China, demonstrating a year-over-year growth of approximately 1.3%. Admittedly, the platform economy plays a crucial role in providing jobs for hundreds and thousands of laid-off workers from factories and other companies, especially during the Covid-19 pandemic. However, the platform work creates new forms of power, asymmetry, and vulnerability, exacerbating the insufficient protection for sub-standard workers’ labour rights (Ződi & Török, 2021). Especially, the high vocational risks resulted from high work intensity and lack of occupational training of platform workers cannot be ignored. What makes it worse is that these platform workers cannot participate in national work-related injury insurance, as this new model of platform employment is beyond the scope of regulations of labor laws and social security laws. By taking advantage of technology, some platform companies engage in regulatory arbitrage by shifting work from one region to another, or from employees to independent contractors (Prassl, 2018).
This issue of vocational injury of platform workers has been subject to heated discussions among policymakers, scholars, unions and alike in China. Some suggested that the dual mode of the labour law should be transformed into three categories to provide the economically dependent contractor/platform workers with basic labour rights (Ban, 2019; Wang, 2020). Additionally, the construction of a labor standard system for platform workers can help to achieve a balance between the development of gig economy and the protection of the rights and interests of workers, creating an efficient labor market (Sun et al., 2020). In their debates, we have witnessed an exploration of the option to protect platform workers from occupational injuries, which reflects the complexity of the phenomenon at hand.
This essay will firstly aim to discover some factors that contribute to high occupational risk of platform workers in China. Following will be an analysis on the regulatory challenges posed by platform work and an examination of some pilot experiences from several local governments. The last part is to propose brand-new occupational injury insurance for platform workers and other flexible workers in the context of China.
2. The Regulatory Challenges Posed by Platform Work on Occupational Injury Protection in China
Platform enterprises have used methods, such as subcontracting delivery work at different levels, to dissolve employment relationships with platform workers and avoid the obligation to provide occupational safety and health protection. As a result, platform workers have to undertake all the occupational risks on their own. The following section will firstly describe how the platform enterprises avoid establishing labour relationship with workers, causing inadequate compensation to platform workers who are not covered by national work-related insurance in work-related injuries.
2.1. The Circumvention of Labor Relations by Platform Enterprises
According to the Notice on Matters Concerning the Establishment of Labor Relationship issued by the former Ministry of Labor (now the Ministry of Human Resources and Social Security, or MOHRSS) of China in 2005, a labor relationship is only established if the following conditions are met concurrently: 1) The work unit and the worker meet the principal legal qualifications; 2) The worker is subject to the work unit’s rules and labor management and engages in paid work arranged by the work unit; 3) The labor provided by the worker is an integral part of the work unit’s business.
With reference to Artificial Intelligence technology and other measures, platform enterprises attempted to avoid establishing an employment relationship with platform workers by disqualifying the afore-mentioned three conditions made by MOHRSS (Zhou, 2020). To be more specific, an increasingly popular method used by companies is to make a modification of the legal status of platform workers with the help of various kinds of “flexible work platforms” such as Haohuo, Quhuo, Dinggehuo, Tangehuo have emerged in the Chinese labor market (Huang & Han, 2022). Those flexible work platforms help individuals become a self-employed entrepreneur (independent contractor), solving tax problems and decreasing labor cost for platform companies, etc. Below is a typical example of this cooperation, using Dinggehuo and platform companies as an example (Figure 1).
As evident in Figure 1, Dinggehuo acts as the middleman between platform companies and platform workers (such as delivery riders, couriers, etc.), contracting with the platform companies for the delivery business and then sub-contracting it to platform workers as a self-employed entrepreneur. The platform companies will pay remuneration for to Dinggehuo in the form of a “service commission” in exchange for tax-deductible value-added tax (VAT) invoices. And Dinggehuo will pay remuneration to platform workers in exchange for VAT invoices. By doing this, it disqualifies platform workers’ legal status to establish a labor relationship with platform companies. And they have to undertake operational and vocational risks on their own, receiving unstable income and keep working hard despite these risks. Currently, it has been estimated by lawyers from Beijing Zhicheng Migrant Worker Legal Aid and Research Center that as many as 780,000 platform workers were registered as a self-employed entrepreneur, which accounts for 24% of the total number working in this sector.
Another method some platform companies use is to pay the salary of platform workers through other companies or platforms, meaning platform workers are
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Figure 1. The business process of Dinggehuo (Source: http://www.dinggehuo.cn).
mostly paid by different companies based in different provinces of China. In addition, platform companies outsource their business to some labor service companies which could be bankrupt anytime to hire platform workers. Consequently, platform workers aren’t able to sue platform companies directly because of disconnection (Fan, 2019).
Overall, despite their full-time work schedule and strongly economic dependence on the platform, platform workers rarely, if ever, enter into a labor contract with their counterpart platform companies.
2.2. The Inadequate Compensation to Platform Workers in Terms of Work-Related Injuries
In China, the national work-related injury insurance is based on the labor relationship, and employers are required to pay for work-related injury insurance for their employees, while individual employees are not required to pay. Since many platform companies have purposely avoided establishing labor relations with their workers, thus disqualifying platform workers from having access to the national work-related injury insurance scheme (Zhou, 2020). As a result, the majority of platform workers are not covered by the national work-related injury insurance scheme, and hardly could they get the compensation when they suffered from work-related injuries.
In order to transfer occupational risk, platform workers have purchased commercial insurance such as personal injury and accident injury insurance. Nevertheless, the premiums for these commercial insurance premiums are much higher than the national work-related injury insurance, as well as additional waiver ability clauses and a lower compensation cap with respect to severe injuries and sudden death (Huang & Han, 2022). In addition, most of the commercial insurance policies only cover treatment of injuries at the first stage, making it difficult for injured platform workers to receive long-term treatment, rehabilitation and support for their livelihood in later life.
By and large, the absence of national work-related injury insurance and the inadequate protection of commercial insurance make the majority of platform workers get inadequate compensation for work-related injuries.
3. Pilot Scheme in Relation to Occupational Injury Protection for Platform Workers Conducted by Local Governments in China
In order to rectify this issue, some local governments in China such as Jiangsu province, Guangdong province, Zhejiang province and Shandong province recently have sanctioned local regulations for some pilot projects, designed to enhance the occupational protection of platform workers and other flexible workers. The subsequent section will mainly analyze the regulation and measures carried out by the Wujiang city of Jiangshu province, Jiujiang city of Jiangxi province, Changzhou city of Jiangshu province, Guangdong province, Hangzhou city and Quzhou city and Huzhou city and Jinhua city of Zhejiang province.
3.1. The Local Regulation of Wujiang City in Jiangshu Province
The government of Wujiang city introduced the trial Measures on Occupational Injury Insurance for Flexibly Employed Persons in Wujiang District in April 2018, article 3 of which states that persons who are employed flexibly by the platform enterprises in Wujiang district can participate in the occupational injury insurance designed specifically for flexible employees in Wujiang district. This is the first pilot area in China to break through the household registration restriction and include all flexibly employed persons in the occupational injury insurance. To distinguish this new occupational insurance from the original national work-related injury insurance, article 5, Subparagraph (2) of this regulation states that if the participant enters an employment relationship with an employer later, he or she should promptly notify the insurance operator to terminate the occupational injury insurance contract.
The target of the Wujiang trial scheme aims to provide occupational injury insurance to all flexibly employed people in this city, regardless of their employment relationship.
3.2. The Local Regulation of Jiujiang City in Jiangxi Province
Following in the steps of Wujiang city, Jiujiangcity in Jiangxi province adopted similar regulations in 2019. Article 3 of the Jiujiang City Flexible Employment Personnel Occupational Injury Insurance Scheme (for trial implementation) states that flexible workers in the platform economy and new business who cannot be included in the national work-related injury insurance, including flexibly employed participants, workers over the statutory retirement age, college and university interns and so on, can participate in occupational injury insurance. Generally speaking, the Jiujiang trial scheme is basically the same as Wujiang city, which includes all flexible workers.
3.3. The Local Regulation of Changzhou City in Jiangshu Province
Unlike Wujiang and Jiujiang, the Changzhou city of Jiangsu Province attempted to extend the national work-related insurance to platform workers in 2019. Article 2 of the Trial Scheme for Priority Participation in National Work-Related Injury Insurance for Employees in New Industries at Changzhou City states that all employers in the property, housekeeping, courier and other industries within the Changzhou City could apply for priority participation in the national work-related injury insurance for their remaining employees. It can be concluded from the Changzhou Trial Scheme that employers are able to purchase the national work-related injury insurance for their flexible workers, including platform workers, while individuals cannot participate in this insurance program individually.
3.4. The Local Regulation of Zhejiang Province
In November 2019, Zhejiang Province also opened the gate of the national work-related injury insurance for platform workers. Section 4, Subparagraph (8) of the Guiding Opinions on the Optimization of Labor Employment Services in platform work states that employees of new forms of business can participate in the national work-related injury insurance separately in according to regulations. Directed by the regulation at the provincial level, several cities such as Hangzhou, Quzhou, Huzhou, Jinhua in Zhejiang province have also legislated local regulations targeted to platform workers. Take Hangzhou city as an example, it issued the Notice on the Issuance of Measures for the Participation of Some Specific Persons in (National) Work-Related Injury Insurance (for Trial Implementation), Section 3 of this regulation states that employees in gig economy and other flexible workers are eligible to be enrolled in national work-related injury insurance, and the employer or platform enterprise shall, in accordance with the principle of voluntariness, pay the work-related injury insurance premiums in accordance with the provisions of these measures.
Comparably, Quzhou city of Zhejiang province enacted local regulations in relation to platform workers in 2020, which also provides a more detailed definition of the status of platform workers. Section 2 of the Trial Measures for Occupational Injury Protection for Employees in New Industries states that platform enterprises whose main business scope includes express logistics, online food delivery and online taxi services (including labor dispatching agencies that dispatch employees to the above three types of industries) may, on a voluntary basis, pay the national work-related injury insurance for their employees. The Huzhou city and Jinhua city adopted similar measures in 2020.
3.5. The Local of Guangdong Province
In 2020, Guangdong province also issued Measures on the Participation in Occupational Injury Insurance for Specific Persons such as Workers over Statutory Retirement Age Employed. Article 2, Subparagraph (4) of the regulation states that if the employees register on Internet platform to provide online car hailing, takeout or express services, the platform enterprises where they work can voluntarily participate in national work-related injury insurance for them.
4. A Closer Look at the Models Trialed by Local Governments
Examining the details, there are two models used by the local governments thus far for platform workers: 1) the first model aims to extend the current national work-related injury insurance to platform workers; 2) the second model aims to create a new type of vocational injury insurance policy, specifically for platform workers and other flexible workers. Table 1, which is included below, presents two models used by local governments in different cities. The subsequent section will have a comprehensive introduction of these two models from the perspectives of the premium, contributor, operator and investigation/compensation processes.
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Table 1. The model chosen by local governments.
4.1. The Model of the Extension of the National Work-Related Injury Insurance Policy
As is shown in Table 1, Changzhou city of Jiangshu province, Guangdong province, four cities of Zhejiang province extended the national work-related injury insurance policy separately to platform workers, regardless of their employment relationship, and chose Model 1. There are some subtle differences in terms of the premium, and investigation/compensation process among different cities.
The common aspect shared by different cities in Model 1 implemented is that the insurance premium is entirely contributed by the platform enterprises, whereas the amount is different between regions. In the four cities of Zhejiang province, the payment base of the premium for platform workers is based on the average monthly salary of the employees of the previous year in the province. Compared with cities in Zhejiang province, the premium base in Changzhou city of Jiangsu province is slightly lower, which is implemented according to the lowest social security contribution base in the city-level co-ordination area. The calculation of the premium in Guangdong province is much different, which is within the range of 60% to 300% of the average monthly wage of the whole caliber of employees in the province in the previous year, or be decided according to their monthly labor remuneration and income, etc.
Essentially, platform enterprises are identified as the employer of platform workers in Model 1, paying the national work-related injury insurance at an average level for their workers, but without the duty or obligation to pay other types of social insurance for their workers; they are not necessarily undertaking other employer obligations provided in labor law regulations (Wang, 2021).
In addition, the premium is managed by the social security fund of the government, which is also tasked with the collection of the premium and participation process. For example, Section 4 Subparagraph (1) of the regulation in Huzhou city states that the platform enterprises shall submit the “Increase and decrease (Employment Registration) Form of Social Insurance Workers” and other relevant materials to the local social security agencies.
Finally, the investigation process and compensation standards in Model 1 reference to the rules provided by the Regulations on National Work-Related Injury Insurance, but platform workers aren’t required to submit materials in relation to the employment relationship. Similarly, the investigation process of work-related injury accidents is more flexible. For example, Section 4, Subparagraph (2) of the regulation in Quzhou states that in the process of work-related injury identification, the main role of the platform companies should be given full pay, and the record of dispatching and receiving orders of the platform should be taken as an important basis for identifying working time, working place and working reason. Pertaining to compensation for platform workers, injured while on the job or as a result from work, it’s also the same standard provided by the Regulations on National Work-Related Injury Insurance.
4.2. The Model of the Establishment of a New Vocational Injury Insurance
Model 2 aims to establish a brand-new vocational injury insurance system based on the current national work-related injury insurance system, which was developed having taken account of the flexible features of the platform economy (Zhang, 2017). As illustrated in Table 1, there are two cities, Wujiang city in Jiangsu province and Jiujiang city in Jiangxi province, setting up a new vocational injury insurance system targeted to flexible workers. Unlike Model 1, Model 2 aims to establish new rules of premium, contributor, operator, and investigation/compensation processes.
The premium of this new vocational injury insurance is approximately 180 yuan per year, with little fluctuation based on a realistic situation. Article 7 of the regulation in Wujiang District states that he occupational injury insurance premium is 180 yuan per person, per year, which shall be paid by the insured individual. Similarly, the occupational injury insurance premium of the Jiujiang City is identical with Wujiang city. It’s worth to mention that individuals, such as platform workers, should afford the premium by themselves in Model 2.
Secondly, the new occupational injury insurance is managed by professional insurance companies (under the guidance and surveillance of the local government). Article 10 of the regulation in Wujiang city and article 9 of the regulation in Jiujiang city states that the occupational injury insurance for flexible employees is undertaken by commercial insurance companies through the government purchases.
Thirdly, the report of work-related injury accidents in Model 2 is initiated by individuals themselves, and their investigation of work-related injury accidents focuses on working conditions. Article 6 the regulation in Wujiang city and article 5 of the regulation in Jiujiang city states that the insured personnel of occupational injury insurance for flexible employees who suffer sudden, unintentional and non-disease accident injury due to work reasons, resulting in death, disability and injury, can enjoy the benefits of occupational injury insurance.
Speaking to the benefits of occupational injury insurance, the benefits of the injured platform workers could receive in Wujiang city is much higher than that in Jiujiang city.
4.3. An Overview of the Two Models Adopted by Local Governments
The afore-mentioned two models used by local governments to enhance occupational injury protection of platform workers each have pros and cons.
The advantage of Model 1 is quite obvious. One is that such measures attempted to separate the national work-related injury insurance and employment relationship, which not only benefits platform workers to a large extent, but also offers an opportunity for other flexible workers and freelancers to participate in this insurance system. Another advantage is that it maintains the uniformity of the national work-related injury insurance system. Drawing on the current national work-related injury insurance system, there’s no need to design a novel system for platform workers, and the compensation standard is the same with other workers, which also reduces management costs (Gu & Bai, 2021). Some scholars hence support the notion of national work-related injury insurance being separate from the employment relationship to hold platform companies to this duty (Hu et al., 2021). However, other scholars question the practicality of this model, as investigations of numerous of work-related injury accidents of platform workers may prove difficult and come with further labor disputes (Gu & Bai, 2021).
There are also some merits to the content of Model 2. The most important being that the brand-new occupational injury insurance system is tailored to suit the flexible characteristics of the gig economy, which can be illustrated by the new rules of contribution, investigation, and compensation. On top of that, selecting commercial insurance institutions to manage the new vocational insurance can reduce the pressure on the government of implementing the new system. In addition, it also conforms to the policy guidance regulations of “Encouraging social forces to participate in the supply of public service” (Zhu, 2021). By doing so, platform workers could receive compensation as soon as possible if they’re injured at work. Nevertheless, any drawbacks of this model must also be objectively discussed. One particular drawback is that it can potentially complicate the current national work-related injury insurance policy and insurance participants may potentially undergo an adverse selection process in order to maximize their interest.
In a nutshell, the regional pilot schemes provide valuable insight and inspiration for the central government of China to appropriately respond to labor issues brought on by the platform economy industry. However, both Model 1 and Model 2 have some potential issues in terms of the legitimacy, enforceability, and effectiveness that need to be improved for the future.
The first issue is the lack of legitimacy of the pilot schemes, which has also been criticized by some scholars (Wang, 2021). Model 1 is based on a revision of the current national work-related injury insurance system, while Model 2 is an exploration of a new institutional policy, outside of the current system. In accordance with the principle of “May not do anything not authorized by law”, all of the pilot schemes require a relevant legal basis or authorization from a higher law. Furthermore, any deviation of the current system also needs the same authorization. Unfortunately, neither Model 1, nor Model 2, clarify the legal basis of their pilot scheme.
The second problem related to the pilot schemes is the enforceability of each model. Speaking to Model 1, the main issue relates to the collection of the contributions of platform workers who work for platform companies registered at different sites, who operate business across regions throughout the country; even worse, some of the platform companies do not or rarely have local entities on site. It will inevitably increase the costs for the current national work-related injury insurance management system which was designed based on geographical distribution. Another barrier is the vague line between work and rest hours makes it difficult to investigate work-related incidents based on current standards. Nevertheless, the biggest issue posed by Model 2 is surveillance of commercial insurance companies, which may focus on profit instead of benefiting participants.
The final concern about the pilot schemes is the efficiency of each model. Since the schemes have been implemented on a trial basis, it remains unclear about whether those measures are suitable to platform workers. For example, in Jinhua city of Zhejiang province, with 50,000 platform workers in this city, 15,000 of which are participating in the national work-related injury insurance, while 35,000 are still not covered (Zou & Li, 2021).
5. Policy Options for Better Occupational Injuries Protection of Platform Workers in China
In China’s search for appropriate methods to provide better protection for platform workers, the option should be considered in the context of current polices of the central Chinese government and several practical factors, especially when it comes to the design of the new occupational injury insurance policy.
5.1. The Option to Protect Platform Workers against Occupational Injuries
Considering the current Chinese legal system and feasibility of the two models, the author of this paper is inclined to recommend the second model to rectify the issue of platform workers’ vocational injuries. There are two explanations to support the preference given to the second model.
Firstly, the central Chinese government displayed an intention to create a new vocational injury protection system for platform workers. This can be supported by the content of the Guiding Opinions on Protecting the Labor Rights and Interests of Workers Employed in Gig Economy document jointly issued by seven Chinese government departments in July 2021, Section 9 of which states that platform enterprises in the transportation, takeaway, and instant delivery should participate the pilot occupational injury insurance as required, and the government should provide guidance to social forces in providing this insurance service for participants. This insurance undertaken by “social force” means commercial insurance companies under the guidance of government, which is entirely consistent with Model 2.
Subsequently, The Reply of the Ministry of Human Resources and Social Security to Proposal No. 3391 of the Third Session of the 13th National Committee of the Chinese People’s Political Consultative Conference states that the current relationship with the platform enterprises makes it difficult for platform workers to be covered by the existing labor laws and regulations, and a model of occupational injury protection should be proposed.
Additionally, there are some practical issues with having platform workers participate in current national work-related injury insurance policies. The obvious one is that the department of MOHRSS might be short-handed in terms of collecting premiums and investigating work-related injuries because there are hundreds and thousands of platform workers.
Therefore, given the above consideration, it can be concluded that setting up a new vocational injury insurance for platform workers (and other flexible workers) is the better option.
5.2. The Design of the New Occupational Injury Insurance Institution for Platform Workers in China
To ensure the new occupational injury insurance policy goes well in the context of current Chinese law, there are certain points that need to be clarified with respect to the factors of legitimacy, feasibility and applicability.
5.2.1. Legitimacy
The establishment of a brand-new occupational injury insurance system requires the authorization of the law of higher hierarchy. Specifically, by amending the Social Insurance Law and the Regulations on Work-Related Injury Insurance, the local governments are able to roll out new institutions to regulate the new insurance system (Wang, 2021). Due to the complicated and protracted process in amending laws, this action should be a priority item on the national agenda. Fortunately, according to the reply from officials of the MHRSS, this department will begin the revision of the Regulations on national work-related injury insurance again in due course, so as to protect the labour rights and interests of platform workers and minimize the occurrence of work injury disputes.
5.2.2. Feasibility
To make this new insurance policy viable, governments at all levels are required to set up specific rules on the new vocational injury insurance system, such as the premium, operation, investigation and compensation processes.
Firstly, the premium of this new occupational injury insurance should be properly designed, consistent with the occupational risk level for this labor sector. The current highest risk type should be organizational platform employment, such as takeaway and food delivery, and the highest insurance rate should be set. It can have a reference to the calculation of the current national work-related injury insurance (Su, 2020). Also, to expand the coverage of the new insurance policy as wide as possible, certain policies, such as the fiscal/financial subsidy system learned from the experience of the Wujiang city, should be established to lessen the financial burden of platform companies (Yang, 2020; Ai, 2021).
Secondly, regarding to operation and management of this new insurance system, it is expected to be undertaken by commercial insurance companies under the surveillance of government like Jiujiang city and Wujiang city (Shen, 2019). Selecting commercial insurance institutions to manage the new vocational insurance targeted towards platform employees is a practical measure, which can reduce pressure associated with implementing the system by the various departments of government (Zhu, 2021).
Thirdly, investigation of work-related injury accidents should be more flexible based on work conditions. The overall identification of work-related injuries should be carried out with reference to platform order records, as well as records from relevant law enforcement departments, such as the Ministry of Transportation, regarding the assessment of vocational injury. If an insurance participant suffers sudden, unintended and non-disease injury due to work-related matters, causing death, disability or injury, he/she could be compensated from the vocational injury insurance system.
Finally, the compensation of this new occupational insurance should be a combination of long-term benefits and one-time benefits in the payment of benefits, different from the commercial insurance system, which is typically a one-time benefit (Weng, 2019). Occupational injuries usually have a substantial impact on the workers, and only long-term treatment options can better protect the rights and interests of injured workers and their families. The current compensation for work-related injuries includes life care fees, disability allowance provided periodically, which better reflects the essential features of social insurance. Overall, the compensation of the new occupational insurance system should be distributed in an appropriate amount using a proper method.
5.2.3. Applicability
The ability to access social security is a fundamental constitutional right of citizens, and the State has an obligation to ensure it is available to individuals (Sun, 2021). This is especially true in terms of basic safety and health protection, which should not be decided by the nature of an employment relationship. Regardless of the form of labour used by the platforms, the benefits of the platform are derived from the labour of the platform participants and the basic rule that labour creates value remains unchanged in gig economy. Therefore, the new occupational injury insurance policy should be applied to all flexible workers, including platform workers. This can be illustrated by some developed industry countries, such as the United Kingdom, in which the Health and Safety at Work Act (1974) obliges employers to ensure the health, safety and welfare at work of all people providing work there, including independent contractors (Garben, 2017). And the August 2016 El Khomri law in France states that where the platform enterprise determines the characteristics of the service, it must also take responsibility for occupational accident or illness liability (Garben, 2017). Therefore, it should be mandatory for platform enterprises to purchase this new occupational insurance for platform workers. Otherwise, the penalty clauses should be applied.
5.3. In Summary
Given the fact that the central Chinese government showed an intention to set up a brand-new occupational insurance for platform workers and there are some practical barriers for incorporating platform workers into the current national work-related insurance, the model 2 is preferable to enhance the occupation protection of platform workers.
Regarding the design the new occupational injury insurance, the law of higher hierarchy should authorize the local government. This new insurance is also supposed to be accessible and affordable to all platform workers and other sub-standard workers, providing sufficient compensation to workers injured for work reasons and operated by professional commercial insurance companies.
6. Conclusion
In face of ongoing changes in the labor market, in particular, the surge of digital labor platforms, it is better to have a comprehensive understanding of its impact on labor laws and workers’ rights. The economic and employment opportunities provided by digital labor platforms should be acknowledged, while also recognizing challenges, specifically in terms of occupational safety and health. Adequate responses might involve the adaptation of existing policies, laws and regulations and/or the adoption of new policies in a number of areas. The most important thing is acknowledging that it is the time to make a change, specifically with regard to legislation, policies or other measures, in order to adequately protect platform workers.