Mandatory Insurance for Iranian Startup Employees

As per the social security law, drivers with Snapp, Tap30 (two main ride-hailing services) and employees of nine other startups are entitled to “mandatory insurance”, says the deputy for insurance and revenue affairs at the Social Security Organization.

Mohammad Hassan Zeda said, “SSO has drawn a short list of startups that must provide their employees with insurance coverage. The list includes Snapp, Tap30 and nine other companies,” the SSO website reported. He did not elaborate.

Talks are underway between SSO and company owners. “If the companies fail to comply and make arrangements of the insurance of their drivers, SSO will enforce the law.”

During recent years, share of startups in the economy has increased in Iran, with such firms growing both in terms of number and diversity of services. Zeda is of the opinion that while startups look different from old-school companies, in order to protect workers rights, social security laws must also be applied to the new and emerging companies.

Lawmakers around the globe are facing new challenges on how to regulate activities of startups since many of them do not fit the textbook definitions of business.

For instance, the global ride-hailing giant Uber treated its drivers as self-employed arguing that it operated merely as an intermediary between drivers and users. Last year, a tribunal in the UK ruled that the drivers were Uber staff and entitled to holiday pay, paid rest breaks and the minimum wage. The firm lost an appeal against the ruling in November. Last week, the European Union’s top court ruled that Uber provides a transport service and should thus be regulated like traditional taxis, and therefore its drivers are entitled to employee benefits.

In addition to insurance coverage, drivers with ride-hailing services in Iran have often complained about “low income” and “high commissions” they need to pay to the companies. However, none of the companies have published any detail about their deals with the drivers or the commission rates. The payment system is so entangled with bureaucracy that none of the drivers have been able to properly explain how it actually works.