The State Council has issued its final version of rules legalizing the booming online-ride hailing sector and governing traditional taxi companies. The new rules will strictly manage drivers and ride-hailing platforms such as Uber and Didi Chuxing. Meanwhile, traditional taxi services will also see more flexible management.

The regulations come as part of the guidelines for taxi reforms released by the State Council. The new rules mandate that online ride-hailing platforms must sign labor contracts with drivers, and ensure that they are legally qualified. Analysts say the move would protect the interests of platforms, drivers and customers.

“In China, many online ride-hailing services drivers are part time ones. The contracts can distinguish responsibilities and rights between platforms and drivers. Compared to platforms, drivers are the weak group. The contracts can help them to protect their interests. If there is a dispute between drivers and customers, the contracts can also protect customers’ interests with clear statements about responsibilities and rights,” said Chen Yanyan, Dean of Transportation College, Beijing University of Technology.

Meanwhile, the platforms must train drivers who provide ride-hailing services in related laws and rules, professional ethics, and safety awareness. The regulations also require that ride-hailing drivers report their identities to local taxi administration bodies just as taxi drivers do. The biggest change for the traditional taxi sector will be that managerial rights will be free of charge.

“For people who already have the managerial rights, they are unwilling to see more players. So the conflict between new comers and current taxi companies could grow larger and larger. This time, the authorities made a great decision in the new regulations to set managerial rights free of charge to solve the problem,” said Guo Jifu, Director of Beijing Transportation Research Center.

The new regulations also encourage taxi companies, drivers, taxi industry associations and labor unions to negotiate contract fees and mortgages based on costs and market situations. The new regulations are scheduled to take effect on November 1.