EU lawmakers have formally proposed legislation for the gig economy they hope will improve conditions for platform workers across the bloc — including by establishing a framework to tackle the problem of bogus self-employment.
The Commission’s overarching goal is to a create a level playing field between traditional businesses and gig platforms, as well as between different gig platforms (or “digital labor platforms” as its draft text calls them) — by enforcing minimum standards for platform workers in areas like pay, conditions and social protections.
EU lawmakers also want to improve visibility and “traceability” of platform work by bringing in obligations for platforms to declare work to authorities at a national level — to support enforcement of legal requirements across the bloc, and ensure social security contributions are being paid where the work is actually taking place.
They are taking steps to drive algorithmic accountability and fairness on the sector — with a package of transparency measures.
Commenting in a statement, EVP Margrethe Vestager, said: “With more and more jobs created by digital labour platforms, we need to ensure decent working conditions for all those deriving their income from such work. Our proposal for a Directive will help false self-employed working for platforms to correctly determine their employment status and enjoy all the social rights that come with that. Genuine self-employed on platforms will be protected through enhanced legal certainty on their status and there will be new safeguards against the pitfalls of algorithmic management. This is an important step towards a more social digital economy.”
The directive will need the backing of the European Parliament and Member States’ governments, via the European Council, before it can become EU law. But at a press conference today the Commission noted widespread support from MEPs for legislation to protect gig workers.
It also pointed out that a number of Member States have been pressing for it to act. While the text of the draft highlights one incentive for governments to get on board, predicting: “Member States will enjoy increased revenues in the form of additional tax and social protection contributions.”
Once adopted, the Commission is allowing two years for Member States to transport the rules into national law — meaning application and enforcement won’t happen before 2024 at the earliest.
While, by 2025, the Commission expects some 43M people in the EU to be working through digital labor platforms — up from around 28M now. And accelerating growth of the gig economy is a key reason why it’s decided to act.
Most notably, the proposed directive (PDF) sets out a presumption of employment for workers on digital labor platforms — based on a set of defined criteria related to the facts of how work is controlled by a platform, rather than whatever relationship contracts might try to claim.
(And, as it happens, we’ve just seen another litigation on gig platform contracts play out in the UK courts — where earlier this month Uber lost an attempt in the High Court to have a claimed bypass from contactual liability legalized, with industry-wide ramifications for London-licensed ride-hailing platforms in that (non-EU) market.)
An impact assessment in the EU proposal suggests the change could result in between 1.72M and 4.1M people providing services through platforms being reclassified as workers.
At a press conference announcing the reform this morning, Valdis Dombrovskis, the Commission EVP responsible for trade and social protections for workers, appeared to suggest an even larger number of platform workers may be reclassified as as result.
“Of 28 million platform workers [in Europe currently] there may be up to 5.5M whose contractors describes them as self employed but in reality they are regularly checked and supervised — this effectively makes them employed workers,” he said. “They should have the labor and social rights that correspond to this status, such as working time and health protection, minimum wage, unemployment, sickness and old age benefits.”
“Our proposal address the mis-qualification of these vulnerable workers and introduces the principle of rebuttable presumption [of employment] based on a range of control criteria,” Dombrovskis added.
On-demand platforms such as those offering ride-hailing and food delivery have faced numerous legal challenges over how their classification of workers’ employment status in Europe in recent years.
Concern over the issue has also led some Member States to consider or pass national legislation (such as Spain’s ‘riders law’ which was passed earlier this year and recognizes delivery platform workers as employees). Portugal has also said it’s looking at similar legislation.
The passing of national laws is a typical trigger for the EU’s executive to come forward with pan-EU rules to try to avoid fragmentation of the bloc’s single market.
Although, in this case, the EU’s legislative push is more about ensuring platforms abide by minimum standards across the region to prevent a race to the bottom on labor standards.
Commission president, Ursula von der Leyen, signalled an intention to dial up scrutiny of the gig economy as she took office at the end of 2019, saying she would look at ways of improving the labour conditions of platform workers, initially suggesting the approach would focus on skills and education.
However the coronavirus pandemic sharpened the bloc’s concern over conditions for gig workers, as the lack of social protections for many platform workers were brought into stark relief — highlighting a slew of risks around delivery services that were suddenly being relied upon in the midst of lockdowns and mobility restrictions. So the Commission appears to have stepped up its action.
A consultation phase on the reform took place earlier this year but failed to lead to agreement between the two sides (platforms and unions) — hence the EU’s executive now stepping in with a legislative proposal.
The proposed framework for determining the presumption of employment has been tightly drawn by the Commission — covering factors such as whether a platform sets the level of pay for the work; puts conditions on conduct/performance; supervises the performance of work or verifies quality; puts restrictions on when/whether a worker can work; and restricts a worker from building a client base or working for third parties.
Here is the full list of proposed criteria:
Just two of the five criteria need to be met for the presumption of employment to kick in, per the proposal. And — at a glance — it looks like many ride-hailing platforms especially will see their workers fall under the presumption of employment.
Taking press questions, the Commission denied it’s trying to kill off the gig economy business model — arguing that platforms that do not want to have to reclassify scores of workers will be able to adapt their systems and tweak their models to reduce the level of control they apply so workers can be deemed genuinely self employed.
“Platforms may react to this by adjusting their relations with their contractors if they prefer to keep self employment status — but it means less systemic control over those independent contractors,” said Dombrovskis. “Or if they think that their specific circumstances merit it they may still challenge this presumption but at least it sets clear criteria which would be uniform criteria across the EU.”
As well as switching the burden of proof vis-a-vis employment status off workers and onto platforms, the proposal stipulates that any legal challenges platforms bring to try to rebut the presumption “shall not have suspensive effect on the application” — meaning that they must treat workers as employees during any period they are trying to overturn that status.
The draft directive also includes a very interesting package of measures focused on algorithmic transparency and fairness that goes further than current EU legislation which provides citizens with some protections vis-a-vis automated decisions (such as the GDPR) — putting obligations on platforms to provide workers with information about the algorithms that are used to control their labor.
This...
The Commission’s overarching goal is to a create a level playing field between traditional businesses and gig platforms, as well as between different gig platforms (or “digital labor platforms” as its draft text calls them) — by enforcing minimum standards for platform workers in areas like pay, conditions and social protections.
EU lawmakers also want to improve visibility and “traceability” of platform work by bringing in obligations for platforms to declare work to authorities at a national level — to support enforcement of legal requirements across the bloc, and ensure social security contributions are being paid where the work is actually taking place.
They are taking steps to drive algorithmic accountability and fairness on the sector — with a package of transparency measures.
Commenting in a statement, EVP Margrethe Vestager, said: “With more and more jobs created by digital labour platforms, we need to ensure decent working conditions for all those deriving their income from such work. Our proposal for a Directive will help false self-employed working for platforms to correctly determine their employment status and enjoy all the social rights that come with that. Genuine self-employed on platforms will be protected through enhanced legal certainty on their status and there will be new safeguards against the pitfalls of algorithmic management. This is an important step towards a more social digital economy.”
The directive will need the backing of the European Parliament and Member States’ governments, via the European Council, before it can become EU law. But at a press conference today the Commission noted widespread support from MEPs for legislation to protect gig workers.
It also pointed out that a number of Member States have been pressing for it to act. While the text of the draft highlights one incentive for governments to get on board, predicting: “Member States will enjoy increased revenues in the form of additional tax and social protection contributions.”
Once adopted, the Commission is allowing two years for Member States to transport the rules into national law — meaning application and enforcement won’t happen before 2024 at the earliest.
While, by 2025, the Commission expects some 43M people in the EU to be working through digital labor platforms — up from around 28M now. And accelerating growth of the gig economy is a key reason why it’s decided to act.
Presumption of employment
Most notably, the proposed directive (PDF) sets out a presumption of employment for workers on digital labor platforms — based on a set of defined criteria related to the facts of how work is controlled by a platform, rather than whatever relationship contracts might try to claim.
(And, as it happens, we’ve just seen another litigation on gig platform contracts play out in the UK courts — where earlier this month Uber lost an attempt in the High Court to have a claimed bypass from contactual liability legalized, with industry-wide ramifications for London-licensed ride-hailing platforms in that (non-EU) market.)
An impact assessment in the EU proposal suggests the change could result in between 1.72M and 4.1M people providing services through platforms being reclassified as workers.
At a press conference announcing the reform this morning, Valdis Dombrovskis, the Commission EVP responsible for trade and social protections for workers, appeared to suggest an even larger number of platform workers may be reclassified as as result.
“Of 28 million platform workers [in Europe currently] there may be up to 5.5M whose contractors describes them as self employed but in reality they are regularly checked and supervised — this effectively makes them employed workers,” he said. “They should have the labor and social rights that correspond to this status, such as working time and health protection, minimum wage, unemployment, sickness and old age benefits.”
“Our proposal address the mis-qualification of these vulnerable workers and introduces the principle of rebuttable presumption [of employment] based on a range of control criteria,” Dombrovskis added.
On-demand platforms such as those offering ride-hailing and food delivery have faced numerous legal challenges over how their classification of workers’ employment status in Europe in recent years.
Concern over the issue has also led some Member States to consider or pass national legislation (such as Spain’s ‘riders law’ which was passed earlier this year and recognizes delivery platform workers as employees). Portugal has also said it’s looking at similar legislation.
The passing of national laws is a typical trigger for the EU’s executive to come forward with pan-EU rules to try to avoid fragmentation of the bloc’s single market.
Although, in this case, the EU’s legislative push is more about ensuring platforms abide by minimum standards across the region to prevent a race to the bottom on labor standards.
Commission president, Ursula von der Leyen, signalled an intention to dial up scrutiny of the gig economy as she took office at the end of 2019, saying she would look at ways of improving the labour conditions of platform workers, initially suggesting the approach would focus on skills and education.
However the coronavirus pandemic sharpened the bloc’s concern over conditions for gig workers, as the lack of social protections for many platform workers were brought into stark relief — highlighting a slew of risks around delivery services that were suddenly being relied upon in the midst of lockdowns and mobility restrictions. So the Commission appears to have stepped up its action.
A consultation phase on the reform took place earlier this year but failed to lead to agreement between the two sides (platforms and unions) — hence the EU’s executive now stepping in with a legislative proposal.
The proposed framework for determining the presumption of employment has been tightly drawn by the Commission — covering factors such as whether a platform sets the level of pay for the work; puts conditions on conduct/performance; supervises the performance of work or verifies quality; puts restrictions on when/whether a worker can work; and restricts a worker from building a client base or working for third parties.
Here is the full list of proposed criteria:
Just two of the five criteria need to be met for the presumption of employment to kick in, per the proposal. And — at a glance — it looks like many ride-hailing platforms especially will see their workers fall under the presumption of employment.
Taking press questions, the Commission denied it’s trying to kill off the gig economy business model — arguing that platforms that do not want to have to reclassify scores of workers will be able to adapt their systems and tweak their models to reduce the level of control they apply so workers can be deemed genuinely self employed.
“Platforms may react to this by adjusting their relations with their contractors if they prefer to keep self employment status — but it means less systemic control over those independent contractors,” said Dombrovskis. “Or if they think that their specific circumstances merit it they may still challenge this presumption but at least it sets clear criteria which would be uniform criteria across the EU.”
As well as switching the burden of proof vis-a-vis employment status off workers and onto platforms, the proposal stipulates that any legal challenges platforms bring to try to rebut the presumption “shall not have suspensive effect on the application” — meaning that they must treat workers as employees during any period they are trying to overturn that status.
Algorithmic transparency
The draft directive also includes a very interesting package of measures focused on algorithmic transparency and fairness that goes further than current EU legislation which provides citizens with some protections vis-a-vis automated decisions (such as the GDPR) — putting obligations on platforms to provide workers with information about the algorithms that are used to control their labor.
This...