Directive, once passed, will be the most significant regulatory change to the platform economy in Europe so far.
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THE much-anticipated platform work directive from the European Commission has been published, proposing a legal presumption of employment status for platform workers and changes to strengthen the rights of those working under algorithmic management.
The Directive will become law in all 27 EU member states once passed, and thus is unquestionably set to be the most significant regulatory change to the gig economy since it began to emerge as a significant part of Europe’s economy around a decade ago, with the Commission apparently resisting, at least to some extent, the “push-back” from the platform lobby over these proposals which has been widely reported in the financial press over the past week.
The Commission estimates that there are currently 28 million platform workers in Europe right now, which is set to rise to 43 million by 2025. Out of this 28 million, 5.5 million are currently “miss-qualified” as self-employed, according to the Commission.
What’s in the directive?
On employment status, which has been at the heart of the debate over platform economy regulation, the Directive proposes that “the contractual relationship between a digital labour platform that controls…the performance of work and a person performing platform work through that platform shall be legally presumed to be an employment relationship.”
Furthermore, “the burden of proof shall be on the digital labour platform” to prove that there is no employment relationship, meaning they will have to go to court to make their case, rather than the worker, as is current practice.
For a court of law to find that a platform worker should be considered as an employee, two of five of the following criteria has to be met:
- “effectively determining, or setting upper limits for the level of remuneration;
- requiring the person performing platform work to respect specific binding rules with regard to appearance, conduct towards the recipient of the service or performance of the work;
- supervising the performance of work or verifying the quality of the results of the work including by electronic means;
- effectively restricting the freedom, including through sanctions, to organise one’s work, in particular the discretion to choose one’s working hours or periods of absence, to accept or to refuse tasks or to use subcontractors or substitutes;
- effectively restricting the possibility to build a client base or to perform work for any third party.”
On algorithmic management, the Commission proposes a series of rights for platform workers, including the right to know if they are being monitored, if any data is being collected on them, and if any decisions are being taken affecting their job based on that data. There will also be a requirement for platforms to have humans “regularly monitor and evaluate the impact of individual decisions taken”.
Platform workers will also have the right to a human explanation as to why a significant decision has been taken affecting their working conditions, with a contact person “to discuss and to clarify the facts, circumstances and reasons having led to the decision.” There will also be a right to demand a review of a decision taken if the worker is not satisfied with the reasons given.
Finally, the Commission wants digital labour platforms to create mechanisms whereby platform workers – especially those operating solely online – can be in contact directly with one another, in order to form or join unions, be able to collectively bargain and get representation.
The Commission also wants greater traceability and transparency from platforms, so that they provide to member states information on how many workers they are hiring, where they operate and some information on their activities, in order to ensure accurate tax collection and social security compliance.
Nicolas Schmit, EU Commissioner for jobs and social rights who is responsible for the Directive, also announced at the press conference that new guidelines would be forthcoming on collective bargaining for the self-employed, including those who are genuinely self-employed in the platform economy.
Platform criticism
Speaking at the press conference, Schmit sought to address criticisms of the proposals from some platform companies and their lobby groups over the past week, which have claimed that the Directive could lead to hundreds of thousands of workers made unemployed.
“No one is trying to kill, to stop, or to hamper this growth of the platform economy,” Schmit said. “We are all committed to the development of this economy because it responds to a demand in our society.
“This business model should also fit with our standards, including the social standards, so we have to bring the platform economy inside the European social model.
“If people are missing out on labour and social rights that they are entitled to, then there is a need for acting.”
He added that there was also an “economic argument” for the directive, based on “ensuring a level playing field” in the economy.
“Why should some companies not have to meet the same social standards as companies they are competing against outside the platform economy…and also competition between platforms?”
On the question of worker flexibility, another aspect that the platforms have been keen to stress would be undermined by this Directive, Schmit said: “Our proposal does not mean an end to flexibility…you can have an employment status and also enjoy flexibility, these are not two aspects which are exclusive.”
“We also see that this is already happening in platforms that do employ some workers…it’s not something which does not yet exist. These are important platforms listed on the stock exchange and they are absolutely competitive.
“Workers on the platforms value flexibility, but they also value social protection, social benefits and protections against accidents.”
Asked about the EU’s economic impact assessment, which found that the Directive would cost platforms €4.5 billion while benefiting platform workers just €484 million, Schmit said that “those figures are incomplete” because they did not include the social security benefits platform workers would get from being employees, which would be paid by the state.
A journalist from Bloomberg said that platforms were already stating that few if any of the criteria for employment status apply to them, for example claiming that they don’t set pay levels, and that therefore this is likely to end up in national courts and lead to more “fragmentation” across Europe.
Schmit responded by saying that the Directive brings “more legal security to the business model”.
“We now have a set of common rules and common criteria, if a platform clearly abides by the rule applicable to the self-employed, there is no problem,” he said.
The next steps
There has been some suggestions in the media that the platform work directive will not be implemented in member-states until 2025. Asked about what would happen next and the likelihood of the Directive getting political support, including from the EU Council of Ministers which can amend the Directive, Schmit said he did not “expect major problems”.
He explained: “We have a large majority in [the European] Parliament who are in favour of this proposal. I have also received a letter from five ministers asking for exactly this proposal…so I don’t expect major problems, of course there are likely to be some proposals for amendments.”
The EU Council and the European Parliament will now discuss the Commission’s proposal and once it is signed-off, member-states will then have two years to transpose it into national law.
To read all the reaction to the Platform Work Directive from unions, politicians, academics, platforms and more, click here.
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