Gig Economy Project – Portugal: from Uber’s test tube to a leader in platform workers’ rights?

Portugal’s labour code reform could deliver much needed workers’ rights to the country’s gig economy, but legal and political uncertainty remains.

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Picture by Geogast

Go down to the Rua Dom João V in central Lisbon, and you can can find Uber’s ‘Centre of Excellence’, also known as ‘Uber Greenlight’. It’s the Silicon Valley company’s biggest European hub and it’s where many of Uber’s experiments in platform work begin. In 2022, Lisbon became the first city in the world where you could order a doctor to visit your home through the Uber Eats app.

The Portuguese capital was chosen by Uber as its European test tube for a reason. As labour researchers Emanuele Leonardi and Giorgio Pirina explain in a 2020 paper, Uber placed a bet on Lisbon due to the platform’s strong relationships to political elites nationally and locally, a light-touch regulatory regime and a proliferation “of atypical working relationships (such as false self-employment)”. 

Portugal, then, sounded like paradise for the company’s CEO Dara Khosrowshahi, but all that might be about to change. On May Day 2023, the government introduced a reform to the labour code which could bring about the thing which Khosrowshahi hates the most: labour rights for Uber’s drivers and riders, including holiday pay and sick leave. 

Claims of false self-employment in the platform economy have begun to reach Portugal’s courts, after years of the Southern European country being one of the few in Europe not to have an ongoing judicial battle over employment status on digital labour platforms. With rulings expected soon, could Portugal become one of the first EU countries where employment contracts for food delivery couriers, ridehail drivers and beyond are the rule, rather than the exception?

Exploitation in Portugal’s gig economy

On the night of 6 October, a Nepalese driver is pulled over by the police for faulty headlights. He’s asked to open the boot of his car. Inside is another man, also a migrant. They both explain to the police a story which the officers say is becoming increasingly common: they were trafficked here to work as ridehail drivers (known as TVDE drivers in Portugal). They both use the same license, neither of which belongs to them. While one works, the other sleeps in the trunk.

“They were not able to provide us with their passports. The traffickers took them and asked them for money to recover them”, Luis, a police officer, tells InfoMigrant. “It’s a classic pattern, it’s very worrying because these people have no social protection, they are in great precariousness and are taken hostage by their ‘boss’. It’s a growing phenomenon.”

InfoMigrant reports that between 2,000 to 2,500 migrant drivers operate in the Lisbon vicinity in the TVDE and taxi sectors. While cases of modern-slavery like that identified on 6 October are still a small minority, many more drivers are still vulnerable to exploitation. 

“It was really hard,” Dr Nuno Boavida, labour researcher at the Nova University of Lisbon, who has conducted in-depth interviews with TVDE drivers, tells the Gig Economy Project. “They would work shifts of 12 or 16 hours. We did interviews with guys who didn’t go home to sleep, they just slept in the car for a few hours at night and worked for two days straight.”

Portugal’s TVDE model is based on intermediaries; tiny firms which operate between Uber and Bolt (the two big ridehail platforms in Portugal) and the driver. As is typical with sub-contracting, the platforms exert pressure on the intermediaries through low fares, which in turn exert pressure on the drivers through poverty pay. 

“Some of these companies had 30 to 60 cars, because they also rent cars in the summer time. So one employer could have 30 cars and this could be used by, for instance, 90 Uber drivers through shifts. Eighty-five to 90% were SMEs,” Boavida explains.

The TVDE model was established in 2018 with the passing of the ‘Uber Law’, under what was then a minority government of the Socialist Party (PS), led by prime minister António Costa. Uber had operated in Portugal since 2015, but a two-week long taxi strike in September 2018 pushed the government into action. The Uber Law was therefore initiated not primarily to address working conditions among TVDE drivers, but to placate the anger of the taxis about Uber’s rapid growth.

The Uber Law meant that a driver had to work through a company to get a TVDE license. They could either set-up a company themselves, determining their own hours and so forth, or an entrepreneur could set-up a company and either employ the drivers or have an ‘independent contractor’ relationship with them, where they take a percentage of the company’s profits. Typically, these entrepreneurs would rent out the car to the driver to use. It’s a system ripe for exploitation.

“After the Uber Law, Uber still dictated the rules,” Boavida says. “For example, they would engage in sales promotions without telling the intermediaries anything. They’d lower the fares and some people couldn’t make enough money to pay the rent of the car or to cover their costs.

“Many gave up and sold their car. Others ended up bankrupt, and you would see a second hand market of Uber cars. If you were to buy a second-hand car here in Lisbon more often than not it would be an Uber car.”

While migrants are increasingly common in the TVDE sector, in the food delivery sector – dominated by Glovo and Uber Eats – they now make up the vast majority of workers. Until 1 May 2023, the food delivery sector had been entirely unregulated, and just like in ridehail, exploitation is rife.

“There’s a lot of migrants that arrive today and start as riders tomorrow,” Boavida says. “From Latin America, Pakistan, India, Nepal; they don’t speak the language and they often have people controlling them.”

Half a decade on from the Uber Law, Costa, now at the head of a majority PS government, made a new reform to the labour code, this time establishing a legal presumption of employment, not just for drivers but across all digital labour platforms. Can the new law succeed where the 2018 law failed, by improving working conditions in the gig economy?

Portugal’s new platform work law

The labour code reform establishes six criteria to indicate whether a platform worker is an employee, with two criteria needed to trigger the presumption of employment. The six criteria are:

“a) The digital platform sets the remuneration for work carried out on the platform or establishes maximum and minimum limits for it;

“b) The digital platform exercises the power of direction and determines specific rules, namely regarding the way in which the activity provider presents itself, its conduct towards the service user or the provision of the activity;

“c) The digital platform controls and supervises the provision of the activity, including in real time, or verifies the quality of the activity provided, namely through electronic means or algorithmic management;

“d) The digital platform restricts the autonomy of the activity provider regarding the organisation of work, especially regarding the choice of working hours or periods of absence, the possibility of accepting or refusing tasks, the use of subcontractors or substitutes, through the application sanctions, at the choice of customers or providing activities to third parties via the platform;

“e) The digital platform exercises labor powers over the activity provider, namely disciplinary power, including the exclusion of future activities on the platform through account deactivation;

“f) The equipment and work instruments used belong to the digital platform or are operated by them through a rental contract.”

On the face of it, Uber drivers and Glovo couriers would meet at least two of these six criteria. However, a relatively similar set of criteria in Belgium, where either two of five or three of seven was required to trigger the presumption of employment, has not moved things forward. Similar fears exist about proposals for the EU Platform Work Directive, which remains under negotiation.

In the case of the Belgian law, the big platforms all immediately announced after its introduction that they did not meet the new criteria. Ana Teresa Ribeiro, assistant professor in labour law at the Portuguese Catholic University in Porto, tells GEP that following Portugal’s May Day platform work law, the platforms responded by trying to bend their model around the six criteria.

“They stated on their websites that they were updating their systems to ‘confer more autonomy to their collaborators’, which basically means changing aspects of their operation to avoid the presumption [of employment],” she says.

In Spain, the ‘Rider Law’ established a general presumption of employment in the food delivery sector in 2021 in order to avoid the problem of platforms’ powerful corporate lawyers identifying legal loopholes to avoid a set of strict criteria. Despite this, Ribiero says there has been little discussion in Portugal of whether they should follow the example of their southern European neighbour, and instead the debate has been focused on the wording of the criteria.

“I think the criteria is not written as well as it could have been and could be improved, but even without this, the presumption of employment can still help platform workers,” she says.

A key reason for Ribiero’s confidence is the implementation measures which have accompanied the new law. The Authority of Working Conditions (ACT) has been required to carry out an “extraordinary campaign” of labour inspections in the platform economy to identify whether workers are falsely self-employed.

From June to December 2023, ACT made 1,133 notifications and 861 reports to the Public Prosecutor’s Office to recognise the existence of an employment contract in Uber Eats and Glovo. ACT had given the platforms ten days to recognise the employment relationship, but they refused to do so, leading to the cases being sent to the Public Prosecutor.

At least 18 lawsuits have now been registered by the Public Prosecutor, and each case should take just 30 days from the initial petition to the final hearing. A quick process in comparison to the speed with which the judicial system usually moves at.

The first verdict came in on 1 February, with the judge ruling that an Uber Eats courier was in fact an employee of the platform, with five of the six criteria being met (only point (f) was not triggered).* Uber Eats did not contest the ruling in court, but it’s possible that they could still choose to appeal.

Teresa Coelho Moreira, associate law professor at the University of Minho who has written about the new platform work law, tells GEP that the verdict is “a very important decision”.

“In the judge’s ruling, she has also analysed how to interpret this criteria in the law, and I think the interpretation is very good,” Moreira says. “This establishes a significant precedent.”

However, in Portuguese law it is not possible for a whole group of workers to be decided on by a court at once, it has to be done on an individual basis. To go through this process with every platform worker in Portugal would be arduous. Among TVDE drivers alone, there were 66,325 registered in Portugal as of October 2023, a number that has tripled in five years.

“We do not have many labour inspectors in Portugal and they already have a lot of tasks,” Ribiero says. “This is a problem that the labour inspectorate has itself complained about.”

A final issue is the role of intermediaries in Portugal’s ridehail sector. The new law doesn’t scrap the intermediary system that the 2018 law established. It states that it will be up to the courts to determine whether the intermediary or the platform will be considered the real employer, but that either way the platform and the intermediary will be “jointly responsible for the employee’s claims arising from an employment contract”. 

Until a judge rules on the employment case of a Bolt and/or Uber driver, we will not know whether the platform or the intermediary will have the responsibilities of the employer. Boavida says this legal grey area is “a bit of a mess”, but believes that many drivers will be eager to establish an employment relationship “directly” with the platforms as soon as possible, cutting out the middle-man.

“These intermediaries can go bankrupt from one day to the other, so it’s not really a stable situation for the drivers,” he says.

The Left Bloc (‘Bloco de Esquerda’) were heavily involved in the wording of the new law**, and the issue of intermediaries was one of the areas of conflict between the government and the radical left party during these discussions. 

José Gusmão, MEP for the Left Bloc in the European Parliament, tells GEP that while his party are “still not keen on the intermediaries”, prefering all drivers to be employed directly by the platforms, “it was the best agreement we could reach”. 

“I think there is some legal certainty that when the intermediaries are not considered to be the responsible employer, the platform will be,” he says. 

Boavida believes that the platform work law was ultimately “a compromise” as the government sought to “find a solution to keep Uber in Portugal and satisfy the demand of labour”.

“Uber has been very active in lobbying on this law,” he says. “They were consulted multiple times. At the end of the day Portugal is a very open economy and the mainstream politicians want to keep it that way.”

Political uncertainty

Legal wrangling over the new platform work law is important, but it is currently being overshadowed by political conflicts at national and EU level which may ultimately prove decisive in determining the future of Portugal’s gig economy.

In November, Costa announced he was resigning as prime minister over a police investigation into alleged corruption in relation to lithium mining in the north of the country. An election is now set for 10 March, in what many political experts believe is the most unpredictable ballot in Portugal’s post-dictatorship era. How this might affect workers’ rights in Portugal no one is quite yet sure.

Another key factor will be the outcome of the EU Platform Work Directive negotiations, with any law agreed in Brussels to be transposed into the national law of all 27 member-states by 2026. On a 26 January meeting of EU member-states, Portugal voted in favour of a new watered-down text which has split the Social Democratic-led governments, with Spain among those states to vote against.

“I think the Portuguese law can match up well with the EU directive, but obviously we don’t what the final Directive is going to look like yet,” Gusmão says. 

Doubt on several fronts therefore hangs over Portugal’s platform work law, but the very fact it has been passed shows how the debate has shifted in the five and a half years since the Uber Law was passed, a reform which arguably worsened the situation of Uber drivers.

“Even if it’s not perfect, a law to give platform workers’ rights now exists and can be improved,” Boavida argues. “It’s fulfilling for me to see this, as I have researched this topic and seen their suffering.”

* This has been updated. An earlier version did not include information about the 1 February ruling.

**This has been updated. An earlier version wrongly stated that the Left Bloc’s votes were necessary to pass the law.

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