Could The Agency Work Model Become a Leading Example for Online Platforms?

By Menno Bart and Marine Marty, The Adecco Group

The way that people find work has fundamentally shifted in recent years. As a result of the digital revolution, fuelled in part by the 2008 global financial recession and the COVID-19 pandemic, workers have been able to find new and different jobs in new and different ways.

But it is not just the method of finding work that has shifted. Workers’ preferences have also changed. More than ever, workers are looking for alternative forms of performing work. This change signals the end of the full-time, open-ended work contract as the norm — as far as it ever was.

Although it is not the first or only alternative form of organizing work, for many people, platform work is certainly the most visible. As preference for full-time positions decreases, workers have begun to consider alternative arrangements. Together with increasing agility required throughout the labour market, this means the emergence of ‘crowd work’, ‘gig work’, and other forms of often on-demand labour. Digital platform work has increased five-fold in the last decade, with around 11% of the EU workforcesaying that they have already provided services through a platform.

We believe much of the discussion about flexibility and security is overlooking an important alternative: Agency Work. In this article, we will explore to which extent this well-regulated alternative can be part of the solution to the platform work conundrum.

Understanding platform work

The first digital work platforms emerged in the mid-1990s, and growth in the sector has only accelerated from the mid-2000s onwards, driven by faster internet speeds and the development of smart devices.

How does it work? The platform model works by enabling individuals to provide specific services, organised through a digital platform that connects them directly with clients. This could be a location-based app that allocates jobs, such as food delivery or domestic services, or web-based platforms for outsourcing IT work or other higher skill jobs, like Upwork or Freelancer.

Platform work can be defined by the following characteristics:

• Paid work is organised through an online platform
• Three parties are involved: the online platform, the client, and the worker
• Often, the aim is to carry out specific tasks or solve specific problems
• The work is contracted out
• Services are provided on demand

The rapid growth of the platform economy gives testament of the value it brings, to both clients and workers, for example by offering access to work for people who otherwise could not integrate into the labour market for a variety of reasons. But platform work has also attracted considerable controversy.

Platform companies in many countries have been subject to lawsuits, notably over workers’ employment status. It has been argued that workers providing services through platforms were unjustly considered as self-employed, leading to them being denied their right to the minimum wage, holiday and sick pay, and a secure employment contract.

The platform work discussion

Many have expressed concerns about the working conditions in platform work. In particular, policymakers are concerned with how to ensure job and income security for workers, as well as access to social protection, overall career development, and rights to collective bargaining.

After all, platforms typically contract their workers as independent contractors, in other words, as micro-entrepreneurs. This status precludes them from joining unions and engaging in collective bargaining in most jurisdictions, as this would effectively result in anti-competitive behaviour. It is also difficult for platform workers spread across multiple geographical regions to establish relationships and form communities, especially when many are constantly moving in and out of platform work.

The European Parliament adopted on September 16 an own-initiative report on “Fair working conditions, rights and social protection for platform workers — New forms of employment linked to digital development.” The report highlights the legal uncertainty around the term worker and self-employed, and as such calls for a reversal of the burden of proof for workers claiming employment status. Additionally, the report pleads for a minimum set of rights for platform workers regardless of their employment status, for the provision of essential and transparent information regarding working conditions and the calculation of fees, as well as for minimum requirements concerning safety and health.

The European Commission is due to publish a policy proposal to regulate platform work in December this year. However, this in itself is filled with controversy.

The self-employment status of platform workers has perhaps been one of the most controversial elements of this model. Platforms mainly rely on self-employed or independent contractors to carry out work. Yet, in some situations, the contractual arrangement between the platform and the worker does not reflect the true nature of their relationship. Genuine self-employment is characterised by a certain degree of autonomy of the worker on a number of elements. The exact criteria differ slightly between EU Member States, but often include the ability to accept or reject any assignments, to organize their work as they see fit under working conditions, they set for themselves, and the option to work for more than one provider or client. Workers who do not have enough of such autonomy are considered to be in “bogus self-employment”. Legally, this means these workers should have access to the same social protection, access to training and career opportunities as an employed worker. The fact that some platforms offer some of these protections to their workers on a voluntary basis does not alter the fact that legally, shortcomings remain. Employment protection is not an a la carte menu.

While some platform workers find themselves in a bogus self-employment situation, many others are truly independent and benefit from the flexibility offered by the platform. Many of the larger platforms have gradually enacted changes to their model to improve the autonomy of these workers, ensuring that they can indeed enjoy the entrepreneurial freedom that they are looking for.

Considering the complex variety of platforms that act as intermediaries between workers and tasks, regulating this form of employment is, unsurprisingly, a huge challenge for policymakers at both national and international levels. Importantly, what differentiates the various models is not whether they take place on– or offline. The difference is made in the way that the relationship between the platform, the worker, and the client is shaped. In that context, when it comes to regulation of platform work, the general consensus is that there is no one-size-fits-all solution.

Introduction to the Agency Work Model

Agency work is a well-established and well-regulated model based on an employment relationship where the agency covers all the traditional responsibilities faced by employers, but the worker works at a third party, under the supervision of that third party. Clearly, agency work as such is better suited for shift-based work than for task-based work: pay is by the hour, not per meal delivered or number of shirts ironed.

The employment relationship may only last for the duration of the assignment ranging from several hours to months. But in other cases, the relationship may go on longer, with the potential for an open-ended employment relationship, with or without pay between assignments. The available contractual arrangements depend on national agency work legislation. By being in an employment relationship, the agency worker benefits from adequate social protection as well as access to training and skills development.

In Europe, the agency work sector is regulated by Agency Workers Directive, which came into force on October 1, 2011, and grants temporary agency workers the right to the same pay and working conditions that they would have been entitled to had they been directly employed into the same role by the hirer.

In fact, not only do agency workers receive the same pay as directly employed workers, but in some cases, they even receive better pay than directly hired employees with fixed-term contracts and enjoy largely the same social protection benefits as direct employees, the World Employment Confederation Social Impact Report shows.

Why the agency work model could be considered as a leading example for the platform work debate

Labour market intermediaries, including temporary work agencies, have a long history in shaping labour markets across many EU nations. By positioning themselves between workers and firms, these intermediaries can facilitate job matching, and enable cost savings when competition in the labour market is unpredictable.

Agencies have been suggested as a model for online platforms as these also provide opportunities for flexible work and lower the barriers to entering the labour market, while offering social protection and access to training. Data suggests that agency work fosters a labour market inclusion, as 35% of agency workers embarking upon their first assignment were previously either unemployed or inactive and on average, 72% of agency workers remain employed 12 months following their initial assignment. Additionally, the share of young people aged less than 24 years is often higher in agency work than in the overall employed population — underlining the role the sector plays in offering a door to labour markets.

Differences and challenges between the two models

Compared with online platforms, agencies are heavily regulated, setting specific conditions under which the agencies should operate and how they should treat their workers. To be clear: with the agency model workers have access to the same social protection as other employees.

Access to training has been a priority for many agencies, with statutory access generally ensured. Access to training for self-employed platform workers is often dependent on voluntary initiatives by the platform itself, or even in a newly emerging partnership model, where training is offered by other workers.

In the agency arena, social partners play an active and important role in ensuring workers’ rights and are involved in collective bargaining in several Member States. With online platforms, social partners have addressed many of the issues and formulated different responses. Overall, the existing industrial relations and social dialogue structures are not clearly aligned with the realities of the platform economy.

However, the two models do share some similarities, creating an overlap between agencies and platforms. Some platforms, for example, offer services that are comparable with temporary work agencies. Hybrid forms that combine features of platforms and agencies are already emerging, with some platforms vetting crowd workers, and providing services such as payroll, and access to training and insurance, while many agencies have launched their online divisions.

The future of the platform economy

In 2018 the World Employment Confederation, in collaboration with UNI Europa, the European services workers union, conducted a research project that concluded that, while most platform work is based on self-employment, employment models also have an important role to play.

Among their joint recommendations to policymakers was the establishment of a level playing field by ensuring the same treatment for adequately similar services and forms of work. If an online platform provides similar services, and exercises the same level of control over a worker as a temporary work agency, it should be governed by the same regulation, conditions, and standards. If it walks like a duck and quacks like a duck…

The social partners agreed that National and European regulation on the different forms of work should be correctly applied and enforced to ensure a level-playing field, with particular focus on preventing bogus self-employment of online platforms’ labour suppliers. This seems straightforward, but it is taking prolonged legal battles to apply this principle in practice. It is good news that slowly, courts are confirming that being online is not enough to be different. Instead, each service provider, whether online or offline, should be judged on the merits of the service they offer.

Additionally, the joint recommendations recognised the fact that diverse forms of work can play a key role in well-functioning labour markets. In order to reap those benefits however, they need to be matched by up-to-date, flexible social protection schemes that provide transferable rights. Policymakers are recommended to take inspiration from practices developed in the temporary agency work sector, especially via social dialogue. Personally, we could not agree more to this. There is an urgent need for more social innovation.

Another key point to come out of the study: the need for continued education as well as training and skills enhancement. This is of central importance to equipping all labour suppliers with the relevant skills they need to succeed in the labour market. To reach that goal, policymakers should involve social partners and seek inspiration from the agency work sector, including access to dual learning schemes, bipartite funds, and opportunities for training on the job.

Futureproofing labour markets

Clearly, there is a place for both employment and genuine self-employment, as long as there is a level playing field. Some platforms are operating like agencies, but failing to abide by the same rules. We should put an end to the ‘regime surfing’ that we see some operators do.

But that should not mean an automatic presumption of employment either.

Modern and futureproof labour markets are characterised by diverse forms of work, including self-employment. Smart entrepreneurs should have the freedom to organize their work as they see fit.

What is crucial as the platform work market continues to evolve, is to ensure the correct classification of people working via online talent platforms and to have clarity on their employment status, their working conditions and corresponding rights to social security. The rights of those who are indeed employed are already protected in a number of European legal instruments including the Working Time Directive, the Directive on Transparent and Predictable Working Conditions, and the Council Recommendation on Access to Social Protection. And of course, the Agency Work Directive for those who are in a tripartite employment relationship. Now we should ensure it each of these are correctly enforced — ideally before adding even more labour market regulation and administrative burden on companies.

A one-size-fits-all policy to regulate the platform work economy appears out of reach, yet the problem of platforms abusing the self-employment model needs to be addressed, and platforms that operate as an agency should be regulated as such. The well-regulated agency work model facilitates the flexibility of and access to a diverse jobs market, enabling individuals to enjoy genuine independent or self-employed status without compromising their social rights and employment protections. At the Adecco Group, we aim to make the future work for everyone. We are convinced that agency work can be a leading model on how to do just that.

The opinions and views expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of Reshaping Work.