The European Commission Takes a Bold Action to Improve Lives of Platform Workers — What Is the Sentiment Around It?

by Jovana Karanovic, Founder and Managing Director of Reshaping Work

On December 9, 2021 the European Commission proposed a set of measures to improve the working conditions of platform workers. If adopted into a directive, two scenarios are possible: platform workers will have a status of employees or platform companies will change their business models drastically to avoid this from happening.

The Commission proposed a rebuttable presumption of employment, which essentially means that platform workers (including those working on online platforms for data coding or graphic design, as well on on-location platforms such as ride-hailing and food delivery) will have a status of employees, entitling them to social benefits such as insurance and sick leave.

Among the criteria are monitoring, limits on tasks and working hours, and restrictions on building a client base, all under which platform workers will be presumed employees, enjoying all the rights as those in traditional employment (e.g., minimum wage). In addition to addressing (miss)classification, the Proposal also focuses on ensuring fairness and transparency in the area of algorithmic management.

If the Directive is adopted by the European Parliament and the Council, Member States will have two years to incorporate it into their national laws.

Valdis Dombrovskis, Executive Vice President of the European Commission for an Economy that Works for People, and Nicolas Schmit, Commissioner for Jobs and Social Rights, remark that the Commission recognises benefits of platform work. As they pointed during the press conference, revenues from EU platform companies have risen almost five fold in the last 5 years. It is estimated that currently some 28 million people work via digital labour platforms, and that this number is expected to raise to 43 million by 2025. In other words, the job opportunities afforded by this new economy are not negligible.

Furthermore, consumers’ appetite for platform services is evident. The consumer demand is driving the growth of the platform economy, thus the Commission remarks that there are currently more than 500 platform companies operating mostly in multiple Member States.

While recognising benefits brought about by the platform economy, the Commissioner Schmit points that this new business model should fit with Europe’s social standards, such as labour and social rights. Considering the developments of recent decades that enabled the European Union to be where it is now, they believe that new job opportunities should also uphold same social standards, ensuring for quality jobs.

Their proposal does not mean ‘the end to flexibility’, points Schmit. The Commission believes that flexibility and an employment status are not mutually exclusive. They underline that some major platforms that have such a model.

MAIN OBJECTIVES OF THE PROPOSED DIRECTIVE

OBJECTIVE 1: Addressing Misclassification of Employment Status

The proposed directive outlines that platforms workers should enjoy labour and social rights that correspond to European social framework. If the platform is considered an employer based on the laid-out criteria, then workers should be entitled to enjoy the same rights as employees of traditional (offline) companies.

The criteria that determines if a worker is an employee is dependent on the level of control exercised by the platform, where two of the five conditions below would presume an employment relationship:

• “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”[1].

OBJECTIVE 2: Ensuring for Algorithmic Fairness and Transparency

The proposed directive also aims to increase transparency regarding algorithmic management. The Commission stresses that it is important that workers understand how the tasks are assigned, how the prices are set, and how they are being evaluated.

Furthermore, the Commission wants to ensure for accountability in the use of algorithms, or in other words, that there is human supervision of automated decisions and automated monitoring systems. In addition, such monitoring and automated decisions can be contested by workers under the proposed directive.

These rules apply to employees and self-employed alike engaged in platform work.

OBJECTIVE 3: Traceability of Platform Work

Furthermore, the proposed directive is meant to increase transparency and traceability of platform work. The Commission acknowledges that scaling across Members States is important; thus, there needs to be information on which platforms are active in specific regions.

Platforms will need to declare work that is preformed and share certain information with national authorities, such as information on the number of people that work through them.

OBJECTIVE 4: Safeguarding Collective Representation and Social Dialogue

The proposed directive will make it possible for workers to join or form unions as well as seek expert advice. At the moment such right is not guaranteed to platform workers as it is in the breach of competition law; the Commission aims to resolve that.

OBJECTIVE 5: Stimulating Social Economy

Lastly, the Commission aims to stimulate social economy, which includes foundations, cooperatives and private companies that are engine of social innovation and inclusivity, as they point. The Commission believes that their potential is underutilised, thus they want to boost their development and potential to create employment.

SENTIMENT AMONG EXPERTS, COMPANIES, AND UNIONS

Commissioner Schmit points that the cost for platforms, if the directive is adopted, will be 4.5 billion per year. Naturally, the question arises whether the platform business models can handle it?

ETUC’s Confederal Secretary Ludovic Voet pointed that platform companies have made enormous profits ‘by dodging their most basic obligations as employers at the expense of workers while peddling the lie that they provided choice to workers’.

Uni Europa’s Regional Secretary Oliver Roethig says: “Until now, workers who have been forced into bogus self-employment have had to take lengthy and expensive court action on a case-by-case basis to claw back rights”.

In general, unions seem pleased by the proposed directive and hope for its adoption and roll out across the Member States.

Scholars point that such a bold action from the Commission is a step in the right direction but also outline some criticism.

Professor Valerio de Stefano and Dr. Antonio Aloisi say in their commentary[2] that proposed interpretation of the anti-trust law “aims to promote social dialogue but leaves us short of the protection of collective bargaining rights for all, regardless of employment status, granted by international law”. They add that “lack of recognition of collective agency and voice for these workers could limit their effectiveness”.

Platform companies’ opinions are divided.

ZenJob, a Berlin-based startup connecting students with temporary jobs in sectors such as retail, logistics and hospitality, stated that “maintaining flexibility while at the same time offering security for all stakeholders is the biggest challenge in the discourse around platform work. It is amazing to see, that many platform operators are united in the mission to take this challenge. In various projects and bilateral exchanges, we have worked out common positions and also explored the subtle differences in our business models.”

Delivery Hero remarks that the criteria for a rebuttable presumption of employment “are too broad and would not contribute to that goal. This would also have disproportionate restrictions for self-employed platform workers and put limitations on the flexibility we know they value most”.

Oxford Professor Jeremias Adams-Prassl, author of the book Humans as a Service, however, points that flexibility is not always what it seems. While the work is supposedly flexible, the business model of platforms often demands tightly-curated service.

Some other platforms argue that reclassification has negative consequences for platform workers. The Deliveroo spokesperson told The Brussels Times that “evidence from around the world clearly demonstrates that reclassifying riders has negative consequences for riders themselves, consumers, restaurants and the wider economy.”

Uber’s spokesperson directs attention to France, which in their opinion has shown how drivers and couriers can “retain the flexibility we know they value most, while allowing platforms to introduce more protections and benefits”.

Furthermore, Fairwork Foundation of Oxford University underlines that the proposed directive does not address subcontracting, which many platforms resort to. “Our research shows how platforms often use complex networks of subcontracting to avoid liability. But the proposal makes no mention of platforms’ responsibilities in subcontracting arrangements”, says Fairwork on Twitter.

Another criticism is that much is left to individual Member States.

Nicola Countouris, Director of Research at ETUI remarks: “The EU intervention alone will not resolve these regulatory conundrums; national governments and parliaments will need to step up their efforts.”

One thing is certain: platform companies will need to radically change their business models. As Morgan Meaker of Wired points: “Platforms will have to decide whether they want to run the business model according to the rules or completely change their business model by allowing workers to set their own fees and not expelling them from the platform for low ratings.”

[1] From the proposed Directive 2021/0414 (COD). Accessible at: https://ec.europa.eu/commission/presscorner/detail/en/ip_21_6605

[2] Can be accessed here: https://socialeurope.eu/european-commission-takes-the-lead-in-regulating-platform-work