The EU’s Attempt to Ensure Every Platform Worker is Employed Promises to be a Bumpy Ride
by Martijn Arets, Independent Platform Expert
If the European Commission were to have the final say, platforms like Uber and Deliveroo would employ all freelancers working with them. But is this actually feasible? A new European Directive attempts to build a case against pseudo self-employment within the platform economy. As EU member states may still have their say and platforms aren’t expected to sit and wait, this might be the beginning of a long and bumpy ride.
After investigating 100 court cases, the European Commission concluded that it needs to advocate for better working conditions within the platform economy. Currently, platform workers delivering your pizza or driving your taxi are mostly freelancers, which implies that they are not entitled to job protection(s), a pension, a minimum wage, and so on.
In order to enact change, Brussels published ambitious new draft legislation in December of last year. First, the Commission would like to place the burden of proof for the establishment of an employment relationship on the platforms. This implies that everyone working via a platform should, by definition, be considered an employee with an employment contract, unless a platform can prove otherwise. Moreover, platforms will have to provide transparency by offering insight into how their algorithms direct and remunerate workers.
What is to be expected
Whether platforms will ultimately employ their workers isn’t guaranteed yet. Although the drafted rules are widely supported, there are still many details to work out.
Negotiations surrounding the exact implementation of the draft will continue for another two years. Many EU member states will be adding their own preferences and platforms are also expected to wield their influence, as the stakes are high. An initial estimate by the European Commission determined that these changes could collectively see platforms shoulder 8 billion euro in additional labor costs.
Pros and cons of an employment relationship
According to the platforms, workers will be the ones negatively impacted by this directive. Platforms argue that their freelancers need the flexibility and autonomy to work when and where they want.
The fact that Deliveroo used to employ their riders in its early days in the Netherlands, and that Just Eat Takeaway also offers couriers an employment contract, demonstrates that autonomy, flexibility, and an employment relationship can be combined. However, employment comes with certain restrictions on workers. They will have to set their availability upfront, can only work for one platform at a time, and their compensation will be determined in advance: cycling faster will no longer lead to more income.
However, platforms are increasingly less dependent on this form of flexibility. Since they have been gathering sufficient data to adequately forecast when additional meal delivery or taxi drivers will be needed, this leaves existing platforms with a very weak argument.
Mandatory employment causes less employment
Nevertheless, it is still easier for platforms to work with self-employed people. Not only do they alleviate payroll taxes, but in order to offer clients the fastest delivery possible, platforms like Deliveroo and UberEats benefit from the availability of a worker surplus. When the demand turns out to be less than expected, the freelancers are hit the hardest. But as soon as platform workers are employees, the risks shift to where they belong, with the platform.
Shifting risks will surely impact the number of delivery riders that platforms will hire. Mandatory employment, which in reality is not expected to be undertaken by the platforms, but rather by subcontractors or employment agencies, will therefore lead to less employment opportunities. This statement proved true in Switzerland, where UberEats was forced to hire its freelancers. Delivery workers had to apply to keep their ‘job’. According to a message from Uber, only 23% of the drivers were offered employment.
Most likely, the ones most in need of protection will still miss out. Guillaume Blanchet, director of the French delivery cooperative Naofood, noted in the Dutch newspaper NRC, “Many of these workers don’t have any papers and just don’t have the opportunity to become an employee.” Mandatory employment is surely an option for delivery drivers, but to view this as the ultimate solution for a vulnerable group of workers is naive, to say the least.
Platform lobby
How platforms are able to influence the lawmaking processes was illustrated when AB5 was proposed in California in 2019. This bill intended to force taxi and delivery platforms to hire their workers. Whichever workers met the three outlined criteria, would automatically become an employee. Platforms didn’t agree and sprang into action. First, they changed their own processes, in order to avoid having the law apply to them. Uber drivers, for instance, were suddenly allowed to set their own fares and were given more information about their rides.
Secondly, platforms initiated a massive lobbying campaign, on which they successfully spent a staggering $200 million. An exception, by the title of Proposition 22, was made for companies within the platform economy. This implied that precisely businesses like Uber and Lyft would not have to hire their freelancers. Platform workers still received some added benefits, but nothing close to what actual employees receive. Basically, a new status for platform workers was created.
After the successful lobby campaign, the freelancers’ augmented freedoms were deemed unnecessary by the platforms and expediently reversed. Many companies even rescinded options like individual price setting.
A game of cat and mouse awaits us
Within the European Union, taxi and meal delivery platforms are expected to lobby against the new directive. They might even change their regulations to avoid being subjected to the law, which is quite easily done, as the criteria set by the EU are perfectly clear. Platforms may give freelancers the ability to influence their prices, suggest the use of company-branded clothing instead of demanding it, monitor performance less closely, and allow workers to work via other platforms as well. Surely, a game of cat and mouse awaits us.
The intention of the European Commission to empower the position of platform workers is commendable, but whether this proposal will fix any of the existing problems remains questionable. Not only because the law drafted has yet to be amended in many ways, but also because it fights symptoms selectively. Pseudo self-employed and vulnerable workers outside the platform economy deserve better working conditions too. So, it is time to look for structural solutions to providing certainty for workers and improving the valuation of their work.
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.
