The EU Commission published its long-awaited platform workers proposals on Thursday 9 December. This is an important milestone in a very long process, and follows multiple consultation rounds, including with the platform industry and with European social partners. The latter did not agree to enter into negotiations, which explains why the Commission is proposing a legal instrument in the form of a framework directive as part of its package.
We will come back to timing issues later in this blog post, but it is important to note that nothing will change overnight. Thursday 9 December’s announcement is only the release of proposals, no more, no less.
The proposed framework directive in a nutshell
The EU Commission has always been supportive of the digital platform economy while focusing on the platform workers’ rights at the same time. The proposed directive is consistent with this approach: the chosen path is a rebuttable presumption of employee status; a softer way of improving the rights of platform workers compared to some of the other options that were on the table and a recognition of the fact that not all platform workers are employees (nor interested in becoming one). How would this presumption work? The proposed directive would require Members States to have appropriate procedures in place to verify and ensure the correct determination of the employment status of platform workers. This determination should be guided primarily by the facts (which is already the case in most countries). The proposed directive goes on to say that someone performing work under the control of a platform should be legally presumed to be an employee of said platform. Control would be established if at least two of the following criteria are met:
- the remuneration (or its upper limit) is determined by the platform;
- binding rules are in place with regards to appearance, conduct towards clients or performance of the work;
- electronic means are in place to supervise and assess performance;
- restrictions are in place on working time, freedom to turn the App off or to use a substitute; and
- exclusivity/non-competition is required.
This is only a framework directive proposal and it would be down to Member States to establish the presumption in accordance with their national legal and judicial systems. The classification of an employment relationship is indeed a matter for Member States to deal with and in most jurisdictions, ultimately a matter for judges to determine, based on the specifics of each case. There isn’t much the EU can do in terms of blanket approach.
It is worth noting that the presumption would be rebuttable, both by the platform and the worker, which will no doubt lead to more judicial claims.
The use of a rebuttable presumption in the employment field will be familiar to many and is already in place in the framework of social security coverage in some countries, or, in the case of Spain, for delivery platforms as per the 2021 Rider Law which came into force last August.
The second part of the proposal focuses on algorithmic management and would apply to all platform workers, irrespective of their status. It calls for more transparency in the use of such algorithms and for a “human in command” approach. In addition, (and different from the draft EU AI regulation), it promotes social dialogue between platform and workers on the issue.
The third part looks at “traceability”, forcing platforms to declare platform workers to the relevant local authorities of the Member States in which the work is performed (and the entire regime would apply to the EU operations of any platform, including those based in the US).
The final provisions of the proposed directive also include a protection against retaliation for workers claiming rights on the basis of the proposed directive and the need to establish communication channels between workers themselves and with the platform.
Any immediate impact?
The announcement by the Commission is very important, but technically speaking, it is only the release of a proposal. It will take time before any new EU rules on platform workers enter into force and become effective locally. The proposal for a new directive will have to be discussed among the Member States in the Council and by the European Parliament, each of which will need to adopt a position. When this is concluded, the traditional “trilogue” will start between the EU institutions before a final text can be agreed by the Parliament and the Council and published in the Official Journal. This process can take up to two years especially when the matter is sensitive as this one is, although according Commissioner Schmit, there is already support both in the Council and the Parliament. Then assuming a directive is published sometime in late 2022 (or more realistically in the course of 2023), Member States will have two years to implement its provisions into local law, meaning that new rules are unlikely to be effective before the end of 2024 or 2025. So much can happen in 4 years in the platform industry and especially in ride-hailing and food and grocery delivery, which are the main targets of the proposal. Who knows how these platforms’ business models will evolve and whether these will rely on drivers and riders in the same way as they do today? Drones and self-driving cars will most likely play a bigger role by then, raising a new range of issues for drivers and riders.
The impact of the announced package is not so much in the prospect of a set of new enforceable rules by 2025. It is probably about showing the EU’s determination in supporting platform workers and can be read as a call to Member States to do more. Some have already put in place new local laws that are in many ways similar to the approach taken by the proposed directive. Think about the 2021 Rider Law in Spain, which introduces a rebuttable presumption that riders providing services for companies which organise those through digital platforms are employees and tries to regulate algorithmic transparency. Such an EU level message can also be seen as an encouragement to drivers and riders to stand for their rights and possibly bring more claims against platforms. Local initiatives and case law indeed appear to be faster ways to achieve the overall goal than a long and uncertain EU legislative process. Of course, case law can go in both directions, as shown by the recent Brussels’ employment tribunal decision ruling, a case in which Deliveroo successfully rebutted the employment presumption.
Finally, some of the content of the proposed directive overlaps with other rules that are already in place - such as GDPR or the Directive on transparent and predictable working conditions - and with new initiatives which are already under way, such as the proposed EU AI regulation.
What about collective bargaining?
The collective bargaining route was so far largely viewed as a quick and easy fix as opposed to trying to address the classification of platform workers. If indeed you allow all of them, irrespective of their status, to collectively negotiate their salaries and other terms, you help to improve their working conditions. The Commission already consulted twice on changes in antitrust policy with a view to allowing certain self-employed individuals to collectively bargain.
As part of the new package, the Commission is launching another consultation, this time on guidelines on collective bargaining, with the same idea as before: how to ensure that competition law does not stand in the way of collective agreements to improve the working conditions of certain self-employed people.
One difficulty the Commission will face is that it will need the support of the local competition authorities in respect of proposed new guidelines.
Some EU Member States – e.g., France – are already ahead of the Commission, having taken steps towards the acceptance of some form of collective bargaining for platform workers, irrespective of their individual legal status. Germany and Spain also provide for limited collective bargaining rights for non-employees. But in other Member States, local laws expressly restrict collective bargaining to employers and employees, meaning that next to securing the support from the local competition authorities, one would need to adjust the relevant labour laws.
What about the so-called “third way”?
Interestingly, the so called “third way” is not addressed in the proposed directive. At some point, the generalisation of in-between statuses as these exist in the UK (worker) or in Spain (TRADE) was viewed as the way forward: platform workers would be categorised as the third status, in between full employee and self-employed, providing them with a minimum set of rights. The Commission is not mentioning this solution anymore which is fine for Member States which don’t already have a third status, but which is likely to give rise to difficulties in Member States where a third status is already in place. Indeed, how would a binary type of presumption work in a three-status context?
What is next?
The new EU proposal is a long-term project. In the meantime, platforms will need to continue monitoring regulatory and case law developments in all markets in which they operate and adjust their business models accordingly. Please get in touch with your usual contact at Freshfields for a discussion on the legal landscape around platform workers.
The EU Commission has always been supportive of the digital platform economy while focusing on the platform workers’ rights at the same time. The proposed directive is consistent with this approach.