EU gig economy workers could be reclassified as employees

4 mins

Posted on 13 Dec 2021

EU gig economy workers could be reclassified as employees

EU proposals for gig economy workers

Online platforms operating in the EU may have to reclassify some of their self-employed workers as employees if new EU proposals are adopted. 

Platform workers: assessing employment status

The European Commission has published a proposed Directive aimed at improving working conditions for platform or gig economy workers. Under the proposals, digital platforms that control the performance of a person’s work will be presumed to be their employer. The draft Directive sets out a list of criteria indicative of control. Those working through the platform will be deemed to be employed rather than self-employed if at least two of those criteria are met. 

The proposed criteria for determining whether an online platform is an employer are as follows:

  • 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

Either party will be able to contest the classification, but the burden of proving that there is no employment relationship will rest on the digital platform. This contrasts with the current situation in many EU countries (and in the UK) where it is for the individual to prove that they are not self-employed if they wish to obtain worker rights, such as paid holiday, minimum wage, working time protection, collective bargaining, sick pay and pensions. Under the proposals, assessment of employment status will be based on the facts with less attention paid to the contract or other documents.

Algorithmic management

The Directive also requires greater transparency where digital platforms use algorithms to organise and manage staff, for example to allocate tasks and monitor performance. The platform will have to inform staff and their representatives about how they use algorithms. They will also have to ensure that there is human monitoring of automated decisions and that it is possible to contest those decisions.  Digital platforms will not be able to collect or process any personal data that is not directly related to the work performed. These rights will apply regardless of employment status. 

In addition, digital platforms will have to inform and consult platform workers’ representatives if they propose to make substantial changes to how they use algorithms to monitor staff and make decisions.

What happens next? 

The European Parliament and the Council will have to agree and adopt a final version of the Directive before it can enter into force. There could therefore be changes to the final text of the legislation. The European Commission has also invited public feedback on the proposed Directive via its Have Your Say website. Responses are required by 4 February 2022.    

What does this mean in the UK?

If these proposals are adopted, they will not directly affect UK businesses unless they also operate in the EU.  However, similar proposals could be seen in the UK. Employment status in the gig economy was a key focus of the Taylor Review back in 2017 and in its response the Government said it would legislate to improve the clarity of the employment status tests in order to reflect the reality of modern working relationships. The Government’s response to its consultation on how it might achieve this is still awaited but it will no doubt look at the EU proposals to inform its decision.   

For advice on any employment issue including work contracts, visit our employment pages for more information and for details on how to contact us.

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