EU directive on platform work

The EU Council on Employment, Social Policy, Health and Consumer Protection adopted the Directive on improving working conditions in platform work https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021PC0762 at its meeting on March 11, 2024.

The aim of the new regulations is to improve the situation of people working through online platforms. The new regulations will cover couriers, food and shopping delivery people and cab drivers, but also developers, translators or designers. An estimated 28 million people in the European Union work through digital platforms, and this number could nearly double by 2025.

What will the new regulations mean for companies that offer work through online platforms and applications, and for the self-employed?

What is platform work?

Platform work is that through an application or website, a connection is made between the service recipient (the person ordering the service) and the service provider (the person who will provide the service). Platform work is not regulated, but has developed as a market practice being the result of digital transformation in labor markets.

How platform employment works now?

The vast majority of platform workers in the European Union are self-employed and are not employed in accordance with local employment laws. Entrepreneurs who rely on platform workers point out that these individuals are independent as to when and how much service they will provide. On the other hand, platform workers are often controlled by the platform, subject to certain rules of provision and services, and billed through the platform. As a result, the nature of their cooperation with the platform operator resembles employment, but they are deprived of the rights and privileges associated with their real status.

Companies that based their business on platform work, i.e. offered employment without calling it employment, quickly gained a competitive advantage in the European market, as they did not incur the typical costs associated with hiring employees whether under an employment relationship or contract of mandate. On the other hand, such actions have provoked numerous criticisms-both from platform workers and other entrepreneurs.

Recognizing the growing problem of platform work, the European Union has adopted a directive that aims to regulate the situation of platform workers on equal terms and stabilize the European labor market.

What will the directive change?

Definition of platform work

The Directive introduces the definition of platform work which: “means any work organised through a digital labour platform and performed in the Union by an individual on the basis of a contractual relationship between the digital labour platform and the individual, irrespective of whether a contractual relationship exists between the individual and the recipient of the service”.

Presumption of employment

The directive establishes a presumption of employment between a worker and the digital platform within which the work is performed. This means that a platform worker will automatically be considered to be employed under an employment contract if the terms of his or her cooperation within the platform meet at least two of the five criteria:

• actual determination or setting of salary caps;
• obligating compliance with certain rules of appearance, conduct toward the recipient of the service, or performance of the work;
• supervising the performance of work or verifying the quality of work results;
• restricting the freedom to organize work: in particular, the freedom to choose working hours or periods of absence, to accept or reject tasks, and to use subcontractors or substitutes;
• restricting the ability to expand the client base or perform work for third parties.

Transparent algorithms

Platform workers will have the right to obtain information about the algorithms used by platforms and their key features. The goal of this regulation is for platform workers to obtain transparent information on how decisions related to their employment are made, regarding the rules of their compensation, the awarding of bonuses, the distribution of tasks and access to assignments, or the application of possible sanctions against employees.

Platform workers will also gain the important right to challenge decisions that have been made by automated means.

Also importantly, digital labor platforms will have an obligation to regularly review the impact of algorithmic operations on the working conditions of the people employed.

What does this mean for digital labour platforms?

Once the directive comes into force, European Union member states will have two years to implement it.

The burden of complying with the new regulations will fall mainly on businesses that base their operations on platform work.

New information  and verification obligations to platform workers and the possibility of challenging automated decisions will require adjusting the functionality of digital platforms and hiring additional staff.

The most controversial and feared regulation for entrepreneurs is the introduction of a presumption of the existence of an employment relationship of a platform employee. Importantly, the onus will be on the entrepreneur who employs within the platform to prove that the relationship that binds him to the platform worker is not an employment relationship. The above could mean an increase in the number of court cases to establish the existence of an employment relationship.