Analogies and differences between the European Commission’s and the Parliament’s approaches to the new Directive on platform work
By Despoina Georgiou, PhD Candidate, University of Cambridge
In December 2021, the European Commission published its proposal for a new Directive on improving the working conditions in platform work. One of the main aims of the proposed instrument is to tackle employment status misclassification which constitutes a big problem encountered in this area of work. As the Commission estimates, there are today over 28 million people in the EU who work through digital labour platforms, 5.5 million of whom are at risk of employment status misclassification. Indeed, 9 out of 10 platforms active in the EU today classify people working through them as self-employed. And yet, many of these people are bogus self-employed: they bear the business risks of their activities without being able to enjoy (i) the independence the ‘self-employed’ status offers in determining pay, clients, and working conditions or (ii) the labour and social protection afforded to ‘workers’ in an employment relationship. Furthermore, research has shown that bogus self-employment is often associated with precarious working conditions such as long and unsociable working hours and low and unstable incomes, leaving many platform workers exposed to physical and psychosocial health risks.
To combat this phenomenon, the European Commission introduced, in its proposal for a new Directive, a legal presumption of employment for people who are controlled by a platform and provided five elements that would demonstrate control (Article 4). Individuals who fulfil two of these preconditions will be presumed to be subordinate to the platform and will be granted ‘worker’ status for the purposes of the Directive. The presumption, however, is rebuttable. Platforms can rebut the presumption by proving that the contractual relationship is not an employment relationship according to national laws and the case law of the European Court of Justice (‘CJEU’) (Article 5). As it is stipulated, in making the assessment, attention should be paid to what the person actually does in the case in question, rather than to his/her formal classification in the contract (‘primacy of facts’ principle). Finally, the proposed instrument introduced certain information and consultation rights that are afforded to all persons performing platform work, regardless of their employment status (Article 10).
Overall, while the Commission’s proposal to introduce a legal presumption of employment for persons who are controlled by a platform was welcomed by most stakeholders as a positive step in the right direction, many viewed that there is much room for improvement. The Commission’s approach has been criticised for promoting a more stringent and formalistic notion of control than that that has already been accepted by employment tribunals in several Member States, precipitating thus an overall regression in the level of protection afforded to platform workers. Furthermore, many have expressed the view that the requirement that two out of five indicators need to be present for the legal presumption to apply is too restrictive, removing protection from vulnerable platform workers. Other criticisms raised include the indeterminacy of the criteria to rebut the presumption, the number of platforms that can act as the employer, the ability to use sub-contracting agencies to avoid employer responsibilities, the categories of platforms covered, and others.
Many of these criticisms have been addressed in the Report on the platform work Directive that was prepared by Rapporteur Gualmini and approved by the European Parliament in its plenary on February 2, 2023. There, the Members of the European Parliament took a more ambitious approach, establishing a broad presumption of employment that is not dependent on certain preconditions to apply (amended Article 4.1.1). Workers, trade unions and national authorities can trigger the presumption if they deem it fair, i.e., if they consider that the individual works under the control, direction, or supervision of the platform. Certain elements that could indicate ‘control’ are listed in Recital 25, but this list is not exhaustive and not binding. Hence, other elements could be taken into consideration to classify workers.
The introduction of a broad legal presumption of employment, however, does not mean that all persons performing platform work would automatically be re-classified as ‘workers’, as the platform always has the possibility to rebut the presumption before a decision of reclassification is made by the competent administrative or legal authorities (the onus of proof remains with the platforms) (Amended Article 4.1.2). To this end, the Report provides a list of criteria platforms can use in rebuttal proceedings to prove that the person is, in fact, genuinely self-employed (Article 5). As with the Commission’s proposal, the European Parliament’s Report reiterates that the assessment should be guided by factual elements and not by the parties’ characterisation of the contract. At the same time, elements that could hamper the application of the ‘primacy of facts’ principle are clarified or removed (Amended Recital 25), thus, promoting a more dynamic notion of ‘control’ that allows more persons to be captured by the Directive. Finally, provisions are added to help implement the legal presumption more efficiently. For example, it is stipulated that, if a person is re-classified as a ‘worker’, the relevant authority should, within one month of such recognition, start an inspection to rapidly verify the status of other persons performing work for the same platform (Amended Article 4.2.d.a).
Overall, by (i) removing the preconditions for the legal presumption to be triggered; (ii) establishing the criteria platforms can use to rebut the presumption; (iii) clarifying or removing elements that could hamper the application of the ‘primacy of facts’ principle; and (iv) establishing measures that boost the efficiency of the Directive, the European Parliament’s approach increases certainty, coverage and predictability, helping to level the playing field across platforms and avoid lengthy and costly disputes. Other changes found in the European Parliament’s Report vis-à-vis the Commission’s proposal include:
- Greater emphasis on Member States’ competence and on the case law of the CJEU (Amended Articles 3.1 and 5.3).
- Clarification regarding the number of parties who can act as the employer (Amended Article 3.2 and Recital 22). As it is specified, more than one parties can assume the obligations of the employer.
- Clarification regarding the ability to sub-contract (Amended Article 3.2.b and New Recital 42a). It is provided that Member States should introduce legal provisions on subcontracting that provide for joint and several liability and effective access to redress across subcontracting chains, ensuring that the contractors in a subcontracting chain may be held liable to pay wages, social security contributions and financial penalties in addition to or in place of the direct employer.
- Clarification regarding which platforms are captured by the Directive. While the Commission’s proposal stated that only platforms for which the organisation of work constitutes a “necessary and essential component” of their activities are captured by the Directive, this language has been omitted in the European Parliament’s Report (Amended Article 2.1.1c). As a result, all platforms which involve the organisation of work performed by individuals fall within the scope of the Directive under the European Parliament’s approach. Furthermore, an exclusion is added. Apart from platforms whose primary purpose is to exploit or share assets, platforms which allow private individuals to resell goods are also excluded under the European Parliament’s Report (Amended Article 2.2).
- Clarifications regarding the application of the proposed Directive to taxi dispatch services (New Recital 17b) and crowdwork platforms (New Recital 17c).
- Clarification regarding the persons who can act as ‘workers’ representatives’ (Amended Article 2.1.5 and New Article 2.1.5a)
- Removal of the exclusion for start-ups and small and medium-sized enterprises (Deleted Recital 51).
In general, the European Parliament has adopted a more interventionist approach in relation to platform work regulation. Many of the criticisms that were raised by academics, unions and advocacy groups against the Commission’s approach, have been addressed in the European Parliament’s Report which arguably constitutes a win for workers’ rights. The latter clarifies various contentious issues and provides greater protection to platform workers.
That being said, there is a long way to go before these changes materialise into actual rights for Europe’s platform workers. The European Parliament’s approval gives Gualmini the necessary mandate to enter interinstitutional negotiations (‘trialogues’) with the Commission and the Council. It remains to be seen whether the EU organs will agree on a more worker-protective legislation or whether, any attempts to introduce more favourable measures, will prove to be nothing more than a Sisyphean task.
* The blog is published as part of the Reshaping Work efforts to stimalute timely debate. 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.