Between Stronger Presumption of Employment Relationship and Deeper Binary Divide
By Karol Muszyński, Post Doc, and Valeria Pulignano, Professor, KU Leuven
The European Parliament has significantly strengthened the presumption of employment relationship in its legislative resolution on the proposal for a Directive of the European Parliament and of the Council improving working conditions in platform work. In the current version of the draft, digital labour platforms shall have to prove that the contractual relationship between the platform and the worker is not an employment relationship, i.e., in the process of the rebuttal of the presumption. The European Parliament proposition provides that Member States shall ensure possibility to rebut the presumption under the criteria that contractual relationship is not an employment relationship, the person performing platform work is free from control and direction of the digital labour platform in connection with the performance of the work, and that this person is “usually engaged in an independently established trade, profession or business of the same nature as that with which the work performed is related”.
We believe that the current wording of the Directive deepens the binary divide in the protection of employees and self-employed and raises concerns whether platforms will not, in fact, utilize the genuine self-employment status to foster unfavorable changes in working conditions for the self-employed while the latter are left unprotected. We point to three specific problems which may emerge in this context.
1. Enforcement
First, there is a practical issue related to the enforcement of the presumption in the context of the assumption of the Directive. It refers to when both dependent employees and self-employed provide services in the same digital market. The Directive explicitly provides that employees and genuine self-employed can provide work through the same platforms and that “the presumption should not cover” the group of self-employed. At the same time, the Directive in article 5a explicitly provides that some improvements of the working conditions (deemed voluntary) of the self-employed, which could normally be treated as criteria helping in the determination of the employment status, can be provided by platforms without interference in their self-employed status. These include platforms’ paying for the social protection, providing accident insurance and other forms of insurance, as well as granting training measures or similar benefits to self-employed persons. Provision of such benefits would not interfere with the possibility to rebut the presumption, thus making the correct application of the presumption even more challenging.
2. Implementation
Secondly, in the context of potential implementation of the Directive, it is unclear what would be the relationship between the presumption of employment status and “third status” self-employment solutions adopted within the Member States. Due to the ongoing disintegration of the binary divide between employment status and self-employment, many Member States have introduced third status solutions aimed at improving working conditions for some groups of self-employed workers. These include, for instance, peer-to-peer status in Belgium, para-subordinate status in Italy, and civil law contracts for mandate in Poland, which are commonly used in the respective countries to structure contractual relationships within the platform work. These solutions are variegated across the countries and attempt to accommodate for specific problems related to the functioning of national tax law, as well as existing disturbances and gaps in the coverage of social security protection. They also aim to deal with the (supposed) rigidities of the labour market. The legal status of such solutions is often controversial from the point of view whether they constitute separate non-standard form of employment or distinct form of self-employment. The platform work directive is unclear whether such “third status” contracts would be effectively subject to reclassification as they can be, and in fact often are, treated as a separate, distinct form of self-employment status in the case law, as well as administrative and political practice in the Member States.
This issue is untrivial as we already know that Member States enable to integrate “third status” contracts as means of accommodating attempts to regularize employment in specific sectors through the EU-level legislation. For instance, while the Directive on temporary agency work (2008/104/EC) provides that temporary agency workers should be employed on employment contracts, the Polish Act on hiring temporary agency workers enables temporary agencies to hire workers on civil law contracts under the assumption that civil law contracts are a somewhat “normalized” form of self-employment. Similar situation is present in Italy with regards to short-term labour administration contracts regulated by the Legislative Decree 276/2003.
3. Protection of work conditions
Third, there is the issue of the protection of conditions of work of the genuine self-employed. Regardless of whether it will be “third status” solutions granting them some form of protection or genuine self-employment, non-standard solutions will still be utilized in the landscape created by the platform work directive. As a result, the draft deepens the divide between the protection of self-employed and (potentially reclassified) employees. This raises questions related to equality. Some workers would be fully protected, and some others would be practically fully excluded from the protection, while providing work in very similar if not exactly the same economic conditions. This happens in the context where academic debate proved that platforms tend to transfer economic risks and generate problems for all kinds of workers — including self-employed. For instance, in our research we found that platforms generate excessive amounts of unpaid labour for freelancers — this includes not only misclassified workers whom the Directive would cover with its protective scope — but also genuine self-employed freelancers.
It is well known that the rise of (genuine) self-employment relates to the outsourcing trends that platforms contribute to but that also proceeded and are independent from the emergence of platform economy. Generating income dependency while observing the criteria for autonomy allows not only platforms, but also other businesses, to continue shifting risks and economic costs onto the self-employed under the assumption that they are responsible for their own working conditions. As a result, and in the context of blurred boundaries between employment and genuine self-employment, it becomes a practical and regulatory challenge to improve working conditions for all the workers regardless of their employment status — especially if we allow these two groups to continue to operate effectively in the same organizational context. A number of policy propositions can be put forward to limit potential deepening of this binary divide, such as providing self-employed with a wider access to social security, expanding occupational health and safety protective framework (which has been explicitly excluded from the EU regulatory agenda), as well as introducing specific instruments pertaining to the protection against the risk of unpaid labour.
Funding disclaimer: This contribution is based upon research that has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme (ResPecTMe — Grant Agreement number 833577) and the FWO, Flemish Research Council, Grant/Award Number: G073919N.
* 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.