The European Commission is one step closer to approving a directive that will regulate the employment status of ‘gig workers,’ perhaps shifting many of them from freelancers to employees.
The Commission unveiled a draft directive on “improving working conditions in platform work” on December 9th. It’s designed to end what many see as the “false self-employed” status of online platform workers, such as couriers for delivery apps.
“Our proposal for a Directive will help false self-employed working for platforms to correctly determine their employment status and enjoy all the social rights that come with that. Genuine self-employed on platforms will be protected through enhanced legal certainty on their status and there will be new safeguards against the pitfalls of algorithmic management. This is an important step towards a more social digital economy,” the Danish European Commissioner Margrethe Vestager said in a press statement.
The proliferation of apps and online platforms where anyone can sign up to provide services ranging from food delivery to language classes has brought attention to the ‘gig economy,’ along with its advantages and disadvantages. Research from the International Labor Organisation shows that online work platforms have increased from at least 142 in 2010 to over 777 in 2020.
The European Commission estimates that of the 28 million independent contractors in the Europe Union, 5.5 million are “false self-employed” workers. It expects that between 1.72 million and 4.1 million people could be reclassified under the directive, depending on whether online work is figured into the calculation. It also estimates that on average reclassified workers will earn 121 euros more annually thanks to ‘rider laws,’ with some workers not seeing any increase in earnings and others gaining as much as 1,800 euros a year. As a group, reclassified workers would earn an additional €484 million, according to the commission.
On the flip side, the Commission calculates that work platforms would have to support a total increase in costs of up to €4.5 billion euros annually.
The draft directive sets out criteria to establish the employment status of workers based on “the facts relating to the actual performance of work, taking into account the use of algorithms in the organisation of platform work.” According to the European Commission’s press release, the criteria include putting a limit on what the worker can charge for the service; requiring a certain kind of dress or conduct; supervising or verifying the work done by electronic means; effectively restricting the worker’s ability to build their own client base or do the same work for another party; and effectively enjoining a certain schedule on the worker. If two of the criteria are met, the platform’s workers have to be treated as employees according to the law of the country where they work.
‘Rider laws’ have divided platform workers. While many clamor for employee status hoping for higher earnings and benefits such as paid sick time, others anticipate that employee status would mean worse working conditions. In Spain, where a law similar to the European Commission’s draft directive went into effect in August, groups of ‘riders’ organized both in favor of and against the law.
The digital platforms that fell under the Spanish law, principally food delivery apps, responded with mixed reactions. Deliveroo ended its operations in Spain, UberEATS moved to subcontracting all of its couriers, and Glovo moved some contractors to employee status after it was fined in November for using self-employed couriers in Seville.
The group Delivery Platforms Europe, which includes Glovo, Deliveroo, and other courier services, claims that 70%of people who work for online platforms prefer their independent contractor status for the flexibility, and that ‘rider laws’ could force 250,000 couriers out of work. The assertion comes from a study the informal coalition commissioned from Copenhagen Economics.
But the European Commission countered such statistics. While it acknowledged “the initiative may negatively affect the flexibility enjoyed by people working through platforms,” it considered flexibility “only apparent” since “actual working times depend on the real-time demand for services, supply of workers, and other factors.” Unlike courier platforms, the Commission didn’t find it “possible to meaningfully quantify what this would entail in terms of change in full-time equivalents and potential job losses, given the very high number of variables such calculation would entail.”
The European draft directive goes further than the Spanish law since it also includes regulations on how algorithms are used within the platform to evaluate worker performance. One complaint of online platform workers is that they are penalized or threatened with having their accounts cancelled, essentially getting sacked, due to an evaluation made by an algorithm they are little informed about and have no way to appeal. The European directive requires platforms to be more transparent about how algorithms evaluate workers, to provide better human oversight of decisions, and to offer a means for workers to appeal. The proposal will now have to be agreed upon by the European Parliament and the Council of Ministers. It seems to already have wide support in Parliament, as the body voted overwhelmingly in September to demand the commission write the directive.