News Publications

1 Mar 2021
Digital economy and new forms of employment – one size does not fit all

On 19 February 2021, the UK Supreme Court ruled that Uber drivers should be recognised as ‘workers’, be entitled to holiday pay, the minimum wage, sick leave and a pension.

The question of the precise status of online platform workers has been raised in other courts across Europe, which have not always reached the same conclusion. This myriad of decisions, coupled with diverse national rules, has caused legal uncertainty and pushed for the need of intervention at EU level.

Pursuant to Articles 4(2)(b), 153(1) and (2)(b) and second paragraph therein of the Treaty on the Functioning of the European Union (‘TFEU’), the EU has indeed competence to legislate on social policy, namely concerning working conditions and the protection of workers. Moreover, the right to fair and just working conditions is enshrined in Article 31 of the Charter of Fundamental Rights of the EU.

In 2019, the EU adopted a Directive on transparent and predictable working conditions (Directive 2019/1152), which shall apply to ‘domestic workers, on-demand workers, intermittent workers, voucher based-workers, platform workers, trainees and apprentices’, provided that they fall under the scope of the status of ‘worker’, pursuant to the case-law of the Court of Justice of the European Union (ECJ). According to its Article 1(3), the Directivemight not be applicableto workerswhose ‘working time is equal to or less than an average of three hours per week in a reference period of four consecutive weeks’. Despite being welcomed, this Directive does not completely solve the issue of the status of people working for platforms such as Uber, Uber Eats, Deliveroo or Just Eat (commonly called ‘gig-economy’). Moreover, its implementation by Member States is still ongoing (until 1 August 2022).

In fact, all EU institutions, depending on their role, have addressed the challenges posed by the gig-economy. A more active role has been played by the European Parliament and the Commission.

The Left group of the European Parliament has worked on a text for a Directive on Digital Platform Workers, which has been presented to the Commissioner for jobs and social rights, Nicolas Schmit. Recently, on 9 February, the Parliament has issued a ‘Draft Report on fair working conditions, rights and social protection for platform workers - new forms of employment linked to digital development’, where it recalled that, since Member States have developed different approaches, leading to fragmented rules and initiatives, there is a need for European level action to overcome the resulting legal uncertainty and improve platform workers’ rights.

For its part, the European Commission has just started the procedure that shall lead to a proposal for a Directive by the end of this year.[1] On 24 February 2021, it launched the first-stage consultation of European social partners on how to improve the working conditions for people working through digital labour platforms, which will be open for at least six weeks (more information available here). The Commission has drawn attention to the digital transformation and expansion of platform business models in the internal market, fostered by the Covid-19 crisis. As for the need of a legislative initiative, it pointed to the cross-border nature of digital platforms.

This initiative follows President von der Leyen’s commitment to ‘look at ways of improving the labour conditions of platform workers’, expressed in her Political Guidelines, as well as the Commission Work Programme 2021, where a legislative initiative on improving the working conditions of platform workers was announced for the end of 2021.

According to Commissioner Schmit, a balance must be struck between, on the one hand, promoting online platforms and benefitting from the progress and job opportunities they create and, on the other hand, guaranteeing that workers’ rights are respected. The main goal of this consultation is thus to tackle the employment status of online platform workers. It will also include other questions, such as the social rights which have to go with the platforms, independently of the referred status, the functioning of algorithmic management and to what extent the working time Directive (2003/88/EC) applies to these workers.

In the same vein, Executive Vice-President Margrethe Vestager has remarked the need to ‘find a balance between making the most of the opportunities of the platform economy and ensuring that the social rights of people working in it are the same as in the traditional economy’. In her words, ‘it is also a matter of a fair competition and level playing field between platforms and traditional companies that have higher labour costs because they are subject to traditional labour laws’.

As to the employment status, Commissioner Schmit recalled ‘a lot of Court rulings, [which] (…) do not all go into the same direction but some go more in the direction of «yes, they are employees»’. In fact, the ECJ has consistently affirmed that the concept of ‘worker’ cannot be interpreted differently according to the law of the Member States but has an autonomous meaning specific to EU law. Moreover, the ‘sui generis legal nature of an employment relationship in national law can in no way whatsoever affect whether or not the person is a ‘worker’ for the purposes of EU law’ (case C-658/18). Likewise, it has referred to the notion of ‘false self-employee’, pointing out that ‘the classification of a ‘self-employed person’ under national law does not prevent that person from being classified as an employee within the meaning of EU law if his independence is merely notional, thereby disguising an employment relationship’ (case C‑413/13). Thus, pursuant to the settled case-law of the ECJ, ‘the essential feature of an employment relationship is that, for a certain period of time, a person performs services for and under the direction of another person, in return for which he receives remuneration, the legal characterisation under national law and the form of that relationship, as well as the nature of the legal relationship between those two persons, not being decisive in that regard’ (case C-216/15). Notwithstanding, recent rulings (see, for example, Order in case C‑692/19) may be interpreted as upholding the self-employed status of online platform workers.

In this context, it is worth recalling that online platforms (Uber and Lyft) have recently won a similar ‘battle’ in California (USA). By popular referendum, Californian voters approved Proposition 22, strongly backed by gig companies, therefore allowing them to continue treating drivers as independent contractors, albeit with some limited guarantees, such as the minimum wage. This Proposition constitutes an overturn of the 2018 State Supreme Court ruling, later in 2019 enshrined in state law, pursuant to which workers who performed tasks within a company’s regular business — and were controlled by the company and did not operate their own firms — should be treated as employees.

In a nutshell, everyone seems to agree that ‘we are in some kind of a grey area’, thus claiming for a clarification and harmonisation. The EU’s objective seems ambitious: ‘a win-win for everyone: for the platforms, obviously, because they are the driving force; for the workers, because, sometimes and in many cases, they do not enjoy the protection which other workers in the other economy, the traditional economy, enjoy; but also for the clients, obviously, and they are increasing’ (Commissioner Schmit).

At CVA, we welcome the Commission’s initiative and the EU’s overall action to enhance legal certainty and to ensure the protection of people working through platforms. Indeed, this has been a hot topic for years and, following the UK Supreme Court’s ruling of last week, it is likely that other national courts will face similar questions. Despite the judgments of the ECJ, which have shed some light on how to interpret the concept of ‘worker’, as well as Directive 2019/1152, which has contributed to enhance workers’ rights in certain fields, the precise status of online platform workers remains unclear. EU legislative action is therefore essential to improve workers’ rights, irrespective of their status under national laws, as well as to increase legal certainty. As all the relevant actors seem to agree, European values, enshrined in the so-called European social model, must remain at the heart of Europe's digital future.



[1] Article 154(2) TFEU provides for a two-stage consultation of social partners for proposals in the social policy field based on Article 153 TFEU. Unless social partners decide to enter into negotiations among themselves following the first or the second stage of the consultation, the Commission intends to put forward a legislative initiative by the end of the year.

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