Work at the click of a button
Employees using the platform economy receive orders via the Internet at the click of a button. Known as crowd, cloud, click or gig workers, they work as riders for delivery services such as Gorillas, Foodora or Deliveroo, as Uber drivers, charge electric scooters or work for Helpling as cleaners, for example. However, a Study by the Bertelsmann Stiftung has determined that large numbers of IT specialists, copywriters, designers and translators also work for platforms. Brussels estimates that more than 28 million people in the EU already work for Internet platforms which place orders via apps. According to estimates, this will rise to 43 million by 2025.
No set of criteria classifying employee status
The EU estimates that roughly 26 million of the 28 million platform workers in member states are self-employed. However, the commission also assumes that approximately five million workers are incorrectly classified. Conversely, the German Association of Founders and Freelancers questions this statistic. As already reported, Margarethe Vestager, the Executive Vice President of the EU Commission, aims to prevent pseudo self-employment with this proposed directive by reversing the burden of proof. On the one hand, misclassification as a freelancer could promote precarious working conditions and undermine social protection rights, such as the continued payment of wages in the event of illness, paid vacation or regulated working hours. On the other hand, Brussels also intends to avoid endangering the solidarity-based social systems and to protect small and medium-sized enterprises against unfair competition. Unlike the EU commission’s original draft, the Parliament’s proposal in Article 4(2) does not stipulate a set of criteria for classifying a platform as an employer. Instead, the general legal assumption is that an employment relationship exists between the digital work platform and the platform worker.
The parliamentary proposal states that this must not result in the automatic reclassification of all people performing platform work. That is why Article 4(1) grants digital work platforms the right to refute the presumption of an employment relationship before a decision regarding reclassification is reached in the course of administrative or judicial proceedings.
Criteria for denying employee status
Article 5 of the parliamentary proposal specifies two criteria for denying the legal presumption of an employment relationship:
- An employment relationship does not exist in the national sense and the digital work platform does not control or direct the person working for it in any way – neither within the scope of the contract nor factually via the work performance.
- The click worker also pursues an independent trade, profession or area of business which corresponds to the work on the platform.
The Parliament’s proposal sets forth eight criteria in amendments 104 to 111 which, conversely, indicate control and instruction on the part of the platform. These include: Setting pay, controlling working conditions, supervising the employed person while they work, or specifying conduct or outward appearance.
Management by algorithm
The directive also seeks to regulate how digital work platforms utilize algorithms and artificial intelligence to monitor employees and measure their performance. The Commission is pursuing three objectives:
- Greater transparency: Workers should be granted more extensive rights and information, and should know how their work is being tracked and analyzed.
- Human monitoring: Entirely automating every important decision in an employment relationship is prohibited. These always require additional supervision by a human being.
- Right to review: It must be ensured that both employees and actual freelancers have the option of disputing automated decisions.
Promote collective bargaining
The Parliament’s proposal also includes regulations to enable platform workers to better organize themselves into trade unions and negotiate collective agreements.
Not practical enough
According to the EU, around 80 percent of crowdworkers work as cab drivers, cleaners, in the trades or for delivery services. Seventy percent of these are considered to be jobs which require low skill levels. In contrast, the study by the Bertelsmann Stiftung states that the image of the precarious click worker is not differentiated enough: Platform workers in Germany are on average younger, better educated and financially better situated than the average population. More than one-third of gig workers handle higher-value jobs: These include programmers, copywriters, designers or other creative professionals, for example. 99 percent of those interviewed do platform work in addition to their primary job as a means of earning extra money. They cite time flexibility as one of the top reasons in favor of platform work. According to the IT industry association Bitkom, many people also use platform work as a springboard to starting a freelance career.
Avoid repeating mistakes
In the light of things, the EU needs to avoid repeating the mistake of Germany’s red-green coalition government at the end of the 1990s. As already reported, the coalition worked to put an end to pseudo self-employment. Despite great resistance, the coalition pushed through a law combating pseudo self-employment combat in an attempt to prevent what it regarded as precarious employment relationships. The regulations at that time also included a legal presumption of an employment relationship along with a set of criteria. However, these needed to be revised after only one year. Four years later, the rules were abolished again.
Outcome still open
Uniform regulations governing the gig economy in the EU are a fundamentally welcome idea. However, the existence of an employment relationship between the platform and the click worker requires a clear definition. The focus here needs to be on clear cases of pseudo self-employment. The directive is still in undergoing tough negotiations. Once the Council of Ministers has agreed on a proposal, the draft may still undergo revisions during the trilogue procedure between the Parliament, the Commission and the Council of Ministers. After the directive has been adopted, the member states then have two years to transpose it into national law. The current German government regards digital platforms as an enrichment of the working world. According to the coalition agreement, the German government intends to “constructively accompany” the EU initiative on platform work. One can only hope that the experiences of the red-green coalition regarding the legal presumption and a set of criteria defining pseudo self-employment will also be considered. As we have already reported, focusing on positive examples of constructive regulation such as the approach in Estonia, for example, may prove helpful.