European Commission to the world: Gig Economy workers are employees

Gorillas, a German food delivery startup, decided to put all of its riders on the payroll from the day it launched, offering them a contract, health insurance and paid time off.

Europe’s fastest growing unicorn did it, the company said, because it wanted to operate “a counter-model to the concert economy.”

It could also be that the gorillas saw the writing on the wall.

Last week, the European Commission unveiled what lawyers describe as the world’s first attempt to regulate the burgeoning concert economy that has become a mainstay of many cities. More than 500 platform companies are active in the European Union and represent a 20 billion euro industry, according to the Commission.

The proposal aims to give the bloc’s 28 million workers in the concert economy better labor protections, while giving the Ubers and Deliveroos of this world more legal certainty by settling an issue that has divided courts across the bloc of 27 countries: are workers in the concert economy really autonomous? -employee?

According to the EU’s executive body, the answer is no, or at least, generally not. Most of the time, they are employees. The proposed directive assumes that platform workers are employees when two of the five criteria suggesting control over a worker are met. The criteria cover compensation, electronic surveillance, rules regarding appearance and conduct, and restrictions on working hours and other customers. The proposal also shifts the burden of proof to establish that there is no employee-employer relationship with platform companies in labor disputes.

“We need to make the most of the job creation potential of digital platforms,” ​​said employment commissioner Nicolas Schmit when announcing the rules last week. “But we also need to make sure that these are quality jobs that do not promote precariousness, so that the people who work there are safe and can plan for their future.”

Despite the Commission’s best efforts, however, employment lawyers interviewed by International said the new plans should not result in less litigation. To date, there have been more than 100 local court decisions related to the employment status of workers in the odd-job economy, according to the Commission.

Companies and workers at the platforms can still challenge the presumption of employment based on local labor laws, and some of the criteria proposed by the Commission are subject to interpretation, lawyers note.

“Any jurisdiction may have a different point of view on how to rebut, and on the basis of the criteria to be rebutted,” the presumption of an employer-employee relationship, even after the new rules are adopted, said Sophie Berg, partner in Brussels. CMS office. “In that sense, it’s not going to help.”

Allen & Overy partner Inge Vanderreken agrees that the legal patchwork that has emerged on the issue will remain. “They [are trying] to increase legal certainty, but it is not really clear, if we look at the results of the various court decisions [so far], if they will succeed, ”she said.

It’s also unclear how much of what’s currently on the table will remain in four or five years, when the various stages of the EU’s legislative process have been completed and the proposals become law, according to lawyers.

Reclassification of gig workers

One thing is certain is that more workers on the platform will be reclassified as employees as a result of the new rules. According to the Commission’s own estimates, up to 4.1 million workers at the platforms could be reclassified as workers under the new rules, representing a bill of up to € 4 billion per year in wages. and additional benefits for companies like Uber.

The draft rules have received a frosty reception from companies in the gig economy, which have warned it could push up to 250,000 people to quit working on the platform. They also say it would rob drivers and passengers of the flexibility many were looking for in the gig economy in the first place.

“We are concerned about the impact this proposal could have on passengers, restaurants and the wider European economy,” lobby group Delivery Platforms Europe said in a statement.

Lawyers interviewed by International said the Commission’s plan is unlikely to inspire similar legislation in other parts of the world, like some of its regulations, such as its GDPR privacy law. According to A&O’s Vanderreken, lawmakers in other countries will have to balance the benefits of tighter regulation – lower litigation costs and better labor protections, with its drawbacks – less flexibility and job losses. “It’s a tough choice,” she said. “And [it’s one] every jurisdiction outside of Europe will have to do and they can come up with a totally different result.

Berg of CMS sees the value of the plan as primarily symbolic. She described it as how the European Commission shows its position on the whole issue. “[It will] probably reassure unions and runners that the basic principle is that they should be employees, but as such no more than that, ”she said.

Influencing a rapidly changing market

Jean-François Gerard, lawyer in the Brussels office of Freshfields Bruckhaus Deringer, added: “It’s more about trying to influence the market than providing people with a solution that is certain.

Berg expects platform companies to heed some of the Commission’s requests by making minor changes, such as offering professional insurance to concert workers. But she doesn’t expect them to completely rethink their business model and start hiring riders like Gorillas, the German start-up, has. “[The proposal] has this rebuttable presumption; that’s why they won’t change their business model, ”said Berg. “They can always go to court and challenge it.”

The slowness of the EU legislative process may also mean that the legislation could lose its relevance along the way. Gerard of Freshfield pointed to a promotional video recently posted by the subsidiary of GM Cruise, a self-driving car service in San Francisco, showing a founder of the company jumping into a driverless car, he hailed through an app.

“Who knows where [platform companies] will be in four years ?, Girard said, adding that their business models are changing very quickly. “There may be drones making the deliveries. ”

Another part of the Commission’s plan, which has received much less attention, aims to help on-demand workers achieve better working conditions by opening up collective bargaining to the self-employed. Right now, independent contractors who collectively negotiate their fees or other working conditions are on dangerous ground, legally speaking, as they could be seen as violating European or national competition rules prohibiting cartel activity. The proposed new competition guidelines, said Margrethe Vestager, EU competition chief, “aim to provide legal certainty by making it clear when competition law does not stand in the way of these people’s efforts to negotiate collectively for a better agreement “.

This proposal faces fewer obstacles, Gerard said, because it would require a simple statement from Vestager that Commission officials will not go after collective agreements on the basis of antitrust law. Of course, national competition authorities should offer a similar commitment.

Currently, France, Germany, Ireland and the Netherlands already allow independents to bargain collectively in certain circumstances. “There are precedents which make me think that [will be] easier than negotiating a directive on the status of a true contractual relationship between drivers and platforms, ”said Gérard.

Lawyers said the Commission proposal was also notable for what it did not include: a new ‘ni-ni’ employment status tailored to the kind of employment the odd-job economy has ushered in. In addition to its categories of self-employed and employees, the United Kingdom has, for example, introduced a “worker” category which comes with several employment rights and protections.

The answer, then, might be to not reclassify workers from one job status to another, but to find a new one fit for purpose that combines the best of both worlds, Berg said.

“[Riders] want some flexibility, but they [also] want to be protected in one way or another, ”she said. “And this is something that we are failing to do at the moment.”

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