Disentangling the regulatory jungle: EU action on platform work should help secure fair work for all

In a recent opinion, the EESC backed the EU's legal initiative on regulating platform work as a precondition for ensuring fair working conditions for all types of workers. However, the opinion did not get the support of its Employers' Group, which sees the EU's legal measure as unnecessary and believes it will stifle the innovation and investment brought about by platforms

The European Economic and Social Committee (EESC) has welcomed the European Commission’s proposal for a Directive on improving working conditions in platform work, hailing the initiative as a much needed step towards setting clear and well-defined criteria for classifying employment relations and for governing the use of algorithms when recruiting and employing platform workers.

The EESC said that the use of a binding legal instrument, a directive, to regulate platform work was justified, as the extreme diversity of working conditions and legislation in each Member State often results in the poor treatment of platform workers and in a crumbling of national and EU labour protection standards. The opinion was adopted at its plenary session in March, with 149 votes in favour, 80 against and 17 abstentions.

The rapporteur for the opinion, Cinzia del Rio, said: We see clear examples of discrimination and unequal treatment of platform workers across the EU. The situation in Member States is extremely diverse – it's a regulatory jungle which needs to be disentangled. The proposed directive aims to provide a flexible regulatory framework, which can be adapted at the national level and which would take into account disparities in people's working conditions.

While recognising that the platform economy offers numerous opportunities to both businesses and workers, the EESC expressed concerns about the working conditions of platform workers, their more limited access to social protection and social security coverage, health and safety risks, insecure work, fragmented working hours, low pay and non-recognition of collective rights.

It warned that the variety of labour relations and levels of protection, differing both between and within countries, creates the conditions for social dumping and unfair competition.

Working conditions on platforms can therefore be best improved at EU level, in accordance with the subsidiarity principle. It is all the more important and urgent to develop a common approach given that the digital transition means that the number of platform workers is steadily increasing and is expected to further expand across more sectors and professions, creating new inequalities.

By far the most important issue is the legal classification of the employment relationship and its clear distinction from genuine self-employment. To this end, it is necessary to clearly identify the legally responsible employer, both to ensure proper payment of taxes and social contributions and to enable collective bargaining. In the EESC's view, however, the text of the Commission's proposal is too generic and vague on this issue.

The EESC's Employers Group submitted a counter opinion, detailing its position on platform work. Although it did not receive the majority of votes, the counter-opinion obtained more than 30% of the votes cast and was published as an Appendix to the adopted opinion.

EESC Employers' group rejects the EU proposal for a directive

In the counter-opinion, the Employers' Group opposed the use of a directive to regulate platform work. In its view, such binding legislation would represent a one-size-fits-all solution, which may become a barrier for innovation and investment in the setting-up and development of digital platforms in the EU.

The counter-opinion states that the main focus of the proposal clearly seems to be on the activities of deliverers, riders and lower skilled on-location services in general, omitting the fact that the variety of platform work is much larger.

Instead of a separate set of rules which would lead to unnecessary overlaps and duplications, employers called for the existing legislation to be strengthened. In their view, the GDPR and the forthcoming AI Act already provide workers with a variety of rights with respect to their personal data. Both also meet the requirements of risk management, human oversight and transparency.

Employers also disagree with the introduction of a legal EU definition of who is a worker and who is self-employed on platforms as it would be unable to respect the different models used in different countries or keep up with dynamic developments in labour markets. Genuinely self-employed people could become wrongly classified as employees and would then have to rebut this legal presumption if they wanted to continue working.

EESC's reservations about the Commission's proposal

For the EESC, the efficacy and effectiveness of the entire regulatory framework of the proposed directive depends on the clarity of the definition of employee and its clear distinction from genuine self-employed worker.

Workers should get the necessary information to be able to choose whether they want to be genuinely self-employed or not. According to the Commission's figures, 5.5 million platform workers are estimated to be incorrectly classified as self-employed.

The fact that platform work is not even properly regulated in national legal systems is demonstrated by a large and growing number of court cases and judgments in favour of classifying this work as employment.

We believe that a clearly defined employment status, even for those working few hours, would guarantee the right to social protection, health and safety, the right to organise and the right to collective bargaining in relation to the working hours performed, therefore guaranteeing the necessary flexibility, said Ms del Rio.

However, the text of the Commission proposal is ambiguous on a number of points and in particular with regard to the definition of people working through digital platforms and the rights of both workers and union representatives to information and consultation.

These legal uncertainties may in some situations favour the emergence and proliferation of undeclared forms of work and deplorable situations of exploitation and competition between the workers themselves, who might be under illegal subcontracting practices, said the EESC in the opinion. These workers are often migrants, who are objectively weak and unaware of the minimum protection rights envisaged. The proposed Directive does not contain a provision on subcontracting, hence it does not offer those platform workers any protection against those practices.

To prevent the erosion of labour standards, it would be more appropriate to state that the presumption of employment in the field of digital labour platforms operates in favour of the individual worker who provide their labour and/or services under the direction, control and/or organisational power of a digital platform using algorithmic management. Platforms should be able to rebut this presumption of employment by proving that they do not exercise commercial powers of organisation, even indirect or implicit, over the provision of the service/labour by the worker.

As for the use of such algorithms in an employment context, the EESC concluded that all decisions that could substantially impact on a labour relationship should be taken by human beings and the rights laid down by the Directive in this regard should be applicable in all situations.