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Can platform workers be employees? An update from Germany

Written by
Kliemt.HR Lawyers, the first port of call in employment law for top-class and future-proof advice.
Authors
Jörn-Philipp Klimburg
Associate - Germany
Kliemt.HR Lawyers
Germany
08.01.20
3
A German court has confirmed that a platform worker was not an employee of the platform operator, but left open the possibility of a time-limited employment relationship with the platform end user.

As a rule, crowdworkers (or platform workers, those found and engaged through a crowdsourcing platform) are not employees. This has now also been clarified by the Munich Higher Labour Court (LAG) in its ruling of 4 December 2019, although it also allowed an appeal to the Federal Labour Court. At the same time, there are more signs that the ‘platform economy’ is coming into political focus. Will the legislator take action soon?

The case

In this case, the platform worker (with the active support of a trade union) claimed that an employment relationship had been established between him and the platform operator. This was done by means of a ‘basic agreement’ concluded with the platform operator, which enabled him to take on certain orders via an app.

However, as is usual for platform workers, there was neither an obligation to accept an order nor, conversely, an obligation for the platform operator to offer orders. The court regarded this as decisive and denied the worker employee status. The fact that the platform worker in this case earned a considerable proportion of his livelihood from the orders did not alter this finding.

This meant the platform operator could effectively terminate the basic agreement by email without having to observe the applicable notice periods under labour law or the German Dismissal Protection Act.

Is a fixed-term employment relationship created by clicking on an order?

However, the Munich Higher Labour Court’s welcome clarification only refers to the basic agreement with the platform operator.

The Court expressly left open whether a fixed-term employment relationship (i.e. for the time required to process the order) can be established by clicking on a concrete order. This was because the German statutory three-week period for filing an action to check the fixed term had already expired.

In this respect, the decision raises an interesting question: is a platform worker, by taking on a specific assignment, integrated into the platform operator’s or the platform operator’s client’s work organisation and subject to their instructions, so that he or she is to be qualified as an employee, at least with regard to this specific assignment? This cannot be ruled out and is likely to depend on the concrete procedure involved. As a rule, however, the client’s or platform operator’s instruction should be limited to a mere description of the content and scope of the contract which would not constitute the exercise of a right of instruction. Integration into the work organisation is more likely to be the exception than the rule.

Is the legislator taking action?

In recent weeks, the Federal Ministry of Labour and Social Affairs (BMAS) has spoken remarkably frequently of wanting to create regulations for the ‘platform economy’. A spokeswoman for the ministry is quoted as follows:

‘Good work in the platform economy needs good regulations. Accordingly, the BMAS will make proposals to create a level playing field between platformers and platforms. At the same time, we want to protect platform operators who guarantee fair conditions so that they do not suffer a competitive disadvantage.’

However, the BMAS is still examining possible concrete measures internally. The tripartite relationship between client, platform operator and platform worker, which is typical in the gig economy, is likely to present legislators with considerable challenges. Regulation is therefore unlikely to be forthcoming in the near future, especially as there is no apparent need for regulation currently.

Outlook

First of all, it is to be expected that, since the Munich Higher Labour Court has allowed an appeal, the Federal Labor Court will now deal with the legal framework conditions relating to crowd working and possibly provide new guidance in the coming year.

Meanwhile, clients and platform operators are well advised to limit the potential risks of this type of work arrangement by carefully drafting contracts.