The Platform Workers Directive just inched closer towards being adopted by the EU. This article looks at how the Directive is shaping up as it nears its final stages.
‘Laws are like sausages, it is better not to see them being made,’ said the famous German statesman Bismarck. Those who have followed the tortuous progress of the EU’s Platform Workers Directive may have some sympathy with this sentiment. The process nevertheless took a further, important step forward this week. The Directive still hasn’t been passed, and isn’t yet in its final form, but the European Council agreed its position on Monday 12 June. This is important, as the Council’s position shows, in effect, consensus among member states on the approach that should be taken. This will be influential as the Council proceeds with negotiations with the European Parliament on the final draft. Here, we take a look at what you need to know.
There are over 28 million people working on digital platforms across the EU, a model commonly known as the ‘gig economy’. This number is predicted to rise significantly. The European Commission first drafted legislation in 2021, aiming to improve the working conditions of platform workers, support the sustainable growth of digital labour platforms in the EU, and provide legal certainty.
The Directive focuses on the employment status of platform workers and proposes new rights for individuals whose work involves the use of algorithmic technology.
The Council has made some important changes to the draft text. These bring welcome clarity to the definition of what exactly a ‘platform’ is, and significantly narrow its scope.
Earlier drafts had defined a ‘digital labour platform’ as ‘any natural or legal person providing a commercial service which:
This led to widespread concern that almost any organisation which uses computers to provide services and where at least some work is done remotely would be considered a ‘platform’ under the Directive.
The Council has addressed this, retaining the three components of the previous definition, but adding a crucial fourth one, namely, that:
Recitals make clear that this refers to organisations in which ‘algorithms increasingly replace functions that managers usually perform in businesses, such as allocating tasks, giving instructions, evaluating the work performed, providing incentives or imposing sanctions’.
This brings the definition much closer to how most of us would describe an online platform or ‘gig economy’ work provider and should significantly limit the application of the Directive. That said, as more and more traditional employers contemplate using AI and other automated tools in organising work, the potential for scope creep over the years cannot be ruled out.
The Council has also made changes to the rules on presumed employment status for individuals working through platforms. This has been a key battleground.
The Commission’s original draft provided that individuals working through platforms would be presumed to be employees if two out of five criteria were met. The European Parliament wanted to go further, suggesting that the presumption of employment status should apply automatically to anyone working through a platform, with only very limited scope to rebut the presumption. The latest Council draft moves things back towards the Commission position, with the presumption of employment status now only to apply if the platform ‘exerts control and direction’ over the performance of work. This is to be judged by whether three out of seven criteria are met:
The Council has also taken the opportunity to clarify its stance on the vexed question of when the presumption applies, stating that it ‘shall apply in all relevant administrative or judicial proceedings where the correct determination of the employment status of the person performing platform work is at stake’ but will ‘not apply to tax, criminal and social security proceedings’. In other words, it will apply in labour court/labour inspectorate/industrial tribunal–type settings but will not allow tax or social security authorities to invoke the presumption to declare that back–taxes are owed, for example. The Council text would, however, allow individual member states to extend the legal presumption to other types of proceedings as a matter of national law, meaning that platforms will need to be alive to the possibility that an individual country could take a different approach.
Beyond the changes described above, the Council leaves the rest of the draft text mostly unchanged. The obligations under the Directive include:
The timeframe for the Directive to be finalised remains unclear, but it now moves into the home straight, with an expectation that it will be concluded before the terms of the current Commission and Parliament end in spring 2024. If that’s right, and the usual two-year implementation period for Directives applies, this would mean that the 27 Member States have until spring 2026 to make the necessary changes to their domestic law. In the meantime, those who meet the definition of a platform (or who may do so in the future) have a somewhat greater degree of certainty about the regulatory framework that may apply to them after this time, as well as the changes they may need to make to comply with it.
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