European Commission takes the lead in regulating platform work

The draft directive published today is already breaking the united front of the platform companies.

The European Commission’s proposed directive on improving the conditions of platform work would materially reshape work through digital platforms. The new instrument addresses three main concerns: worker-status misclassification; fairness, transparency and accountability in algorithmic management; and enforcement of the applicable rules.

Contrary to national legislative initiatives addressing only segments of the broader phenomenon (such as the ‘riders’ law’ in Spain), this directive potentially applies to all platform workers, including food-delivery riders and drivers of ride-hailing platforms but also domestic workers whose work is channelled via applications and, crucially, individuals who work for exclusively online platforms, such as Amazon Mechanical Turk and Upwork. Article 2 specifies that the directive would apply to all forms of digitally-mediated platform work, ‘irrespective of whether that work is performed online or in a certain location’.

The proposal would also have broad personal scope—other EU instruments have been prone to exclude platform workers with ambiguous status. The text embraces all persons who ‘have, or who based on an assessment of facts may be deemed to have, an employment contract or employment relationship as defined by the law, collective agreements or practice in force in the Member States, with consideration to the case-law of the C[ourt of ] J[ustice of the] EU’. The goal is thus to include situations where the employment status of the person performing platform work is not clear, so those workers can enjoy the safeguards enshrined in the directive.

Essential to this is the ‘primacy of fact’ principle on which the directive relies. Article 3 provides that ‘the determination of the existence of an employment relationship’ must be guided ‘primarily by the facts relating to the actual performance of work’, also ‘taking into account the use of algorithms in the organisation of platform work, irrespective of how the relationship is classified’ by the parties. Substance must always prevail over form. Boilerplate clauses which classify workers as independent contractors but which are disregarded in practice or do not correspond to the reality of the work performed cannot deprive workers of employment status and its attendant protections.

Presumption of employment

One of the major purposes of the instrument, indicated in article 1, is to ‘improve the working conditions of persons performing platform work by ensuring correct determination of their employment status’. This would primarily stem from a rebuttable legal presumption of employment status for platform workers, when a digital labour platform ‘controls […] the performance of work’.

The latter would be deemed to occur when at least two of the following conditions are met:

• the platform effectively determines, or sets upper limits to, workers’ remuneration;
• workers are required to respect specific, binding rules with regard to appearance, conduct towards the recipient of the service or performance of the work;
• the platform supervises the performance of work or assesses the quality of its results, including by electronic means;
• the platform effectively restricts, including through sanctions, the freedom to organise one’s work, in particular working time and the ability to accept or to refuse tasks or use subcontractors or substitutes, and/or
• the worker’s capacity to build a client base or perform work for a third party is effectively restricted.

Beyond contractual façades, these elements are present in most location-based platform work, for instance food-delivery, ride-hailing and domestic work. Some online platforms would however meet the criteria too, organising and controlling work in line with the application of the draft directive.

They do not allow online workers to outsource tasks to others (or bots) or to have contacts with clients outside the platform. They also supervise work and assess its quality, by monitoring how long a worker takes to complete a task or by using customers’ ratings and acceptance of the tasks executed by ‘crowdworkers’. These benchmarks also typically determine a ranking of online workers, with only the best performers receiving further remunerative tasks.

The criteria triggering the presumption of employment status enshrine key jurisprudence from the case law of several European countries, where courts—including the supreme courts of France, Germany and Spain—have challenged the self-employment status of platform workers and reclassified them as fully-fledged employees. Many national legislatures and domestic judges are thus familiar with these elements, which should make reaching a political consensus around the proposal and transposing the directive smoother.

Algorithmic decisions

Another purpose of the directive is to promote ‘transparency, fairness and accountability in algorithmic management in platform work and by improving transparency in platform work’. The working conditions of platform workers are fundamentally affected by such algorithmic decisions as to their pay, ranking and ability to receive further work.

Not only would an organisational model based on algorithmic management be one of the triggers for the presumption of employment but also the directive would regulate such automated decisions. Platforms would have to provide adequate information to workers and their representatives about the categories of actions monitored, supervised and assessed (including by clients, through ratings) and the main parameters such systems could encompass. Furthermore, the proposal would oblige risk assessment and mitigation, consistent with a human-in-command approach.

The text complements and strengthens the standard set in the General Data Protection Regulation. It explicitly provides for a right to explanation for a decision taken—even only supported—by automated systems that significantly affects working conditions: access to tasks, earnings, occupational safety and health, working time, promotion, restriction, suspension or termination. All decisional options upheld by data-driven instruments would have to be presented in an accessible way, so as to allow workers to challenge them. This debunks many myths as to ‘algorithmic impenetrability’—where opacity is often used as an alibi to undermine legibility and contestability—and would guarantee a pre-emptive right to understand the consequences of certain conducts.

Very recently, case law has started to address the infringements by ‘algorithmic bosses’ of data protection, anti-discrimination and health and safety. The directive embraces this multidimensional perspective. A ‘workplace fair process’ model is envisaged, in line with duties applying to conventional employers which exercise unilateral discretionary powers. Platforms would have to share written information about decisions with significant impact, such as termination, denial of remuneration or change in contractual terms.

Social acquis

Without qualification, the social acquis providing minimum standards in working conditions and labour rights across the union would extend to platform workers. The time of platform exceptionalism seems to be over.

Nonetheless, while a growing body of literature engages with the need to overcome a narrow interpretation of EU anti-trust law, the latter could ban some vulnerable platform workers from collective bargaining if they do not meet the standard of employees under the draft directive—the instrument is silent on this. It would only require digital labour platforms to inform and consult workers’ representatives on algorithmic management when they consider adopting or amending automated monitoring or decision-making systems.

This aims to promote social dialogue but leaves us short of the protection of collective bargaining rights for all, regardless of employment status, granted by international law. Even if some important rules regarding transparency of algorithms are extended to the self-employed, lack of recognition of collective agency and voice for these workers could limit their effectiveness.

Bold posture

Undoubtedly, however, the commission has adopted a bold posture, matching to an extent the expectations of the proposal and the positive atmosphere surrounding the European Pillar of Social Rights. While it is too early to say if the text will maintain its current form, the resolution approved earlier this year by the European Parliament could be read as advance endorsement.

A wide consensus is emerging in policy-making and public opinion. For the first time, the front of platform companies has fragmented. Some major operators are openly challenging the proposition, foreseeing nefarious consequences for their profitability. Others have however already started to comply with national laws about employment status and rights—showing how innovation and regulation can go hand in hand.

Valerio De Stefano

Valerio De Stefano is a law professor at Osgoode Hall School, York University, Toronto.

Antonio Aloisi

Antonio Aloisi is Marie Skłodowska-Curie fellow and assistant professor of European and comparative labour law at IE Law School, IE University, Madrid.