Germany adds to recognition of platform workers

The Federal Labour Court ruled late last year that a crowdworker was indeed an employee, despite the platform’s contrary claim.

Digitally organised platform work can offer advantages for workers on platforms, such as low-threshold access to work opportunities, mobility and high flexibility. This is especially true of highly skilled work often associated with business innovation or creative work in freelance marketplaces. Companies can use platform-mediated work to provide access to knowledge and thus promote innovation, accelerate processes and save money.

At the same time, however, new forms of digital outsourcing and platform employment reinforce tendencies to precarisation, lead to distortions of competition and contribute to a further shift in the balance of power, to the detriment of workers.

Obligation avoided

The main problem is that most platform operators vehemently deny any employment relationship with the people working for them. As a rule, they do not declare themselves as employers, clients or even employment agencies via their general terms and conditions.

In all these cases, platform workers are managed as self-employed persons, even if their economic independence is clearly limited. By refusing to be an employer, operators of labour platforms not only avoid the obligation to pay social-security contributions but also circumvent labour, social and (where applicable) co-determination rights.

Yet for an increasing number of people, work organised via or on platforms is not just a side activity but their main source of income. According to recent studies, almost 6 per cent of the working population in Germany earn a quarter to half of their income through platform work.

Amid pandemic-related restrictions, online delivery services have been able to realise record growth, accruing in Germany up to 500 per cent more customers. It is perhaps unlikely that this steep rise will continue after the crisis but the digitalisation of the world of work will not come to a standstill. As the multi-billion valuation of commercial labour platforms such as Uber—heavily dependent on venture capital—demonstrates, important developments are anticipated in financial markets.

Recognised as employee

In December, the German Federal Labour Court ruled in the case of a crowdworker who, with the help of the union IG Metall, had sued a platform to recognise him as an employee. The plaintiff carried out so-called ‘micro-jobs’, such as photographing product displays in gas stations and supermarkets, feeding them through the platform and answering questions about product advertising.

The platform set deadlines for these jobs. For completed assignments, the crowdworker received experience points which enabled him to level up—as in a video game—and in turn granted him access to more assignments. These ‘gamification’ measures are—especially in crowdworking—popular incentive systems for platform operators.

The plaintiff used to work 15 to 20 hours a week for the platform but was blocked from working there after disagreements with the operator. The case ended up before the Federal Labour Court after the Munich Labour Court and the Regional Labour Court had dismissed the claim.

In a ground-breaking decision, the federal court recognised the crowdworker as an employee. This was on the merits of the individual case but the court’s reasoning shows it will have a wider impact.

For the judges, the platform had created an incentive system which resulted in a pattern of indirect control, in which the crowdworker was not free to organise his activity according to place, time and content. Even if he was not obliged to accept orders, the platform’s evaluation system, through its ‘gamification’ structure, significantly determined his access to orders and thus had an impact on his hourly wage. In combination with the detailed task descriptions and the fixed timeframe, the court found that a personal dependency, and thus an employment relationship, had been created.

Precarious conditions

The ruling sheds light on the digital shadow labour market: the business model of platform operators, which is based on the presumed self-employment of employees, leads in many areas to precarious working conditions.

Many platform employees are integrated into the work organisation created by platforms and are subject to digitally issued personal instructions. The platforms issue instructions on the content, execution, time and, where applicable, location of the activity. These (algorithmic) monitoring and control options replace personal instructions in the traditional sense but fulfil the same function. Good work on platforms requires sufficient transparency about how the work is organised through algorithmic control, ranking and reputation systems and pricing.

To counter precarity, the Federal Ministry of Labour and Social Affairs has presented an important benchmark paper, which should lead as soon as possible to a draft law—finally to put an end to social dumping and distortions of competition in the digital market economy. Platform workers who are economically dependent on their client, integrated into the operational process and bound by instructions must be recognised as employees. For this to be effective, all platform workers must be able to clarify their employment status. To break through the asymmetry of information, a shift in the burden of proof to the platform operators is needed: rather than asking employees to prove their employment relationship, lawmakers should oblige platforms to deliver proof to the contrary.

The collective rights of platform workers must therefore be strengthened. Trade unions need a right of access, to be able to reach out to platform workers and support them in winning better conditions. A collective right of action for trade unions is also necessary, to enforce the associational rights of these workers effectively.

Even if platform workers really are self-employed, they need minimum protection, for example through statutory pension schemes and accident insurance. The case discussed above also shows the importance of clear regulation when it comes to the termination of employment on platforms.

European level

The European Union also has a key role to play. National regulation of platform work ends at borders. Digital platforms which offer location-independent work can, however, move to other, less regulated, member states to avoid strict rules.

That is why the path towards good work in the digital world must also be set at European level. Minimum EU standards for the rights of platform employees would be a good first step.