Regulating digital work: from laisser-faire to fairness

The proposal for an EU directive on platform work about to emerge is welcome, yet insufficient—and no substitute for national action.

Comprehensive and fair regulation of working conditions, collective representation, social-security rights and the fiscal position of platform workers lies at the heart of the challenges presented by the ‘gig’ economy. The adoption of a European Union directive on working conditions in platform work could deepen the debate on the future of work in an increasingly digitalised economy.

EU intervention alone will not however resolve many of the core regulatory questions emerging from this debate. National governments and parliaments will need to step up.

Pervasive anomie

The French legal scholar Alain Supiot contends: ‘We are in a normative chaos at the international level, in a regime of generalised irresponsibility.’ There is no better example than the pervasive anomie under which in the last decade the platform economy has been allowed to grow fivefold, virtually in the absence of any national—let alone supranational—regulation.

This negligent, laisser-faire attitude towards the manifold challenges presented by platform work can be contrasted with the much more hands-on approach parliaments and governments took just a generation ago, dealing with the emergence of what used to be referred to (before it became ‘normal’) as ‘atypical work’. By the early 1990s most EU member states had passed a vast array of statutes regulating in great detail part-time, fixed-term and agency work. As a rule, these waves of national regulatory activity preceded EU action in this domain by a decade or two.

It is a sign of our times—and of the ‘generalised irresponsibility’ lamented by Supiot—that, this time around, the European Commission is putting forward proposals to protect platform workers well in advance of any comparable action at national level, with member states at best attempting to protect certain types of workers (such as couriers) and at worst ignoring the problem.

By contrast, national judiciaries have pulled their weight on the issue. While this has greatly benefited many litigants, they have not been able to offer the comprehensive regulatory solutions only legislative action can provide.

EU intervention is welcome and essential to regulate a phenomenon with an undeniable transnational dimension. But a directive alone is unlikely to exhaust the need for further, national regulatory action.

Really workers?

First, there are already indications that the regulatory efforts of the EU will fall short of what is needed to address the central question in the debate: are platform workers really workers? In casting the personal scope of application of the forthcoming directive, it is difficult to see the EU going much beyond the definition contained in the 2019 directive on transparent and predictable working conditions.

Armed with that formulation alone—albeit in many ways broader than any in previous EU labour-law instruments—the Court of Justice of the EU is unlikely to remedy the faux pas of its 2020 decision in Yodel. There the presence of a substitution clause in a courier’s contract with a food-delivery platform was seen as an indication of autonomy and entrepreneurship, thus negating employment status.

In this light, De Stefano and Aloisi argue that much broader scope would be necessary, as also posited in a recent study for the European Economic and Social Committee. But it’s unlikely that the commission will have the courage to embrace this challenge.

Collective bargaining

A second concern is over the right to bargain collectively. Commission proposals have refused to engage earnestly with this, leaving it to the directorate-general on competition and its initiative on collective bargaining for the self-employed. 

Even the broadest regulatory option attached to that initiative would fall short of the need for collective representation of platform workers, many of whom are likely to be labelled, or misclassified, as self-employed. Comprehensive regulation of powerful multinational platforms cannot be achieved if unions representing vulnerable workers have one hand tied behind their backs by competition authorities.

Finally, action is likely to be constrained by the limited competence of EU law-making institutions, in social security and taxation in particular. Recommendation 2019/387 on access to social protection for workers and the self-employed is weakened by the lack of precise definitions of what a worker and self-employed individual are, as well as by its non-binding nature. Member states will no doubt have to intervene with a sense of purpose, recognising that ‘the majority of workers on digital labour platforms do not have social security coverage’. 

Taxation is even thornier. Problems arising from the tax status of nominally self-employed workers are compounded by jurisdictional conflicts and the lack of firm EU competence.

Socialising losses

These four issues—scope, collective bargaining, social security and taxation—lie at the heart of the equity and distributional challenges of regulating the business model of platform companies, a model which too often privatises profits while socialising losses. As a recent policy document from the Organisation for Economic Co-operation and Development put it, regulators should ‘guarantee a level playing field among firms by preventing platform operators from gaining a competitive advantage by avoiding their obligations and responsibilities’.

Unfortunately, EU intervention alone will not resolve these regulatory conundrums. National governments and parliaments will need to step up their efforts. In this respect, their implementation of an EU directive on working conditions in platform work should inspire some joined-up thinking on the future of work in an increasingly digitalised economy.