While the relevance of the gig economy in terms of GDP and turnover might still be limited, the dynamic of the growth rate since 2016 has been remarkable and accelerated during the Covid-19 pandemic. Global megatrends in societies, economies and the world of work will even push the number of people choosing to work through a digital labour platform to an estimated 42.7 million in the EU-27 by 2030, according to a recent study of the EU Commission.

While the services offered by platforms are convenient for consumers, the working conditions of the providers of these services are not so convenient: Often labelled as self-employed, platform workers habitually lack labour and social protection. Many are payed below minimum wages and work without provisions for sick pay, health insurance and pension schemes.

That is why the EU Commission put forward an overdue legislative proposal, with the intention to safeguard fundamental worker rights in the platform economy. The classification of the legal employment status of people working through platforms, which entails questions about the access to the national labour and social protection rights, is at the core of the proposal as it introduces the legal presumption that the contractual relationship is an employment relationship. Most importantly, the burden of proof to change this legal presumption shall be now on the digital labour platform, which reflects the actual imbalance of negotiation power between the individual employee and the platform.

A catalogue of five criteria determines, based on the principle of the primacy of facts, who falls under the status as employee or is genuinely self-employed. These include, among others, 1) how remuneration and binding rules with regard to the conduct of their work are determined, 2) who and in which way supervises the performance of the work, 3) as well as the workers freedom to organise their work, 4) determine their working time and 5) their ability to choose their clients and build up a client base. When at least two of the five conditions set out in the directive are fulfilled, the employment status is maintained.

According to the accompanying study, out of 28.3 million people in the EU-27 who regularly work through platforms, the Commission sees 5.51 million at “risk of misclassification of employment status”. These numbers show the scale and the ambition of the legal proposal.

However, the Commission’s proposal will only (re-) establish a bare minimum of worker rights in the platform economy. This alone does not yet guarantee fair wages and access to good social protection. Only collective agreements do. Therefore, it is essential, that the Commission also announced binding Guidelines for the correct interpretation of Article 101 of the competition law, which in the past presented a barrier for solo self-employed workers to conclude collective agreements. Until February 2022, social partners can give feedback to the draft Guidelines, before the Commission adopts the final text in June.

In the spirit of strengthening the negotiation position of workers, the EU lawmakers want to introduce new rules for algorithmic management. Today’s working conditions can entirely depend on artificial intelligence, for example, when AI plans the routes of food couriers, analyse ratings by customers and register your computer writing skills. Algorithms are given the right to promote, punish and ultimately even sack workers without any human oversight.

The proposed rules foresee information rights for the platform workers and their trade unions regarding the use of big data and artificial intelligence in the management of the workforce. Although the proposed rules must still be fleshed out, for example through official requests from employees and trade unions, the new approach does promise to live up to the human-in-command principle. Where “opacity” has been the corner stone of some business models, transparency and a clear set of rules will enable the workforce to stand up for their rights.

Certainly also inspired by the Spanish 'Riders' Law” approved last year, the Commission demands platforms to present the requested data in a “concise, transparent, intelligible and easily accessible form, using clear and plain language”, which makes it easier to understand automated decisions.

In comparison with past sectoral legislations, the explicit emphasis on collective agreements is remarkable. The Commission for example wants to “foster the social dialogue on algorithmic management systems by introducing collective rights regarding information and consultation on substantial changes related to use of automated monitoring and decision-making systems”. In this regard, the proposed rules, if adopted, are certainly fit to improve working conditions in an often precarious working environment. 

The European Parliament and the Member States will now discuss the proposal and make amendments. In a first reaction, the Parliament welcomed the proposal and announced support for the key demands, as they are in line with an earlier Parliament position. A final agreement is not expected before summer 2023.

If the proposal is adopted, it could be an important step towards giving platform workers in Europe the same basic rights as other employees, as they would be protected through labour law, including access to the welfare systems and the right to organise.

Thorben Albrecht is policy director of IG Metall, Germany’s largest trade union.

Aljoscha Voggenreiter is policy adviser of IG Metall.

This article has been written for the Albert Hirschman Centre on Democracy’s series of commentaries on the need to redesign the platform economy on a more democratic and sustainable basis.

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