The digital transition is fast-tracking changes to the labour market. Stemming from two legislative priorities – enabling the digital single market, and fostering social initiatives (the ‘S’ (social) in ESG)  – the European Commission presented yesterday a proposal for a Directive aimed at improving the working conditions of people who work through digital labour platforms.

Who might be caught? 

All companies providing a commercial service (i) at a distance through electronic means; (ii) at the request of the recipient of the services; and (iii) involving as an essential component the organisation of work by individuals, would fall under the ‘digital labour platform’ umbrella. This covers companies in a variety of sectors; those offering solely online services (data encoding, translation, graphic design) and those offering services ‘on-location’, such as delivery of goods, ride-hailing and cleaning or care services.

The territorial criteria would be the place where platform work is performed, irrespective of a company’s establishment or the location of the recipient of the services.

Key features of the Proposal 

Rebuttable presumption and criteria to determine employment status 

The centrepiece of the Commission’s proposal is the introduction of a legal presumption of employment relationship when the digital labour platform controls at least two of the following elements:

• determines or sets upper limits for the remuneration level;
• requires the person performing platform work to respect binding rules relating to appearance, conduct towards the service recipient or performance of the work;
• supervises performance or verifies the quality of the results of the work, including by electronic means;
• restricts the freedom to organise one’s work, including the discretion to choose working hours or absences, to accept or to refuse tasks or to use subcontractors or substitutes;
• restricts the possibility to build a client base or to perform work for any third party.
• The platform or the person affected could rebut the presumption in administrative or court proceedings by proving that there is no employment relationship by reference to national definitions.

New rights relating to algorithmic management 

People working through platforms (workers and self-employed) would also be granted new rights in relation to automated monitoring and decision making systems, such as:

• enhanced information rights regarding how tasks are allocated/prices are set and how they are being monitored (complementing existing rights in relation to data protection); and
• human review of significant decisions impacting their working conditions, including the right (i) to obtain an explanation from a contact person and a written statement on the reasons for the decision; and (ii) to contest automated decisions and have them rectified.

Enforcement measures

A final set of provisions relate to enhanced enforcement of the rights granted by the Directive through:

• the obligation to declare work to national authorities as well as to provide data on the number of workers and the terms of their contractual relationship on a six-monthly basis; and
• the possibility by certain representatives to bring claims on behalf of multiple claimants, with their approval (opt-in collective redress actions).

What’s next?

The adoption of the proposed Directive by the Commission only marks the beginning of the legislative process. The proposal will now be scrutinised and likely amended by the EU co-legislators, the European Parliament and the Council. Once they have defined their position, they will try to reach a political agreement before formal votes are held in each institution.

The average timeline from adoption of a proposal to implementation under the ordinary legislative procedure is 18 months. The earliest the rules would be adopted is 2023. If adopted, Member States will have two years to transpose the Directive into national law, so the new rules are not expected to come into force until 2025 at the earliest.

Beyond labour law – cross-sectoral relevance 

The proposed Directive sits at the crossroads of labour law, competition law and tech. In addition to the proposed Directive, the set of measures presented by the Commission include:

• the launch of a public consultation on draft competition policy guidelines on collective bargaining agreements regarding the working conditions of the self-employed. The purpose is to facilitate solo and/or economically dependent self-employed workers to improve their work conditions without risking antitrust enforcement. This looming risk of antitrust enforcement had already prompted legislative changes and additional guidance in Ireland and the Netherlands. These EU-wide draft guidelines will likely prevent the further development of a patchwork of divergent national solutions and have therefore been much anticipated. Interested stakeholders can provide feedback until 24 February 2022. The Commission intends to publish the final version of the guidelines in Q2 2022.
• a Communication on better working conditions for a stronger social Europe laying down the views of the Commission on future policy initiatives related to digitalisation and the future of work.