The digital transition is fast-tracking changes to the labour market. Discussions on the classification of platform workers have been on the rise worldwide in recent years with divergent court decisions and a patch-work of national legislative initiatives.

The EU approach

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

The scope 

The proposal is relevant for companies in a variety of sectors – including those in the tech sector offering solely online services (data encoding, translation, graphic design, marketing work), as well as those offering services ‘on-location’, such as delivery of goods, ride-hailing and cleaning or care services.

The proposal aims at catching platforms operating cross-border by making the key reference point the place where the work is physically performed, irrespective of a company’s establishment or the location of the recipient of the services. A coder based in Germany performing coding activities for a UK tech based company and a UK customer, would thus also be caught by the proposal.

The reach

If and when adopted, the proposal is expected to have far-reaching consequences on the classification of platform workers and potentially on how digital labour platforms operate:

  • Presumption of employment: 

The centrepiece of the Commission’s proposal is the introduction of a legal presumption of employment relationship based on a list of criteria. The Commission expects that the application of this presumption could lead to a reclassification of at least 4.1 million workers of digital labour platforms as employees.

  • Algorithmic management:

The proposal also introduces a whole set of new rights for workers in relation to algorithmic management. For example, workers would have the right to human review (one-on-one conversation) regarding automated decisions impacting them (e.g. in case of removal from the app following three negative costumer reviews).

Complying with the Directive in terms of human management may place a heavy burden on tech companies that highly rely on automated decisions in terms of e.g. task allocation.

Timing and preparation

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 earliest the rules would be adopted is 2023 and 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.

In the meantime platforms should get prepared. Join our upcoming webinar on 11 May to hear our panel of pan-European experts analyse the proposal and its potential impact.

Read more in our Sustainable Futures blog post New proposed EU rules on Platform Work.