EU Platform Work Directive: Council and Parliament agree on rules for gig-economy workers

After two years of intense negotiations, the EU legislators have reached a provisional agreement on the Platform Work Directive yesterday. This marks a significant step in the ongoing debate over how gig-economy workers should be classified - as employees or as self-employed. The Directive also introduces the first ever EU-rules on algorithmic management in the workplace. Although the final text has not yet been published, the press releases from the Parliament and the Council shed some light on the key outcomes. 

Here is our first assessment of the new rules. 

Classification as employee or self-employed 

A contentious labour issue 

The question of whether individuals working through digital platforms should be classified as employees or self-employed has been one of the most contentious labour issues in EU courts and elsewhere, including the UK, for the past decade. 

To address legal uncertainties and improve working conditions for platform workers, the European Commission presented a Proposal for a Directive aimed at improving the working conditions of persons working through digital labour platforms on 9 December 2021. 

Criteria for determining employment status

The centerpiece of the Commission’s proposal was a list of criteria to determine control. If at least two of the criteria were met, it would automatically trigger a legal presumption of employment status, which could be challenged (see our previous blog posts New proposed EU rules on Platform Work and Europe: A platform for change? The new proposed EU Directive on rights for platform workers for details).

The list of criteria was one of the key sticking points during negotiations between the EU co-legislators, and it seems that the final agreement has tried to strike a balance between the need for an objective determination of employment status and platforms’ concerns for automatic reclassification. 

According to the EU legislators’ press release, the list of criteria has been refined to a set of indicators suggesting an employment relationship when two out of five indicators are met.  

A broad concept of the gig economy

At first glance, the term "digital platforms" may seem to refer narrowly to the gig economy. But the Commission intended to cover a much broader scope, potentially encompassing a range of services that operate through digital means—this includes businesses involved in on-location services such as ride-hailing and food delivery, as well as online services like translation and data encoding. 

A 2021 European Commission study highlighted the booming of the digital platform business, with over 500 platforms employing more than 28 million people, a number expected to increase to about 43 million by 2025. The Commission estimated that although most platform workers are correctly classified as self-employed, the Commission’s proposal could lead to the reclassification of approximately 5.5 million workers. 

Whether that proves to be true in the view of the consensus text will become clear over the coming months and years. 

Legal (Un)certainty? 

The degree to which Member States align with or deviate from the Directive at implementation phase will be critical in achieving another key goal of the Directive: legal certainty.

More than 100 court judgments in EU countries and elsewhere have already dealt with platform workers' employment status, often with contradictory outcomes. 

For example, in 2021, the Belgian courts ruled that Deliveroo riders are self-employed. This is in line with the UK’s Supreme Court judgment that denied collective bargaining rights to Deliveroo riders last month based on the absence of an employment or worker relationship (see UK Deliveroo ruling: with great flexibility comes… no collective bargaining rights). By contrast, the Supreme Court (Hoge Raad) in the Netherlands classified Deliveroo-riders as employees in March 2023. An appeal against the Belgian Deliveroo-case is pending. 

Against this background, a primary objective of the Directive was to establish legal certainty. Yet, the Directive's success in this regard is uncertain, as it only establishes minimum requirements, allowing Member States to adopt more ambitious measures. For instance, as early as January 2023, Belgium introduced a legal presumption of employment, drawing inspiration from the initial list of criteria proposed by the European Commission. 

Consequently, variations in implementation between Member States are expected (see Classification of platform workers: Belgium ahead of the forthcoming European framework).

When an algorithm is the boss 

Another revolutionary aspect of the Directive is the introduction of the first-ever rules on algorithmic management, a term referring to a way of supervising and coordinating workers using algorithms instead of traditional human managers.

The Platform Work Directive introduces transparency requirements to ensure that platform workers are informed about the use of automated monitoring and decision-making systems. Under the new rules, these systems will be monitored by qualified staff, who enjoy special protection from adverse treatment. Human oversight is also guaranteed for certain significant decisions such as the suspension of accounts.

The use of algorithms to monitor activities, offer rewards or take disciplinary measures is well known for work done through digital platforms. Those practices are, however, becoming an increasingly common feature of the workplace more generally, across a variety of sectors. 

The Platform Work Directive may thus well be an indication of the direction of travel for future rules on algorithmic management more generally. 

Beyond the Platform Work Directive 

The Platform Work Directive is not the only EU Directive that will impact AI driven management in the workplace. Following 3-day ‘marathon’ talks, on 9 December 2023 the Council presidency and the European Parliament’s negotiators have reached a provisional agreement on the proposal on the so-called Artificial Intelligence. 

Whilst the final text of the AI Act has not yet been published either, the AI Act notably classifies AI systems used in workplace as “high risk”, implying system obligations for the platforms, including risk management, data governance, human oversight and transparency. Digital platforms may therefore have to navigate (partially) overlapping rules.

Next steps 

The agreed text of the Directive must now be formally adopted by both the Parliament and the Council before it will be published in the Official Journal of the EU and enter into force. We will follow-up closely and keep you informed.