EU Platform Workers Directive – a further step forward

“Laws are like sausages – it is better not to see them being made,” said the famous German statesman von Bismarck. Those who have followed the tortuous progress of the EU’s Platform Workers Directive may have some sympathy with this sentiment, but it nevertheless took a further important step forward this week. It still hasn’t been passed, and isn’t yet in final form, but the European Council agreed its position on it on Monday. This is important, as it is effectively a consensus among Member States on the approach that should be taken, and this will be influential as the Council proceeds with negotiations with the European Parliament on the final draft. What do you need to know?

A brief recap on the Directive

There are over 28 million people working on digital platforms across the EU, a model commonly known as the “gig economy”. This number is predicted to rise significantly. The European Commission first drafted legislation in 2021, aiming to improve the working conditions of platform workers, support the sustainable growth of digital labour platforms in the EU, and provide legal certainty.

The Directive focuses on the employment status of platform workers and proposed new rights for individuals whose work involves the use of algorithmic technology.

We’re not all platforms any more (probably)

The Council has made some important changes to the earlier draft text. These include some welcome clarity on, and narrowing of, the definition of what exactly a “platform” is in the first place.

Earlier drafts had defined a “digital labour platform” as:

“any natural or legal person providing a commercial service which …

a. is provided, at least in part, at a distance through electronic means, such as a website or a mobile application;

b. is provided at the request of a recipient of the service; and

c. involves, as a necessary and essential component, the organisation of work performed by individuals, irrespective of whether that work is performed online or in a certain location”.

This led to widespread concerns that almost any organisation which uses computers to provide services and where at least some work is done remotely would be considered a “platform” under the Directive.

The Council has addressed this, retaining the three components of the previous definition but adding a crucial fourth one, that:

d. “it involves the use of automated monitoring or decision-making systems”.

Recitals make clear that this refers to organisations in which:

“algorithms increasingly replace functions that managers usually perform in businesses, such as allocating tasks, giving instructions, evaluating the work performed, providing incentives or imposing sanctions”.

This brings the definition much closer to how most of us would describe an online platform or “gig economy” work provider and should significantly limit the application of the Directive. That said, as more and more “traditional” employers contemplate using AI and other automated tools in organising work, the potential for “scope creep” over the years cannot be ruled out.

Don’t be too presumptuous

The Council has also made changes to the rules on “presumed” employment status for individuals working through platforms. This has been a key battleground.

The Commission’s original draft provided that individuals working through platforms would be presumed to be employees if two out of five criteria were met. The European Parliament wanted to go further, suggesting that the presumption of employment status should apply automatically to anyone working through a platform, with only very limited scope to rebut this. The latest Council draft moves things back towards the Commission position, with the presumption of employment status now only to apply if the platform “exerts control and direction” over the performance of work. This is to be judged by whether three out of seven criteria are met:

1. The platform determines upper limits for the level of remuneration.

2. The platform requires the worker to respect specific rules with regard to appearance, conduct towards the recipient of the service or performance of the work.

3. The platform supervises the performance of work including by electronic means.

4. The platform restricts the freedom, including through sanctions, for a worker to organise work by limiting the discretion to choose their working hours or periods of absence.

5. The platform restricts the worker’s freedom, including through sanctions, to organise their work by limiting the discretion to accept or to refuse tasks.

6. The platform restricts the worker’s freedom, including through sanctions, to organise their work by limiting the discretion to use subcontractors or substitutes.

7. The platform restricts the possibility to build a client base or to perform work for any third party.

The Council has also taken the opportunity to clarify its stance on the vexed question of when the presumption applies, stating that it “shall apply in all relevant administrative or judicial proceedings where the correct determination of the employment status of the person performing platform work is at stake” but will “not apply to tax, criminal and social security proceedings”. In other words, it will apply in labour court / labour inspectorate / industrial tribunal type settings but will not allow tax or social security authorities to invoke the presumption to declare that back taxes etc are owed. The Council text would, however, allow individual Member States to extend the legal presumption to other types of proceedings as a matter of national law, so platforms will need to be alive to the possibility that an individual country could take a different approach.

And the rest?

Beyond the changes described above, the Council leaves the rest of the draft Directive mostly unchanged. The obligations under the Directive include:

• Transparency for platform workers about the fact that automated monitoring and decision-making systems are being used. Information must be provided on the parameters they take into account, and the way they take decisions on matters such as restricting, suspending or terminating the accounts of platform workers or refusing payments to them. This information must be provided in writing to platform workers and their representatives and updated in the event of substantial changes (with associated information and consultation obligations).
• Limits on the processing of certain types of personal data of those working through platforms.
• A requirement to ensure sufficient human resources for monitoring and evaluating the impact of individual decisions taken or supported by automated monitoring or decision-making systems. These people must be able to override automated decisions and will have protections against dismissal for exercising their functions.
• The right for platform workers to obtain an explanation for any decision taken or supported by an automated decision-making system that significantly affects them. They must be able to have that explanation without undue delay and have access to a contact person to discuss and clarify the facts, circumstances and reasons that led to the decision. The platform will need to provide platform workers with a written statement of the reasons for any decision to restrict, suspend or terminate that person’s account, and any decision to refuse the payment for work performed, also without undue delay. If the individual is dissatisfied with this, they will have the right of review without undue delay and in any event within two weeks.
• If platforms infringe workers’ rights, they must rectify the decision without delay or offer compensation and, if needed, modify automated decision-making systems to avoid such decisions in the future.
• A requirement for platforms which are employers to declare work performed by workers to the competent authorities of the Member State in which the work is performed, and provide associated information.

And finally

The timeframe for the Directive to be finalised remains unclear, but it now moves into the home straight, with an expectation that it will be concluded before the terms of the current Commission and Parliament end in spring 2024. If that’s right, applying the usual two-year implementation period for Directives would mean that the 27 Member States have until spring 2026 to make the necessary changes to their domestic law. In the meantime, those who meet the definition of a platform – or may do so in the future – have a somewhat greater degree of certainty about the regulatory framework that may apply to them after this time, and the changes they may need to make to comply with it.