Digital platform economy - European Commission proposes new measures in the fight against false self-employment

Digital platform work has long since become an integral part of our everyday lives. Whether it is the delivery of food or groceries, the booking of vacation accommoda-tions, or even craft services - just about everyone has probably used services via digital platforms at some point. The following figures confirm that digital platform work is a growing market: According to estimates, there are around 28 million people working via digital platforms. It is expected that until 2025, the number of digital platform workers will increase up to 43 million. Presently, a not inconsiderable number of such workers are incorrectly classified as self-employed. In order to provide a better protection for this growing occupational group, the European Commission published a corresponding directive proposal in December 2021.

Directive on improving working conditions in platform work

With its directive proposal, the European Commission intends to ensure that those who work via digital labor platforms receive an employment status that corresponds to their actual work performance. The main objective is that digital platform workers are classi-fied as employees, in order for them to be able to claim the employee rights to which they are entitled, including but not limited to social benefits, paid vacation, regulated working hours or even minimum wage.

Platform work – and what does it include? 

According to the definition of article 2 para. 1, digital platform work means any natural or legal person providing a commercial service which meets all of the following requirements:

• The service shall be provided, at least in part, at a distance through electronic means, such as a website or a mobile application;
• the service shall be provided at the request of the service recipient; and
• the service involves the organisation of work performed by individuals, irrespective of whether that work is performed online or in a certain location.

This deliberately very open wording is intended to result in a large number of platform companies falling within the scope of the directive in the future. 

Criteria for determining the employer status of the platform

According to the European Commission's draft, a possible employer status of a plat-form company shall be evaluated by means of the following list of criteria (article 4 pa-ra. 2):

• effectively determining, or setting upper limits for the level of remuneration;
• equiring the person performing platform work to respect specific binding rules with regard to appearance, conduct towards the service recipient or performance of the rendered work;
• supervising the work performance or verifying the quality of the results of the work including by electronic means;
• effectively restricting the freedom, including the imposition of sanctions, to organ-ise one’s work, in particular the sole discretion to choose one’s working hours or periods of absence, to accept or to refuse tasks or to use subcontractors or substitutes;
• effectively restricting the possibility to build a client base or to perform work for any third party.

If two of the five criteria set forth above are met, it is legally presumed that an employ-ment relationship exists. However, the platform company still has the option of refuting the classification as an employer, in the process of which it has to provide sufficient evidence with regard to the fact that no employment relationship exists. 

Outlook

The proposed criteria is intended to provide platforms with greater legal certainty, lower litigation costs and easier business planning in the future. So far, however, it seems that a high burden of proof will be imposed on the affected platforms in the future in order to be able to disprove a possible employer status. It will be interesting to see to what extent the proposal of the directive will have an impact on the existing criteria for distinguishing between dependent and self-employed employment.

Even though the publication of the directive is "only" a proposal and insofar subject to further discussion and adoption by and between the European Parliament and the Council before it can be implemented into national law, companies that fall under the concept of digital platform work should closely monitor the current and future develop-ments at the European level.