Gig economy workers to get employee rights under EU proposals

Draft legislation would improve status of millions of workers, with likely knock-on effect on UK despite Brexit

Last modified on Thu 9 Dec 2021 05.02 EST

Gig economy companies operating in the European Union, such as Uber and Deliveroo, must ensure workers get the minimum wage, access to sick pay, holidays and other employment rights under plans for new laws to crack down on fake self-employment.

Publishing long-awaited draft legislation on Thursday, the European Commission said the burden of proof on employment status would shift to companies, rather than the individuals that work for them. Until now, gig economy workers have had to go to court to prove they are employees, or risk being denied basic rights.

Nicolas Schmit, EU commissioner for jobs and social rights, told the Guardian and other European newspapers that internet platforms “have used grey zones in our legislation [and] all possible ambiguities” to develop their business models, resulting in a “misclassification” of millions of workers.

In the EU’s 27 member states, about 5.5 million workers are misclassified as self-employed, when they should be treated as employees with benefits and protection, such as accident insurance, according the commission. Firms would only have to pay minimum wages, where they already exist. About 28 million people work for platforms in the EU, but this is expected to reach 43 million by 2025.

The proposals are an attempt to provide legal certainty, after European courts have been asked to settle about 100 disputes relating to gig economy companies. France, Italy, Spain, Greece and Portugal tightened up domestic laws, but EU officials believe no government has fully addressed the problem.

Since Brexit, the UK government has no obligation to follow EU laws, while judges have been left to clarify employment law for a new generation of internet companies. In 2016 an employment court found that Uber drivers are not self-employed and should be paid the minimum wage, a verdict upheld by the supreme court in February.

Tim Sharp, senior employment rights policy officer at the Trades Union Congress, said there had not been any “significant government intervention in the UK” to address what unions see as abusive and problematic aspects of platform working.

“If the European Union is seen to be taking a robust approach on platform operators, I think there will be more pressure on the government here to take measures to protect vulnerable workers,” he said.

The EU proposals will be amended by national ministers and MEPs before they become law.

Schmit, a former labour minister in his native Luxembourg, said some services might cost “a bit more”, but argued consumer convenience should not be at the expense of workers.

Services, such as food delivery, were not free, he said. “I cannot consider if somebody brings the pizza at 11 o’clock in the evening to my home … that I have not to pay for that. This is a service. And if it’s a service, the guy who performs the service has also rights.”

Under the directive, workers would also gain rights over algorithms, to stop situations where people are denied jobs, working hours or even fired as a result of machines’ decisions. Instead, workers would have the right to receive explanations for and contest automated decisions, while companies would have to ensure access to a human contact for anything that would have a significant impact on the person.

Companies that did not allow people to work for other firms, or had rules about appearance and how to carry out tasks, could be classed as employers, under the proposals.

The European Trade Union Confederation’s Ludovic Voet said the directive should “signal the end of the free for all” for companies such as Uber, Deliveroo and others. “For too long platform companies have made huge profits by dodging their most basic obligations as employers at the expense of workers while peddling the lie that they provided choice to workers,” he said.

Companies in the gig economy have taken different approaches. Just Eat Takeaway, a Dutch company that is one of the world’s biggest food delivery firms, announced last year that gig workers would become employees with benefits.

MoveEU, a body representing ride-hailing apps, such as Uber, has argued EU action could cost jobs. “Platform work is very diverse, and a one-size-fits-all approach could carry weight on the business model of platforms and ultimately negatively affect the many independent workers relying on them,” it said in a recent paper.

George Maier, a specialist on digital technology at the London School of Economics, said companies would have to adapt to stay in markets. “For a lot of these platforms, because they are realising their model is not profitable, there is a big question over what change they can do and what change they can’t do.”

“We have seen some evidence of platforms trying to get around the tightening grip of legislation by changing their business model. The alternative is to pull out of a country where they don’t see a profitable future.”

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