EU Platform Directive: reshaping the future of digital labour

In recent years, EU authorities have been highly active in regulating further employment law issues. The fate of the proposal for a directive of the European Parliament and the Council on improving working conditions through online platforms (Platform Directive) is currently being discussed in Brussels. The proposal for a directive primarily aims to clarify the statute of platform workers and introduce provisions on the use of algorithmic systems in the workplace. Currently, the majority of platform workers have self-employed status. It is estimated that by 2025, around 43 million people will be working via digital platforms in the EU. According to the project authors, a large group of these people may qualify as employees and the current regulations are not sufficient.

What is a digital labour platform really?

Digital labour platforms will be the next big thing… or maybe they already are. They became an essential part of the emerging socio-economic landscape. Platform work is performed by individuals through the digital infrastructure of digital labour platforms that provide services to their customers. With the help of algorithms, digital labour platforms can, to some extent, automatically control work performance, shape the received remuneration or create or terminate the relationship between the client and the persons performing work.

In the proposal, ‘digital labour platform’ means any individual or business entity providing a commercial service which meets all of the following requirements:

• it is provided, at least in part, at a distance through electronic means, such as a website or a mobile application
• it is provided at the request of a service recipient
• it 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

Importantly, the legislator distinguished digital labour platforms of this type from other online platforms that do not organise work performed by individuals, but merely provide means for service providers to reach the end user, for example by advertising offers or orders for services or aggregating and displaying available service providers in a specific area, without further engagement.

Legal presumption

Up to five and a half million people working through digital labour platforms may be at risk of misclassifying their employment status. The Platform Directive is intended to improve the process of proper qualification of the legal relationship between a person performing platform work and a digital labour platform. The employment relationship determination shall be based mainly on the facts of the actual performance of work, taking into account the use of algorithms in the organisation of work through online platforms, regardless of how the relationship is classified in any contractual agreements.

For this purpose, there is to be a legal presumption that a contractual relationship between a digital labour platform that controls the performance of work and the person performing work through that platform will be considered an employment relationship.

Notably, the legislator has included a legal definition of control for the purposes of the above presumption. Controlling the performance of work shall be understood as fulfilling at least two of the following:

• effectively determining, or setting upper limits for the level of remuneration
• requiring the person performing platform work to respect specific binding rules with regard to appearance, conduct towards the service recipients or work performance
• supervising  work performance or verifying the quality of work  results including by electronic means
• effectively restricting the freedom, including through sanctions, to organise one’s work, in particular the 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

The definition of control thus refers to the employer’s subordination of employees, through which the employer indicates the tasks to be performed, specifies the manner in which these tasks will be carried out, as well as the methods and means by which they will be performed.

But what if the directive won’t be adopted in time?

It is often the case that countries fail to implement EU legislation on time. Frequently, these failures are not due to negligence, but to deliberate action and evasion of implementation of obligations in their legal systems.

The legal presumption will be effective from the date of entry into force of the legislation implementing the Platform Directive. With regard to contractual relations arising before the final date of transposition and implementation of the Platform Directive, which will be indicated in this act, the legal presumption in question applies only to the period starting from that date. Neither employees nor social security and tax authorities will have retroactive claims for payment of allowances resulting from the employment relationship.

We know from well-established EU case law that, in the matter of directives, individuals cannot invoke the direct effect of a directive in a dispute with another entity if the directive has not been transposed. This means that those wishing to establish an employment relationship on the basis of Platform Directive will have to look for an alternative path (which the polish legal order already provides).

There is a possible remedy to protect one’s interests by seeking compensation directly from the state. The process involves a difficult and lengthy procedure, which can put off many eligible persons. Moreover, at this stage of the legislation process, it is not really possible to determine whether all the conditions for claiming compensation will be met.

Rebuttal of presumption

None of this means that digital labour platforms will not be able to challenge this presumption. Importantly, the digital labour platform will bear the burden of proving that an employment relationship did not exist. The transfer of the dispute to court proceedings will not have the effect of suspending the legal presumption.

On the other hand, person performing platform work will not only be able to claim that an employment relationship has been established between the person and the digital labour platform, but also that one does not exist. The digital labour platform will be required to assist in the proper conclusion of the proceedings, in particular by providing all relevant information at its disposal. At this stage, it is unclear just how broad the scope of the required assistance is going to be. The power provided for national courts to compel a digital labour platform to disclose any relevant evidence under its control, including confidential information, is worrying. Certainly, such a competence disturbs the equality of parties in a civil process to the disadvantage of the hiring party.

Are we actually going to face a flood of new employees?

It may seem that implementing the provisions of the Platform Directive into the legal system will automatically lead to the establishment of thousands of employment relationships. Although we do not yet know the final version of the directive, we can assume that it will cover a significant proportion of those hired by digital labour platforms.

We can certainly expect a change in management practices among digital labour platforms. They will try to reshape their algorithm in such a way that the legal presumption cannot be applied. On the other hand, many digital labour platform contractors may not be even interested in an employment agreement.

Nevertheless, digital labour platforms should be preparing for a possible change in the organisational structure. It is not just about the obligations under the platform directive. Responsibilities that come with hiring employees could be quite a challenge.

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