Do you - or are you planning to - use automated solutions to make payments to temporary workers? If the answer is yes, you need to be aware of the upcoming EU Platform Workers Directive. Here’s why...
The EU Platform Workers Directive
In 2021, over 28 million workers were part of the EU’s gig economy. By 2025, that number is expected to reach 43 million. From food delivery to consultancy, these gig economy jobs are often associated with digital platforms. Famous examples are Uber, Deliveroo, Freelancer and TaskRabbit.
While these platforms facilitate easier access to the labour market and flexible work arrangements, they also blur the lines between traditional employment and independent contracting. This ambiguity can lead to misclassification of workers, restricting their access to essential labour rights and social protections, consequently unsettling the balance in industrial relations systems, and impacting social security funds.
The aim of the EU Platform Workers Directive is to:
· Improve working conditions.
· Provide legal clarity.
· Regulate digital labour platforms.
Why this Directive could affect you
This Directive is supposed to be applicable to companies that provide services through “...algorithms that replace functions that managers usually perform in businesses, such as allocating tasks, giving instructions, evaluating the work performed, providing incentives or imposing sanctions.”
The original draft of the Directive had a broad definition of what a "platform" is. This caused worry for many in the staffing industry, who were concerned that they could potentially fall under its scope simply because they use advanced electronic means to organise the work and payroll of various individuals.
However, a fourth condition to the definition of “platform” has been recently added to align the draft law with the intention originally sought. This condition states that for a platform to be considered as one under the law it must involve the use of automated systems for monitoring or decision-making. This change helps to limit the Directive to digital work platforms or gig economy providers.
Employment Status Rules
One of the consequences of being considered a platform under the new Directive is that workers could be presumed to be employees of the platform: with implications for their pay, benefits, and rights.
The original draft of the Directive stated that this presumption would happen if the platform provider met two out of five criteria. This has been adjusted. Now, the presumption of employment will only apply if the platform has control and direction over the work. This is determined by whether three out of seven specific criteria are met, with the digital labour platform seen to:
· determine upper limits for the level of remuneration.
· require the person to respect certain rules with regard to appearance, conduct towards the recipient of the service or performance of work.
· supervise the performance of work, including by electronic means.
· restrict the freedom to choose one's working hours or periods of absence.
· restrict the freedom to accept or to refuse tasks.
· restrict the freedom to use subcontractors or substitutes.
· restrict the possibility to build a client base or to perform work for any third party.
Why the Directive could still potentially affect you if you’re in the staffing industry
This draft of the Directive has not yet been finalised and some Member States have expressed reservations about the current legal text. This means that the wording could change again. So, a possibility remains, albeit small, that a broader spread of businesses within the staffing industry could still be affected.
The Directive is expected to become law in 2024. After that, Member States of the EU will have two years to implement it. Once passed, the presumption of employment status would be relevant in labour court settings. Individual countries may also decide to extend this presumption to tax or social security, too.
Our advice? This Directive is one to watch. Its focus is digital platforms, but its scope could grow.
Want support or advice?
At PEO Legal, we provide legal and compliance advice for professional employer organisations and staffing companies around the world. For advice about any point of cross-border employment law – including updates and analysis of upcoming legislation - contact us, today.