a work in progress – Dragoș Adăscăliței

Divergences between the European Commission and the European Parliament reveal the real challenges of regulating the platform economy.

The platform economy is a moving target which, despite receiving increasing media and policy attention, has proved difficult to regulate. Given the heterogeneity of employment relationships, business models, types of platform work and cross-border issues, this is not surprising.

In recent years initiatives and court rulings have proliferated across European Union member states to address the employment rights and working conditions of platform workers. Piecemeal regulation has, however, revealed its limits. Eurofound research has demonstrated that existing initiatives often fail to provide platform workers and platform companies with the regulatory predictability and legal certainty needed to ensure good working conditions and a level playing field.

Bold move

In response, last year the European Commission proposed a directive which seeks to address the regulatory fragmentation around platform work, improve working conditions for the workers involved and set common standards for the platform economy in Europe. The proposal has three core components: ensuring that the employment status of people working through platforms is correctly classified, increasing the transparency of algorithms and setting reporting requirements for digital labour platforms.

The employment status of platform workers sits at the core of the draft directive and aims to ensure that workers who are in a relationship of dependence with platforms are not misclassified as ‘independent contractors’. The legal presumption of an employment relationship would apply if at least two of five criteria of dependence were fulfilled: control of remuneration; the setting of rules with respect to appearance, conduct or performance of work; supervision of performance; and restriction of the freedom to organise work and/or the possibility independently to build a client base.

The directive would also set a floor of rights for all platform workers on the transparency of algorithmic management. These concern the right of workers to be informed that such systems are in use, the type of decisions taken or supported by such systems, the parameters used and their weight in those decisions, and the grounds for decisions where these affect the engagement of workers with the platform.

Finally, the directive would establish monitoring requirements for decisions taken by algorithms and introduce reporting requirements for platform companies. These would take in data on the number of persons performing work through the platforms and the terms and conditions applicable to various contractual relationships. It would also pave the way towards collective bargaining for platform workers.

This is a progressive proposal, which goes beyond other initiatives we have seen emerge in recent years around the world. The now-repealed Assembly Bill 5 in California was much more restricted in scope and dealt strictly with the employment status of platform workers, leaving out complex issues such as algorithmic management and collective bargaining by platform workers.

Questions remain

Questions, however, remain for some actors. Are the commission criteria sufficiently future-proof? Will the directive, if passed and transposed, be able to address potential outsourcing and subcontracting practices likely to emerge in the platform economy—as in the wake of Spain’s ‘riders’ law’? Will substantive social dialogue actually take off?

The European Parliament responded in May to the commission proposal, calling for substantial changes. These would vastly expand the directive’s scope, notably regarding the employment status of platform workers and algorithmic management systems.

The parliament suggests increasing the presumption-of-employment criteria (from five to 11) and—most importantly—moving them from the body of the directive to the preliminary ‘recitals’. Doing so would mean they are not binding, which would imply that the (rebuttable) presumption of employment set by the directive would automatically apply to all platform workers.

This in turn raises questions, however. How would the presumption of employment work in practice? How would it affect those platform workers who are genuinely self-employed? And will member states support such a proposal?

Meaningful regulation

The parliament’s report also proposes further conditions for the use of algorithmic management systems. For example, platforms would be required to conduct an impact assessment before their introduction and to consult workers and their representatives on the planning and introduction of new technologies. But given the fluidity and complexity of algorithmic management systems, not to mention questions over what actually constitutes new technologies, it is difficult to see how meaningful collective bargaining could take place.

The various issues raised go to the core of EU efforts to regulate platform work effectively and highlight the challenges in trying to improve working conditions in a digital age. One aspect remains clear, however: regulation needs to catch up with realities on the ground if we are to move towards better and more inclusive labour markets.

Dragos Adascalitei is research officer in the employment unit at Eurofound in Dublin. His research focuses on labour-market change and the future of work.