European Union: New directive on employment status and protections for platform workers

Employer Action Code: Monitor

The European Union (EU) Parliament and Council have approved the provisions of a new directive aimed at improving working conditions and protections for people performing “platform” work in the EU. The directive will introduce measures for correctly determining the employment status of such persons and promoting transparency, human oversight and accountability in the algorithmic management of such work. Platform work may be defined generally as that organized through a digital labor platform using automated monitoring or decision-making systems (examples include people transport, food delivery, data input and translation services). The Council estimates that in 2022, over 28 million people were performing platform work in the EU (projected to grow to 43 million by 2025), of whom possibly over five million were misclassified as self-employed or contractors rather than as employees. Once the directive is formally adopted by the EU Parliament and Council, member states will have two years to implement conforming national legislation.

Key details

• The directive does not specify uniform criteria for determining whether people performing platform work should be considered employees of the platform’s organization; rather, it provides that there must be a rebuttable legal presumption of a contractual employment relationship if the platform exercises control and direction of the worker according to national law, collective agreements or practice. Each member state will be required to establish criteria and procedures to define and support the presumption that such workers are employees. The burden of rebutting any such presumption will be on the platform.
• Platforms will be required to ensure human oversight of the platform’s automated monitoring or decision-making systems and regularly (at least every two years) carry out an evaluation of the impact of individual decisions taken or supported by such systems on people performing platform work (whether or not they are employees), including, where applicable, their working conditions and equal treatment at work. Workers' representatives should be involved in the evaluation process. The directive also imposes substantial limitations on the processing of personal data by these systems.

Employer implications

Companies that provide digital labor platforms, as well companies that use such platforms, will want to monitor the progress of this directive and its implementation by the individual member states and consider the potential impacts of any changes to the employment status of people performing platform work.