One of the initiatives launched by the European Commission on 9 December 2021 aimed at improving platform workers' working conditions includes draft guidelines clarifying the application of EU competition law to collective bargaining by some solo self-employed workers.
Previously we reported on the draft proposal for a directive establishing a presumption for certain platform workers to be considered workers benefitting from national employment law. However, the draft directive also recognised that only a small minority of platform workers are 'wrongly' categorised as self-employed. While the draft also established some rights in relation to algorithmic management for all platform workers, including the self-employed, the European Commission considers it vital to find ways to improve the working conditions of these self-employed workers more widely. It sees collective bargaining as one of the ways to realise that objective. The proposed Guidelines discussed here are targeted at collective bargaininig by the so-called 'solo self-employed' and examine its relationship with EU competition law.
Where the draft Directive refuses the idea of introducing a third category besides self-employed and (subordinate) workers, the Commission does not see any harm in 'creating' such a category for collective bargaining and competition law purposes.
Collective bargaining and EU competition law
On 28 October 2020, a proposal for a directive was launched aimed at addressing large discrepancies in the coverage and level of minimum wages between member states. The idea is to increase collective bargaining coverage and to promote the capacity of social partners to engage in collective bargaining on wage setting. Member states would even have to draw up action plans to promote collective bargaining if collective bargaining coverage is below 70%.
It seems the EU Commission would like to stop or even reverse the current trend of declining collective bargaining and trade union membership in Europe. The proposal deals with traditional workers, but not with self-employed. Most of these traditional workers are not even currently unionised, so why the push in this direction?
The Commission seems to consider collective bargaining can also operate as an avenue for improving working conditions and wages for some self-employed workers. However, the issue of collective bargaining for the self-employed is legally much more complex, as principles of competition law come into play.
On 9 December 2021, the Commission launched its Communication (draft) 'Guidelines on the application of EU competition law to collective bargaining agreements regarding the working conditions of solo self-employed persons' (see here).
A bit of context
Article 101 of the Treaty on the functioning of the European Union (TFEU) prohibits ,
'as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;... .'
Trade unions and employers' associations are 'undertakings' in the sense of this prohibition.
Collective bargaining agreements between trade unions representing workers and employers or employers' associations are not by definition exempt from the prohibition contained in Article 101 TFEU. Collective bargaining agreements in which wage levels or wage increases are set are in fact price-fixing agreements which based on that same article, would then be considered automatically void. The European Court of Justice stepped in in this area through a line of cases, taking into account EU social policy objectives and the importance the EU attaches to social dialogue and collective bargaining.
In 1999, the European Court of Justice held in the landmark Albany case that it:
'is beyond question that certain restrictions of competition are inherent in collective agreements between organisations representing employers and workers. However, the social policy objectives pursued by such agreements would be seriously undermined if management and labour were subject to Article 85(1) of the Treaty' (currently Article 101 TFEU).'
'when seeking jointly to adopt measures to improve conditions of work and employment. It therefore follows from an interpretation of the provisions of the Treaty as a whole which is both effective and consistent that agreements concluded in the context of collective negotiations between management and labour in pursuit of such objectives must, by virtue of their nature and purpose, be regarded as falling outside the scope of Article 85(1) of the Treaty.'
( see here).
In the introduction to its draft Communication, the Commission refers to the relevant case law of the ECJ and more specifically to the FNV Kunsten case Informatie en Media case.
'The Court has further clarified that this exclusion from the scope of Article 101 TFEU also covers collective agreements concluded between employers and workers' organisations negotiating in the name, and on behalf of their false self-employed members, namely service providers in a situation comparable to that of workers. In this context the Court has considered an individual to be a false self-employed person if: (i) he/she acts under the direction of his/her employer as regards, in particular, his/her freedom to choose the time, place and content of his/her work; (ii) does not share the employer's commercial risks and (iii) for the duration of the relationship, forms an integral part of the employer's undertaking. Such criteria apply irrespective of whether that person is labelled as self-employed under national law for tax, administrative or organisational reasons and require a case by case assessment in light of the facts of the individual case.'
The European Court of Justice did not, however, extend the exemption to self-employed workers integrated in the counterparty's organisation. Furthermore 'false' self-employed workers are self-evidently not self-employed, but employees and could thus engage in collective bargaining.
Collective bargaining for the solo self-employed
It is clear that the draft Communication also wants to build a case for the solo self-employed who are not necessarily performing work in an 'employee-like' manner, based on the idea that they should not, under the circumstances further specified in the draft Communication, be regarded as 'undertakings' and therefore fall outside the prohibition in Article 101 of the TFEU. The (draft) Guidelines are intended to explain how the Commission will apply competition rules to collective agreements dealing with some self-employed workers who are in a weak bargaining position compared to their counterparties. These (draft) Guidelines do not only concern platform workers, but go far beyond that. The aim is to give guidance on the Commission's stance with respect to competition law potentially erecting barriers for solo self-employed individuals trying to increase their bargaining power by bargaining collectively.
The draft Guidelines clarify that certain categories of collective agreements fall outside the scope of Article 101 TFEU and that the Commission will not intervene against certain other categories of collective agreements. They explain how the Commission will apply EU competition law, without prejudice to the application of other rules or principles of EU law.
The draft Guidelines target agreements collectively bargained or negotiated between certain categories of solo self-employed individuals and their counterparties that concern their working conditions. The term 'working conditions' is supposed to include matters such as remuneration, working time and working patterns, holiday, leave, physical spaces where work takes place, health and safety, insurance and social security, and conditions under which the solo self-employed person is entitled to cease providing his or her services, for example, in response to breaches of the agreement relating to working conditions.
The solo self-employed are defined as individuals who do not have an employment contract or who are not in an employment relationship and who rely primarily on their own personal labour for the provision of the services concerned.
Referring to the FNV case quoted above, the draft Guidelines indicate that the Commission intends not to act against collective bargaining by self-employed individuals who may not be workers, but who are in a situation comparable to workers. The draft identifies three categories of solo self-employed individuals to whom this would apply:
- economically dependent solo self-employed individuals, meaning those exclusively or predominantly providing their services to one counterparty (at least 50% of total annual related work income);
- solo self-employed individuals working side-by side with workers for the same counterparty; and
- solo self-employed individuals working through digital labour platforms, defined in the same way as in the draft Directive on platform work (see herefor our review of the draft Directive).
The Commission's intention is not to intervene against collective agreements between solo self-employed individuals and their counterparties in cases where there is a clear imbalance in bargaining power. Such an imbalance in bargaining power will be considered to exist at least:
- where solo self-employed individuals negotiate or conclude collective agreements with one or more counterparties that represent the whole sector or industry; and
- where solo self-employed individuals negotiate or conclude collective agreements with a counterparty whose annual aggregate turnover exceeds EUR 2 million, or whose staff headcount is equal to or more than ten, or with several counterparties which jointly exceed one of these thresholds.
The Commission would equally refrain from taking action in cases where national or EU law allows such categories of self-employed individuals to bargain collectively or when national law excludes collective agreements concluded for certain professions from the application of competition law.
Any interested party can submit comments on the draft Guidelines up to 24 February 2022, after which the European Comission will assess the input received from stakeholders. The goal is to publish the final version of these Guidelines in the second quarter of 2022.
The question as to who would represent these solo self-employed workers is not really addressed in the draft Guidelines. Should the 'established traditional' trade unions be given a representative voice? Are they even representative giving the dwindling numbers of trade union members and certainly with trade unionisation figures declining in most member states? What portion of these solo self-employed individuals are actually members of trade unions? How will any of these collectively bargained agreements be enforced? If an agreement is reached, to which of the solo self-employed workers should it apply? Collective bargaining not backed-up by a right to strike is tantamount to collective 'begging': would a collective refusal to work by solo self-employed platform workers (who almost by definition have the freedom not to log into any particular system for a given counterpart) be covered by this right to bargain collectively? Can a solo self-employed individual be 'represented' in collective bargaining with multiple counterparts s/he is delivering services for?
And of course, regardless of the Commission Communication or Guidelines, the European Court of Justice will be the final judge of whether or not this kind of collective bargaining is covered by the prohibition on anti-competitive practices in Article 101 TFEU.
To be continued!
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