The volume of orders placed through mobile apps or websites skyrocketed in the last few years, whether for shopping, meal delivery at the office or ride sharing. The activities performed through digital platforms raise a number of legal questions, as attempts are made to tailor the current legislative framework to embody this recent theme as well. Among them, a topic often discussed lately refers to the status of those who provide the services we contract when we click "order here". Are they employees or self-employed individuals according to Romanian law?
What does activity performed through digital platforms mean?
So far, there is no unified concept to define the activity performed through digital platforms. Internationally, it is defined as a transaction established through an app or a website, which connects customers, based on an algorithm, with individuals who provide the service in exchange for money.
At the European level, the concept of activity performed through digital platforms is a type of activity where entities or individuals use a digital platform to access other entities or individuals in order to solve specific problems or to provide specific services in exchange for money.
The relationship between platform operator and providers: dependence or independence?
As digital platform activity expands globally, there is more and more controversy concerning the nature of the relationship between the platform operator and the provider, i.e. whether the latter is independent or dependent.
The classification of the activity as independent or dependent is essential for both the platform operator and the provider. Where the provider is independent, there is a simple collaboration relationship between them and the platform operator, the provider benefiting from flexibility in organising their work and performing their activity on their own. At the same time, the costs for the platform operator are lower, as it has no obligation to grant the provider any legal or social protection (such as minimum wage, days off, occupational safety and health, etc.).
On the other hand, where the provider is dependent on the platform operator, the relationship between the parties will be one of employment, with the platform operator and the provider having to enter into an individual employment agreement. Here the service provider would be reporting to the platform operator and would be required to work for, under the coordination of and in accordance with the instructions of the platform operator, which would be obliged to provide legal and social protection to the service provider.
Controversies and possible worldwide solutions
Over the years, courts were likely to regard digital platform service providers as self-employed, arguing mainly that they are able to organise their working time on their own.
Lately, however, some European courts have more often ruled that the relationship between providers and platforms is one of dependency, with the consequence that providers must benefit from the same level of legal and social protection as typical employees.
For example, the Supreme Court of the United Kingdom recently ruled that two drivers of a ride-sharing service were wrongly categorised as independent service providers because, among other things, they were not at liberty to set the fares for the rides.
At the same time, last year the Supreme Court of Spain ruled that the providers of a delivery platform are employees, arguing that the platform exercises significant control over the providers through the obligations imposed on them, that the providers' activity is controlled through geo-location services, and that the activity is carried out mainly through the app owned by the platform operator.
The courts in the Netherlands, Italy and the United States took a similar approach, categorising the activity of providers through digital delivery platforms as dependent.
In this context, the European Commission has launched initiatives to contribute to better regulation in this field. These do not exclude the possibility for digital platform providers to operate in both forms, either as employees or as independent providers, as allowed under national law. The aim is that, regardless of the form of organisation, they can benefit from a certain level of protection.
Recent examples of such initiatives include assessing the possibility of regulating the negotiation of collective agreements by self-employed providers or consulting the social partners at the European level on how to improve working conditions for people working through digital platforms.
Digital platform activity in Romania: where are we and what to expect?
Since 2019, Romania has expressly regulated certain activities provided through digital platforms, namely alternative transport activities. Unfortunately, although a legislative framework for these activities is welcome, the regulation may allow for interpretation and therefore uneven practical application, especially by the controlling authorities and courts.
Thus, according to the provisions included in the current normative act, providers are independent in relation to the operator of the platform, carrying out passenger transport activities based on an agreement concluded with the user through a digital platform.
However, if we look at the specific way in which a provider of such transport services carries out its activities, the platform operator and the provider cannot be regarded as having a de facto employment relationship. This is particularly the case if certain criteria of subordination/dependence are met, based on which the authorities with oversight over employment relations and/or taxation have already established a practice of reclassification as an employment/dependent relationship.
Of all the activities carried out through digital platforms, however, only alternative transport activities are regulated in Romania. Therefore, there is all the more risk of re-qualifying the relationship with providers in the case of other types of activities performed through digital platforms, for which there is no legislative framework, such as the delivery of products based on an order via a mobile application or a website.
Thus, in the absence of clear regulation, one risk for platform operators is that the tax authorities may in fact view the activity as a dependent one, which would lead to additional rates of income tax, social contributions, interest and penalties being charged to the platforms.
Likewise, the work control authorities could consider that there is in fact an employment relationship between the platform operator and the provider and could penalise both for performing work without legal forms. Moreover, there is a risk that these authorities may believe the platform operator has not fulfilled its legal obligations as an employer (e.g. to ensure the occupational safety and health of the service provider), bearing the contravention and, in some cases, even criminal liability of the operator.
There is a need to review the existing legislative framework in Romania and to amend it so that the interests of all parties to the contractual relationships established through digital platforms (platform operator, providers, customers) are protected. Given the international trends in this regard, it will not be long before the regime for such activities is more clearly regulated. Until then, however, platform operators need to carefully analyse the relationship between them and contracted providers, in order to reduce the risks of reclassifying this relationship as dependent and/or as a labour relationship.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.