The expansion of the so-called “gig economy” has caused big changes to the labor market in Europe in the last 15 years. This is particularly apparent in the digital platform sector. Companies like Uber and Just Eat which provide transport or food delivery services rely upon a workforce engaged under flexible terms under which neither party has any significant obligation to provide or perform work on a durable basis.
Drivers and riders who work with these companies are generally subject to standard terms and conditions which state that they will operate as independent contractors. The platform operator positions itself as an intermediary between the end user and the freelance service provider, charging a commission in order to put the two parties in contact.
But in reality the platform operator may retain a considerable level of control over how its drivers and riders perform their work: including the price to be charged to the client, the worker's hours of availability, the geographic area to be covered, and so on. There may also be consequences if gigs are repeatedly not accepted: for example, if a driver rejects three rides, they may be temporarily disconnected from the platform. Similarly, drivers and riders may be suspended or terminated if they are the subject of customer complaints.
Some platform workers value the flexibility afforded by this type of work, as it allows them to pursue studies or other professional/personal projects without being tied to fixed hours. Others, especially those for whom platform work is the main or sole source of income, believe that their independent entrepreneur status - imposed by the platform - is a fiction which unfairly deprives them of fundamental employment rights.
Recently, drivers and riders have brought court claims in various European countries in order to try to obtain employee status. Meanwhile, the European Commission and various EU Member States are considering legislation in this area. We describe some of the highlights below.
1. Court claims for employee status
The latest court decisions in countries including France, Italy, the Netherlands, Spain, and the UK give the impression that courts sometimes find it difficult to analyze gig-based work according to the traditional criteria for determining whether a working relationship is an employment or not.
1.1 UK Uber ruling
In the UK, the Supreme Court recently ruled in favor of two Uber drivers who were a test case for a large number of drivers claiming “worker” status. This is an intermediate status under UK law applicable to individuals who provide personal service to a third party which is neither their employer nor their customer/client but which, nevertheless, can exercise a significant level of control over them. By being classified as ‘workers' individuals acquire certain rights, for example, in respect of the minimum wage and holiday pay, but do not benefit from full UK employment rights (such as the right not to be unfairly dismissed, the right to a redundancy termination payment, etc.).
The Supreme Court found that the complex contractual arrangements that had been put in place by Uber could not disguise the true nature of its relationship with the drivers. Whilst the drivers supplied their own car and could determine when and where they worked, Uber dictated the type of car that could be used, monitored the rates of acceptance/cancellation of trips and imposed penalties if the cancellation rate exceeded a certain level. The level of control Uber had meant that the drivers were, in reality, ‘workers'.
By the time these claims reached the Supreme Court, Uber had already adjusted its drivers' standard contractual terms to try to reduce future misclassification risks, but it has since announced that it will recognize all of its current drivers (but not Uber Eats delivery riders) as “workers” for UK law purposes, affecting approximately 70,000 drivers.
1.2 France recent court decisions
In France, the traditional test for employee status relies upon the notion of a “link of subordination”. According to established case law, this link exists if the worker performs their duties under the instruction and supervision of the company and can be sanctioned for misconduct or poor performance.
In 2020, the French supreme court ruled in favor of a number of Uber drivers who were claiming employee status. It took into account the fact that the taxi service was entirely organized by Uber, with the result that the drivers could not build up their own clientele, decide what price to charge the client or even which route to take. In addition, Uber had the right to disconnect drivers if they refused a certain number of rides.
However, the question of employee status for platform workers in France is by no means resolved, and will continue to depend upon the specific facts. For example, there have been two recent decisions concerning a food delivery company called Deliveroo:
- In February 2021, the Paris labor court ordered Deliveroo to pay damages for “concealed work” to a rider who was paid by the hour, because it ruled that in reality he was an employee.
- But on 7 April 2021 the Paris court of appeal ruled that a different Deliveroo rider was an independent contractor. The court noted that the rider was free to accept or refuse work, was allowed to work for competitors (and actually did so), and was allowed to sub-contract the work. It's worth noting that he was engaged under different, more recent contractual terms from the other rider (for example, he was paid by the gig, not by the hour).
We may have to wait some time to see what the Supreme Court makes of these two decisions, if indeed the parties appeal.
1.3 Spain Glovo decision
In September 2020, the Spanish Supreme Court ruled against an app-based delivery company called Glovo, concluding that the claimant drivers / riders were in reality employees given that:
- they could not freely determine the days and times when they wanted to work, as this was subject to contractual conditions (and in addition those who refused to provide services during peak hours were subject to worse ratings);
- the platform allowed Glovo to set delivery standards, issue technical instructions, fix prices (so that riders did not have any ability to influence pricing), and collect payment directly from customers; and
- the rating system was in fact an appraisal system, under which riders with lower ratings would be offered fewer gigs or even be terminated. This was viewed by the court as an exercise of disciplinary powers by the platform.
1.4 Italy prosecution and pressure from labor authorities
In February 2021, the Milan public prosecutor imposed a fine of nearly USD 900 million on four food delivery platforms for breach of health and safety regulations in relation to their couriers, and (together with the Milan labor inspectorate) ordered them to hire all of their 60,000 riders within ninety days as “pseudo-subordinate” workers (parasubordinati), with limited employment rights.
Since then, the Just Eat platform operator has signed a collective agreement with the trade unions, undertaking to hire all of its riders. For the moment, it is unclear how the other affected platform operators are trying to resolve the situation.
2. Legislative developments
The European Commission (which is the executive arm of the European union) recently opened a consultation process with the social partners (i.e. trade unions and employer associations) on how to “address challenges” relating to working conditions in the platform work sector. Possible measures mentioned by the consultation paper include introducing a rebuttable presumption of employee status, or reversing the burden of proof (so that it would be up to the platform to prove that its workers are not employees). The Commission aims to present legislation by the end of the year.
On 11 May 2021 the Spanish government approved legislation known as the “Riders' Law”, which introduces a presumption that riders providing delivery services are employees if they work under the direct or indirect organization, direction and control of a digital platform which uses algorithms to manage the service or working conditions.
In addition, the Spanish Riders' Law requires companies to inform their works council about algorithms or artificial intelligence systems that will be used in order to take decisions about employment conditions, access to employment and continued employment, including profiling. The new rules will come into force mid-August.
In parallel, in April 2021 the French government adopted an Order providing for the creation of a system of collective representation for independent workers in the digital platform sector. So in 2022 French platform workers will be able to elect national representatives to engage in negotiations with the platform companies, and the platforms will have to finance this new regime.
3. What's next?
The European Commission will try to promote the protection of certain basic rights for platform workers, but it seems unlikely that it will propose the creation of some sort of new intermediate quasi-employee status.
Meanwhile, further litigation in this relatively new sector is to be expected, as employment law tries to catch up with the evolution of the economy.
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.
