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by Meri Koivusalo, Mikko Perkiö, Arseniy Svynarenko, and Benta Mbare

In this blog we focus on the debate concerning employment status and how the new European Commission proposals on improving working conditions in platform work relate to this on the ground of our research on platform work. We examine some key elements in the Commission proposal, and reactions from companies and trade unions suggesting challenges and way forward.

Partner, employee, or customer

As part our research of working condition in platform economy we have interviewed dozens of Uber drivers and food delivery workers. The employment status is one of one of the most crucial and at the same time complicated issues. There are very few examples of platforms adopting the employment model.

When transportation platforms claim that workers are “partners”, the level of actual control over workers create the situation when workers perceptions of own status and consequently knowledge of own rights is by far more confused. For instance, one labour platform on its webpage addresses its potential couriers with a slogan “Be your own boss”, presuming that it offers a flexible work and high level of worker’s autonomy. In interviews with platform workers the most common message we received was: “Seriously, I still consider <Platform> is my boss!”.

However, recently Juhani Mykkänen, who is one of founders of food delivery company Wolt, has added another level of complexity to the status definition. Mykkänen described Wolt platform as the customer of the courier:

“Does a gig worker have the opportunity to build their own clientele or work for someone else?

– Here it is important to understand what the customer is, Mykkänen says. – Many people think that the courier’s customer is the one who ordered food, but it is not so in our case. Wolt is a customer of a courier. And a courier may have other customers like Foodora, Yango or Uber. And there’s nothing stopping you from making your own deals with a restaurant. He is completely free to build his own clientele.”

European Commission proposals on improving working conditions in platform work addresses exactly this question: when a platform worker is an employee and when not.

European dimension of platform work

European Commission has now provided for a communication, proposal for a directive and guidelines concerning collective bargaining, which will all proceed to wider scrutiny. The key issue in the process has been employment status for people working through digital labour platforms. The European Commission has set responsibilities and obligations clearly on the side of digital platforms in leaving rebuttal of the presumption of employment to them.

The relevance of the proposal will relate to the prior regulatory framework of the markets as well as other national policies. For example, unlike food delivery, the taxi sector has stronger traditions in Finland and rests on solo-entrepreneur model. Requiring any digital ride hailing platform (e.g. Uber) to become an employer for drivers may be a challenge. Drivers are free to choose if they what to work with an online platform or as a regular taxi with or without dispatcher service (unlike in the UK, Finnish drivers are not segregated in unequal categories). In our opinion, it is unlikely that employment provisions will hit hard those sectors and practices, where national history and practice has been based on entrepreneurship and sector specific regulation. Allowing the collective agreements for self-employed may strengthen driver-entrepreneurs position in relation to digital platforms. There will also be more challenges related to algorithmic management and other aspects of the proposal. It remains to be seen to what extent further discussions on employment status of platform workers may lead towards introduction of the 3rd employment category specific for platform work. However, as consequences of such measures could be far wider, we share the views of trade unions that the 3rd employment category should be avoided.

The crucial issue is how requirements for employment /non-employment are defined and on what grounds the fulfilment of two of them are set in practice in the context of national actions.

What is proposed?

On December 9^th 2021, the European Commission announced not one but a package of initiatives for the regulation of platform economy. These include a Communication, a draft directive and draft guidelines for consultations. The proposed Directive on improving working conditions of platform work is based on Article 153 of the Treaty on the Functioning of the European Union and thus set under Article 151 on social policy, which in terms of Commission powers gives substantial scope for national level. DG Competition draft Guidance on the application of EU competition law to collective agreements supports the directive through refraining from action, though it remains draft for consultation. As the European Commission has finally spoken, the case provides an important testing ground for European policies on shaping its digital economy. The policy process will either show the potential for social Europe or the power of corporate and interest group lobbying on European level action.

The definition of the contractual relationship between the digital labour platform and a worker is based on the presumption of employment on the ground of control of work. This is defined further on the ground of fulfilment of at least two out of five criteria (Article 4.2). According to the proposal the worker is thus an employee when a platform is controlling the performance of worker by: “(1) effectively determining, or setting upper limits for the level of remuneration (Authors: i.e. setting prices or ceiling for charges) ; (2) requiring the person performing platform work to respect specific binding rules with regard to appearance, conduct towards the recipient of the service or performance of the work; (3) supervising the performance of work or verifying the quality of the results of the work including by electronic means; (4) effectively restricting the freedom, including through sanctions, to organise one’s work, in particular the discretion to choose one’s working hours or periods of absence, to accept or to refuse tasks or to use subcontractors or substitutes; (5) effectively restricting the possibility to build a client base or to perform work for any third party”.

How these criteria are defined in practice will be of major interest for the platform companies. They may seek to influence the final directive and make its focus or the interpretation of the requirements narrow. Platform companies could also try to interpret their own activities in ways which would leave them outside requirements. This can be achieved, for example, by defining control and the nature of their work in ways, which could escape the requirements. The politics is thus likely to result in a definition game on what is included under requirements, how these are understood and how company practices can be described and understood.

The definition game

Criticism of employment criteria remains a key complaint for Uber and Bolt, which have criticized the presumption of employment and tight criteria for classification of platforms workers as employees. In the opinion of representatives of these two companies the employment of ride-hailing drivers will “sacrifice the flexibility and efficiency of platform work”. The same argument Uber used in its campaign against Prop.22 in California in November 2020. This argument is rather weak as zero-hour contracts would allow for flexibility, justify the control, and offer the employee protections, which would not be available as self-entrepreneur. Employment status would move costs from drivers to Uber.

The challenge for the Commission proposal is that corporations are likely to seek a compromise from the “worker” status adopted in United Kingdom, which resonates with the California case. This is reflected in the Uber commentary emphasising that: “As countries including France have demonstrated, there is a better way and any EU-wide rules should allow drivers and couriers to retain the flexibility we know they value most, while allowing platforms to introduce more protections and benefits.” This articulation would move towards a solution where platform companies are supportive to a more market-based private sector driven task-based social security and insurance policies, which may give the platform companies also potential income and benefits from cooperation . For instance, Uber has already teamed with AXA.

The situation is slightly different with food deliveries as some companies have accepted employment status and problems are also more prominent with food delivery couriers. German-based Delivery Hero, which owns Foodora and a few other food delivery platforms in Europe, criticized the strict criteria for reclassification platform workers as employees. Foodora is known for applying very tight controls over delivery workers, while calling them independent contractors.It is likely that requirement on employment provisions would hit hardest on food delivery sector and practices involved with the industry, even though directive could bring some clarification that these companies can benefit.

Some companies have also sought for European level regulatory clarification. This is reflected in views of Just Eat Takeaway.com and Wolt, which welcomed the EU Commission’s proposal. Just Eat Takeaway.com already employs delivery workers. Wolt, more recently acquired by American Door Dash, is known to impose very light control over delivery workers. The positive spin is evident in the comments by Olli Koski, who described it as “a really good proposal that will truly improve the position of the couriers”. However, this positive approach was combined with Wolt’s talk of itself as “customer” to couriers, which may be of more importance in telling us where this line of argument is going. This hints more to a wish to move its operations under platform2business regulation, through establishing a situation where couriers are customers, which use the services provided by the platform. This implies self-employment instead employment.

The language game extends also to the positioning of what employee or entrepreneur would imply through polarising these as “full-time employment” vs.  “freedoms of an entrepreneur”, which is present in the reaction of platform company Bolt: “The proposal made by the Commission means that hundreds of thousands of ride-hailing drivers and delivery couriers would lose the opportunity of platform work, as platforms would be forced to shift to an exclusive full-time employment model.”  The polarisation of options thus creates an image, where ”flexibility” becomes possible only for entrepreneurs.

Conclusions

Not all platform workers are equal. For example, unlike taxi drivers the delivery workers are much more dependent on platforms and often more confused of their own worker status and their labour rights. They are called “partners” but treated as employees, with often lower net wage than a real employee and with extensive self-responsibility on social protection. In this respect the new EU regulation would clarify their status and offer needed protections. It is highly likely that in the process of adaptation of new directive the large platform companies will continue the language games, playing with definitions for workers-partners-customers. The false narrative of flexibility and efficiency vs employment is already circulating in the reactions to the proposal.

The Commission has offered a set of criteria for defining worker within the dichotomy of employee and genuinely self-employed. This will be a challenge for the platform companies with a danger that in the process of adaptation of this new regulation the tech companies and other lobbyists may water down some of the important novelties in the Commission’s proposals. Lobbyists may bring in compromise proposals which can resemble what previously was known as third category or merely shift the language on requirements enough to escape its reach. However, it is clear that for Social Europe the proposal has been one step ahead. Even if it has not been as large step as many hoped, it is still a reminder that Social Europe exists.  

In the next blog we will look into Commission’s proposals on algorithmic management in platform work.