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How the EU Commission wants to force the digital economy to comply with workers’ rights – work and digitization

For more than a decade, digital work platforms in Europe have been making huge profits with a business model based on fierce labor price competition and the outsourcing of social costs and risks. By forcing workers to describe themselves as self-employed when in reality there is a clear employment relationship, the platforms circumvent minimum wages and sectoral collective agreements as well as social security contributions – to name just a few of their core obligations as employers. Thanks to such “innovation” they can offer lower prices for their services.

These developments have had an adverse impact on European society: not only in the form of a deterioration in working conditions and quality of life for women workers, but also through negative repercussions on traditional sectors and public revenues. This model is now being transferred to more and more new sectors. With its unfair competition, it has an enormous impact on the future viability of traditional companies.

On December 9, 2021, the European Commission proposed a new EU directive to secure workers’ rights in the digital economy. Broadly speaking, it is an ambitious attempt to regulate a business model that has so far thrived on digital platforms by shirking their basic obligations as employers – at the expense of employees, traditional employers and the underfunded public sector Place.

The proposed EU directive is, by and large, an ambitious attempt to regulate a business model that has so far made huge profits for digital platforms by escaping their basic obligations as employers.

The Commission’s proposal is particularly welcome as it is a major step forward from 2016, when a “European agenda for the collaborative economy” was first proposed. However, six years ago, apparently under the influence and pressure of lobbyists from the major digital platforms, the Commission adopted the narrative that these companies were “inventing” a new industry, creating jobs and offering more flexibility. The EU called on those Member States that raised concerns about working conditions not to regulate too quickly. After all, you shouldn’t “kill the economy”.

In the meantime, however, the Commission is taking the side of the employees with its planned directive. At its core, her proposal aims to presume an employment relationship between employees and platforms and thus shift the burden of proof from the employee to the employer. In other words: A digital platform should always be viewed as a classic employer – unless the platform can prove the opposite.

A digital platform should always be viewed as a classic employer – unless the platform can prove otherwise.

For this to be effective, digital platforms that defend themselves against the employer presumption must be forced to refute it. Then these work platforms would have to disclose their algorithms to prove that they actually do not employ women, but work with freelancers. This would not affect the business model of those platforms that work with “real” freelancers – and in return freelancers would have full clarity about which platforms they can work with appropriately.

For us as a European trade union movement, guaranteed employment contracts and respect for workers’ rights while enabling genuine self-employment have been at the heart of our commitment over the past two years. Such a regulation is important because things simply cannot go on as before: Currently, all employees on digital work platforms are considered self-employed if the platform wants it that way. So far, workers and their unions have had to take companies to court to prove their de facto status as employees. This is a costly, lengthy and laborious procedure that few can afford.

Such legal proceedings also do not lead to a change in the business model of the platform, let alone to an improvement in the conditions for the other workers. As a rule, the plaintiff only receives a lump sum compensation amount equal to the minimum wage. Meanwhile, the platform continues to benefit from the outsourcing of all risks at the expense of employee protection. That is why the assumption now proposed by the EU that there is always an employment relationship is of crucial importance: it closes this previous loophole.

With the proposed legislation, platforms would be required to explain their algorithms to workers and their unions, and they would also have to engage in collective bargaining.

With the proposed legislation, the algorithms used for job allocation and HR management would no longer be a “black box”: platforms would be required to explain their algorithms to workers and their unions, and they would also have to engage in collective bargaining. Together with the unions, uniform rules would have to be defined for how the algorithm affects the design of work and working conditions.

In this respect, the Commission’s proposal for a directive is a good start. However, the European Parliament and the European Council still need to improve it further. One of the main shortcomings of the bill are the criteria by which employment is presumed. The current text states that a digital platform must meet two conditions in order to justify this presumption. Again, this is a cumbersome process which would render the companies’ obligation to refute largely useless and could result in a similar situation as before persisting: one in which workers remain responsible for ensuring that their rights are recognised. In addition, the envisaged criteria are inflexible and do not do justice to the reality of how the platforms employ their workers. With the current wording and criteria, digital work platforms could easily adjust their respective terms and conditions to simply not be covered by this law.

The current proposal for an EU directive is not yet perfect and should therefore be improved by the European Parliament and the Council.

More importantly, it is impossible for EU member states to correctly record actual employment relationships without properly checking how the algorithm organizes the work. If shifting the burden of proof from the employee to the employer becomes the generally accepted principle, then the actual assessment of the employment relationship will only be possible at the time of objection proceedings by the companies. If digital work platforms seek to refute an employment relationship with their employees, then they should have to make their algorithm available to the competent administrative or judicial authority.

The current proposal for an EU directive takes into account the concerns of the trade union movement as a whole and aims to improve the working conditions of workers on platforms. However, it is not yet perfect and should therefore be improved by the European Parliament and the Council. To ensure this happens, the European trade union movement will fight for the rights and interests of women workers and will firmly oppose the lobbying tactics of the platforms that want to maintain their current unsustainable business model.

Translated from the English by Tim Steins

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