New proposed rights for platform workers, and why this matters in the UK

The EU Commission has just published a draft Directive which will, when implemented in member states, give new rights to “platform workers”. In this article, we’ll look at who will benefit from the new rules, what the new rights will be, and the likely impact of the rules in the UK.

The Commission’s rationale for the Directive is the huge growth in the digital platform economy, with a fivefold growth between 2016 and 2020. This has led to the need for greater clarity around the status of those working through these platforms. It is estimated that nine out of ten platforms in the EU deem their workers as self-employed, with over five million workers incorrectly placed in this category. The new rules will mean that many millions of workers must be reclassified.

The relationship between tax and the Directive’s rules is made explicit by the Commission: because of the link between employment rights and tax/social security status, member states are expected to gain annual additional revenues of four billion Euros.

What does “platform work” mean?

A platform is a commercial service provided through a website or app involving the need for individuals to perform work. Platform work arises when an individual has a contractual relationship with the platform provider, whether or not they also have a relationship with the recipient of the services.

So the Directive only applies to part of the overall contingent worker population. Those directly hired by an end user, and many agency workers, will not be covered. That bigger population (including those predominantly in the gig economy and who are on zero hours type arrangements) will benefit from separate new EU wide legislation which must be enacted in member states by August 2022.

What does the Directive say about status?

Some new rights are being given to platform workers whether or not they are employed or genuinely self-employed. These involve new rules on the algorithmic management of platforms: the use of automated monitoring and decision making.

On employment status, member states must have in place appropriate procedures to ensure the correct determination of workers. These must be “guided primarily by the facts relating to the actual performance of work, taking into account the use of algorithms in the organisation of platform work, irrespective of how the relationship is classified in any contractual arrangement that may have been agreed between the parties”. This principle mirrors the position in the UK following a series of cases culminating in a recent Supreme Court decision which held that the written contract is just one factor to look at when considering status.

Very importantly, there will also be a rebuttable presumption of employment status where at least two of five factors are present. These factors are all around how work is controlled through the platform. They include amongst other determining remuneration; imposing rules on appearance, conduct towards the recipients of the service; and supervising the performance of work or verifying its quality.

The distinction between these rules and the current test for determining worker/employee status in the UK is notable. Control is an important factor in the UK although arguably the EU is going further in what is meant here by this term. But the UK has other factors not mentioned in the Directive: the obligation to provide personal service (and the unfettered right of substitution) and mutuality of obligation. So it appears that the UK and the EU may be going down significantly different paths in terms of status.

What new rights will reclassified workers gain?

They will have access to a range of employment related rights including minimum wage, collective bargaining, working time and paid holiday and equal pay protection as well as rights conferred through social security.

In the UK, minimum wage, holiday and pension auto-enrolment rights already apply to “workers” who are not employees and for whom no tax or National Insurance is paid (apart from agency workers). This worker category does not generally exist in other countries.

Why does this matter in the UK?

The UK is not obliged to implement the terms of this Directive. It has a different categorisation of self-employed/worker/employee with associated rights for each, and different tests established through statute and case law to determine status. (There have been a number of recent high profile cases dealing with status and further litigation on the issue is likely.) Even following Brexit, UK based organisations must be mindful of the new rules for a number of reasons:

They may have remotely working contingent workers based in EU countries who may move from self-employed to employed status. As in the UK, EU states impose penalties in terms of tax, social security and individual employment rights which can lead to significant liabilities in the event of misclassification.
International supply chains will need to be reconsidered, not least because labour and payroll costs could increase.
Operating models involving platform work applied across a number of countries will have to be reviewed for compliance.
Even where workers are genuinely self-employed, international platform operators will have to implement new procedures to comply with the new algorithmic management requirements.

And last but by no means least, the UK has been looking at how gig and vulnerable workers should be given greater statutory protection. We haven’t heard much about the Government's Good Work Plan recently but it does say that the frameworks for employee/worker rights and tax status should be more closely aligned. On determining status, the Plan said that the factor of control should have greater prominence. So the UK will, at the very least, be looking at the EU’s new platform working regime to decide the extent (if any) to which it should act as a roadmap for the future of contingent work here.