E.U. Plan to Boost Gig Economy Workers Is Latest Blow to Apps

The European Union’s plan to make it easier for gig economy workers to get benefits could see millions more people being classified as employees. This is the latest blow to digital platforms which rely on contractors for food delivery and rides.

Thursday’s draft rules will clarify how app-based businesses like Uber or Deliveroo use labor to provide services to their customers. They also would give oversight to the management algorithms that they employ to help them manage employees.

Platforms and workers in the gig economy have fallen through the cracks of employment legislation. The 27-nation bloc is currently considering measures that will help to clear up these gray areas. It would take many years for those laws to become effective.
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App-based gig jobs have been booming in the digital economy. This was especially true during the COVID-19 epidemic, when there was a surge in food delivery services. Apps provide temporary work to millions. However, their rapid growth has caused problems for traditional business models and labor patterns. Companies and regulators have been forced to fight over the apps. Gig work’s flexibility is a selling point for many, but workers also complain that they end up making less than minimum wage after their expenses are accounted for.

The E.U. rules, which still need approval by the European Parliament, a platform that meets at least two criteria will be deemed an “employer” and people working for that company will be reclassified as “workers” with the right to a minimum wage, paid vacation, unemployment and sickness benefits, pensions and other benefits.

The criteria include whether an app decides pay levels; electronically supervises work performance; restricts a worker’s freedom to choose work hours, accept jobs or use subcontractors; dictates a worker’s appearance and conduct with customers; or limits the possibility for workers to build their own client bases or work for anyone else.

Uber says it’s committed to improving work conditions but worries about the EU proposal “putting thousands of jobs at risk, crippling small businesses in the wake of the pandemic and damaging vital services that consumers across Europe rely on.”

“Any E.U.-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,” a statement from the ride-hailing service said.

Amsterdam-based Just Eat Takeaway said it “welcomes and fully supports” the proposals and hopes they will provide companies across Europe with “clarity and a level playing field.” Unlike other food delivery platforms, the company’s riders are employed as staff, which it says “proves that providing flexibility doesn’t have to come at the expense of workers’ rights.”

The European Commission, the E.U.’s executive branch, estimates some 28 million people on the continent are self-employed on digital platforms, rising to 43 million by 2025, but predicts as many as 4.1 million could be reclassified as employees under the new rules. To ensure that everything is safe online, the bloc plays a major global role in crackingdown on tech companies.

The Commission stated that while platforms may challenge the classification, they must prove that they are employers.

“No one is trying to kill, to stop or to hamper this growth of the platform economy,” E.U. Nicolas Schmit, the Commissioner for Jobs and Social Rights said during a Brussels press conference. But “it comes down to ensuring that these jobs are quality jobs…We don’t want this new economy just giving low quality or precarious jobs.”

Proposed E.U. The proposed E.U. rules will be another setback for European gig economy businesses. Recent court decisions in Spain, Britain and the Netherlands require that food delivery drivers and ride-service operators be classified as employees rather than self-employed freelancers.

There have been more than 100 court decisions across Europe on the issue, with most judges ruling that independent contractors are employees—something the commission took into account as it drafted its directive.

Uber and the other app-based U.S. companies managed to avoid a California effort to categorize workers as employees. The battle for the rightful classification continues at the courts.

Also, the European Commission wants gig-work platforms to make it easier for workers to understand their algorithms and how they are paid. It stated that workers need to be allowed to challenge any automatic decisions and people should monitor the algorithm.


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