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New EU rules could turn 4.1 million gig workers into regular employees

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By Jorge Liboreiro
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Gig workers who are re-classified as employees will gain paid holiday and parental leave, among other rights.
Gig workers who are re-classified as employees will gain paid holiday and parental leave, among other rights.   -   Copyright  Olivier Matthys/Copyright 2020 The Associated Press. All rights reserved

Brussels has taken the first steps to ensure Europe's gig workers -- which include Uber drivers and Deliveroo riders -- enjoy the same labour rights as other traditional employees.

The European Commission unveiled draft rules on Thursday that would see digital platforms automatically reclassified as employers.

That would compel them to ensure staff have the right to a minimum wage, paid leave and unemployment insurance.

Up to 4.1 million gig workers could be affected by the legal change.

The legislative move intends to crack down on the so-called "false self-employed", a trend that has become widespread as the gig economy blooms.

According to the European Commission, revenues from the sector reached €14 billion in 2020 – a near fivefold increase from the €3 billion obtained in 2016. Over 500 platforms are today active in the bloc.

But as the sector grows, so do concerns over working conditions. Complaints from workers point the finger at long hours, uncertainty over being paid, physical exhaustion, lack of a safety net, absence of legal rights and an overall state of precariousness.

Others, however, argue the gig economy offers a degree of freedom, autonomy and flexibility that standard job contracts do not and create opportunities for people who struggle to enter the labour market, such as students, immigrants and ethnic minorities.

Uber has already cast doubt over the latest proposal, warning it might end up "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", a spokesperson told Euronews.

Newfound rights for gig workers

The European Commission believes that, despite the sector's positive contribution, the longstanding concerns must be addressed within an EU-wide framework that will remedy the patchwork of national laws.

Out of the 28 million gig workers currently active across the bloc, around 5.5 million are incorrectly categorised as "self-employed", the executive says.

The new directive will turn between 1.7 to 4.1 million gig workers into ordinary employees, while the remaining could be recognised as genuinely self-employed. The final number will depend on how many platforms meet at least two of five criteria to be deemed employer, which involve issues of remuneration, supervision, working hours and appearance rules.

The workers who are re-classified will immediately gain a series of rights, such as guaranteed holidays, parental leave, minimum wage, old-age pensions, safety protections and collective bargaining (gig workers are seldom unionised).

They will also be allowed to claim benefits for unemployment, sickness and healthcare and will be insured against workplace accidents, which can be frequent for carriers who have to navigate through the hectic city traffic on a bike.

All these newfound rights will be aligned with the domestic legislation of the member state where the gig worker operates. For example, some countries, like Denmark, Austria and Italy, do not have a statutory minimum wage.

The EU-wide re-classification could drive up to 250,000 couriers out of work and put up to €800 million of income at stake, warned Delivery Platforms Europe, a coalition of delivery platforms.

The organisation argued a "fixed employment scenario" runs counter to the flexibility advantage that these companies offer, which, according to a recent study by Copenhagen Economics, is the main reason why people choose to work for digital platforms.

By contrast, the European Commission foresees EU countries will receive between €1.6 billion and €4 billion per year in extra contributions if gig workers are reclassified as traditional employees.

The announcement of the directive comes weeks after European platform workers staged a symbolic demonstration in Brussels and denounced a business model that doesn't guarantee basic rights.

It also follows multiple court cases – more than 100 according to the European Commission – where platforms have been challenged for the poor labour protection they offer. In September, a Dutch tribunal ruled that Uber drivers are employees, not freelancers, and are therefore entitled to the same benefits as taxi drivers. A similar judgment was delivered by the UK’s Supreme Court earlier this year.

"Digital labour platforms play an important role in our economy as they bring innovation, provide jobs and help meet consumer demand," said Valdis Dombrovskis, the European Commission's Vice-President, while presenting the draft law. "People are at the heart of this business model and they are entitled to decent working conditions and social protection."

But Deliveroo struck back, claiming that "reclassifying riders has negative consequences for riders themselves, consumers, restaurants and the wider economy".

"These proposals will increase uncertainty and will be better for lawyers than self-employed platform workers," a company spokesperson told Euronews.

The Commission intends to lay the path for labour rights before the gig economy becomes too big to handle: by 2025, the sector is expected to employ over 43 million workers in the EU.

Right to contest algorithms

The new rules from Brussels also aim at increasing algorithm transparency, another question that has also become problematic with the expansion of the digital economy.

Digital platforms that connect gig workers to jobs usually use algorithms to allocate tasks and set prices. This creates an opaque decision-making system that leaves workers unable to understand the logic behind their chores and fees, the European Commission argues.

The directive will strengthen human monitoring of automated decisions and introduce the right to contest and rectify them if they are incorrect or unfair.

Workers will also be able to obtain more information on how they are being supervised and evaluated, including by the clients they serve. Additionally, platforms will not be allowed to collect personal data that is not related to the workplace.

The provisions on algorithm transparency will apply to all kinds of gig workers, both the self-employed and those who are re-classified as employees under the new method.

"Technological progress must be fair and inclusive," said Nicolas Schmit, European Commissioner for jobs and social rights.

The European Trade Union Confederation (ETUC) welcomed the proposal, saying it will close existing loopholes and help end fake self-employment.

But BusinessEurope, an industry lobby group that represents all-sized companies, was highly critical of the Commission's draft, calling it a "political statement" that ignores the "diversity of platform work" and will have a "chilling effect" on job opportunities.

What happens next?

The legislation has to be negotiated and amended by member states and the European Parliament. MEPs have already signalled their desire for improving the sector's working conditions.

Once the text is adopted, member states will have up to two years to transpose the directive into domestic law. Unlike regulations, which are uniformly enforceable, EU directives give member states more flexibility to adapt their national laws in order to meet a set of basic goals and conditions.