Is the EU taking action against bogus self-employment on digital platforms?

The EU states could today introduce the world’s first law against bogus self-employment on digital platforms. According to the EU, around five million people could actually be employees.

Since the pandemic at the latest, everyone has known them: Lieferando, Wolt, Getir and Co. Regardless of whether you want to quickly order food from the Asian restaurant around the corner or have your groceries delivered to your front door: digital platforms are very popular in our everyday lives.

This is also reflected in the number of employees. According to EU figures, two years ago there were around 28 million people across Europe working as food couriers, drivers, cleaners or click workers on the major digital platforms. By 2025, the number could rise to more than 40 million in the EU.

However, only very few of these platform workers have an employment contract. Almost all of them work as self-employed people for the corporations. However, according to the EU Commission, more than five million of these workers are actually employees. This would give them a legal right to the local minimum wage, continued payment of wages in the event of illness, paid vacation or maternity leave.

EU wants Fake self-employment fight

But because employees usually do not have a physical boss, but receive orders from algorithms, it is currently often associated with high hurdles for individual workers to enforce their correct status. The EU Commission wants to change exactly that in the future with its platform work directive. It would be the first such law in the world. Today the decisive vote on this is taking place in the Council among the representatives of the member states. The hurdle is high: Not only is a majority required for the law, the countries supporting the reform must represent at least 65 percent of the EU population. It remains to be seen whether this mark can be achieved.

The law on platform work provides for simplified procedures for reclassification. The countries should introduce these. The central new point of the planned EU law, however, is the reversal of the burden of proof. Once certain presumptive criteria have been met that suggest employment, it will be the task of the platforms in the future to prove that their workers are self-employed. For this purpose, the law provides for rules on algorithmic management. For example, a person has to control it when a platform worker is blocked from a service. In the future, this will no longer be done automatically using algorithms.

Difficult fight in court – often with success

A look at Germany shows that it is currently not that easy to get your rights as a platform worker. In Germany, a platform worker was declared an employee before the Federal Labor Court for the first time in 2020. Labor lawyer Rüdiger Helm, who represented the man, said opposite tagesschau.de: “The hurdle was extremely high. This was only possible because the man documented everything about his work meticulously.” Normally this is very difficult, especially because many people lack access to data about their own work performance. For example, when platforms deactivate users after they leave and they can no longer view their previous orders.

Nevertheless, there have been various successful procedures in various EU countries in recent years. In the justification for the law, the commission even argues that these successful processes show “ongoing misclassification” by the platforms. The platforms have changed their business models in response to these rulings in such a way that there is even greater uncertainty about legal employment status.

Companies try to establish intermediate statuses

Oğuz Alyanak also observes this. The scientist at the University of Oxford has been researching working conditions on digital platforms for years, including for the Fair Work Project. “There are attempts to establish a new intermediate status that is located between self-employment and employment,” he said tagesschau.de. In Germany, contrary to the general EU trend, there are quite a few employees on the platforms.

Relying on self-employed people or an intermediate route can make economic sense for the platforms. Because if you don’t tie yourself tightly to workers – and if you do, you only pay minimum wages etc. voluntarily – you can save. But this intermediate group is problematic, criticizes Alyanak. “You’re either employed or you’re self-employed.” He sees the danger that current working standards will be undermined. The researcher therefore welcomes the EU project, even if he would have liked a little more ambition in terms of scope.

Platforms: Workers want to be self-employed

The digital platforms, on the other hand, vehemently defend themselves against the move – and say that a reform is not in the interests of the workers. “The drivers want to remain independent, run their own company and be able to work across platforms,” said the lobby association Move EU in a press release. The association represents, among others, the driving service providers Uber, Bolt and Freenow and refers to various studies. The platform workers particularly emphasize the advantages of flexibility and would even prefer this to a wage increase of at least 15 percent. However, some of the studies were commissioned by the companies themselves.

However, scientist Alyanak’s perception of the Fair Work Project is completely different. He said tagesschau.de: “When we survey platform workers, they would like continued payment of wages in the event of illness or minimum wages.”

It remains to be seen whether the law will come

At the same time, labor lawyer Helm warns against excessive expectations of the new law. “We also have a reversal of the burden of proof when it comes to equal pay and the General Equal Treatment Act. But so far this hasn’t had much effect.” It depends on how exactly the law is formulated and implemented at EU level, says Helm. What is particularly important is access for employees and their legal representatives to their data.

Whether the initiative will actually become a reality will be decided this afternoon. And the vote could be close. Germany, as the most populous country in the EU, will probably abstain from the vote today – even if the project was actually an important concern of SPD Labor Minister Hubertus Heil. An abstention is equivalent to a no at EU level. According to diplomatic sources, France, as the second largest country, is also undecided whether it wants to support the law. The country has always shown itself to be very open to an intermediate path between self-employment and employment. Without the two countries, a majority for the law will be almost impossible.