The Gig Economy and Crowdworking as Challenges for Legislation Governing Employment and Social Benefits in Europe?
Dr. Thomas Bezani, GÖRG
They drive people where they want to go, deliver food, write and edit copy, test software, clean apartments and maintain databases, and they collect their pay by clicking a mouse. The ‘crowdworkers’ that drive the ‘gig economy’ offer their services through Internet platforms, from home or while underway, and don’t seem to have anything in common with traditional employees who have fixed office locations and fixed working hours, in any case not at first glance.
This relatively new way of marketing services and bringing together the people who want them and the people to perform them – usually through an online platform – now covers a significant number of extremely disparate sectors of the service economy and there seems to be no end in sight. Apart from their relevance at the level of everyday practice, these new employment models have become the subject of one of the most vigorous debates in the areas of labor law and labor policy at both the domestic and international levels, especially as regards their impact at the level of social protections and benefits.
The following legal update summarises the main problems and challenges in different European jursidictions regarding the „gig economy“.
The UK perspective
There has been a spotlight on the employment status of workers in the last year and in the UK there appears to be a growing trend to find that individuals operating in the gig economy and purportedly engaged on a self-employed basis are in fact workers for the purposes of employment rights.
Views from other jurisdictions
The Gig Economy: Perspectives from Denmark
In Denmark, the biggest challenges faced by companies operating in the gig economy to date have been in relation to tax and licensing. In fact Uber found these challenges too difficult to overcome and has now withdrawn from the Danish market.
Gorrissen Federspiel consider the latest developments on the gig economy in Denmark
Uber recently sought to establish itself on the Danish market, but has now withdrawn from Denmark. The biggest issues faced by the technological platforms, such as the one Uber operates, have been in relation to tax and a lack of authorisations. For example, Denmark operates strict licensing rules for taxi drivers, and as Uber drivers did not have the necessary taxi licenses, they could not legally offer their services in Denmark. This has led to several Uber drivers being fined, most recently in January 2018.
These strict licensing rules in Denmark mean that the employment issues associated with the gig economy have, so far, only been explored superficially. It is, therefore, difficult to say whether or not the Danish courts would exclude the existence of an employment relationship in these cases. This will be determined on a case by case basis.
However, agreements like the one between Uber and the driver are arguably similar to that of an independent contractor. For example, the driver is working at his own cost and risk, driving his own car, can work for several “employers” at the same time, decides when he wants to work, and is not part of a work schedule. On the other hand, the driver cannot make individual agreements with the passengers, and cannot drive the passenger on terms other than those set by Uber, which might indicate that the driver is driving under the instructions of Uber. That said, similar detailed conditions and restrictions are applied to the franchisee within certain areas of franchising and, in general, this would not imply an employment relationship. The rather vulnerable position of the Uber driver might, however, mean that Danish courts would seek to provide these drivers the status as employees.
If the Danish courts should decide in general that technical platforms are not employers, this may have considerable implications for the rights of those working via those platforms. That’s because mandatory Danish employment legislation is created to protect the employees in relation to matters regarding holiday, sick leave, maternity leave, working hours etc. and do not cover an independent contractor.
Who to contact
M +45 24 28 69 09
T +45 86 20 74 04
E jas [at] gorrissenfederspiel.com
The Gig Economy: Perspectives from France
In France, drivers using contact platforms such as Uber are not treated as employees yet. However, their status is subject to controversy. There are currently numerous cases before the French Labor Courts which should be tried in the following months.
August Debouzy shares the latest updates on the gig economy in France
In France, drivers using contact platforms such as Uber are not considered as employees yet. However, their status is subject to controversy. There are currently numerous cases before the French Labor Courts which should be tried in the following months.
French Courts often have to decide whether a taxi driver, or an Uber driver, working for a private company is an employee. To make this decision, the judge has to analyse the actual conditions in which the driver is working and whether or not there is a subordinate relationship between the driver and the company.
In 2017, for example, the Paris Court of Appeals considered that a driver was not in a subordinate relationship with the company for which he was working, as the driver did not provide any evidence showing that the company had control over his working hours or that the company had the power to sanction him.
There should soon be case law for Uber drivers which could significantly shape the French case law. It is possible that an analysis of the gig economy will herald an evolution in how French employment law views the employment relationship and the definition of the employment contract – the requirement for a subordinate relationship may no longer be the essence of an employment contract.
Who to contact
T +33 1 45 61 83 16
E pdurand [at] august-debouzy.com
The Gig Economy: Perspectives from the Netherlands
Dutch Parliament has expressed concerns about platform companies like Deliveroo, in particular in relation to the duty of care to workers and whether this form of work undermines the Dutch social security system.
The Gig Economy: Perspectives from the Netherlands
The biggest players in the gig economy are appreciated because of they offer flexible and accessible employment, result in a better distribution of resources and offer lower costs for consumers. However, the resistance against the alleged bogus self-employment of delivery workers is growing. In January 2018 several Deliveroo couriers, supported by the trade union, went on strike after Deliveroo announced that they would become freelancers; the couriers claim they are actually employees. Dutch Parliament has also expressed concerns about platform companies like Deliveroo, in particular in relation to the duty of care they owe to workers and whether this form of work undermines the Dutch social security system.
The Dutch Court has not given its verdict on this topic yet. However, a Deliveroo courier has recently expressed in the media that he is preparing legal proceedings with the Dutch Court, being backed by the Labour Party.
In the Netherlands the following criteria must be met to have an employment agreement between two parties:
1. there is a relationship of authority whereby the employer can give instructions to the employee;
2. the employee is obliged to personally carry out the employment agreed upon during a given period; and
3. the employee receives a remuneration.
The intention of the parties as laid down in the agreement is an important factor, but not decisive. More important is the actual execution in practice of the agreement. This requires a strong fact sensitive approach.
Because of the complex structure of companies like Uber and Deliveroo, where there are three parties involved (namely the platform, the worker and the consumer) it is difficult to apply the Dutch legal framework of an employment agreement. On the one hand the workers need to follow the instructions of the platforms, must carry out the employment personally, get paid by the platform, have no access to the contact details of consumers and the platform can impose sanctions in case of bad performance. On the other hand workers are free to determine if and when they want to work, do not need permission for holidays, do not get paid in case of illness and it is the consumer who rates the performance of the worker.
In the Netherlands a person qualifies as either an employee or as a freelancer. There is no statutory intermediate category, which is the case in the UK where a person can have the ‘worker’ status. Even though under Dutch law there is no statutory intermediate category, it does provide some protection to freelancers in line with employee protection, for example working hours and a safe and healthy workplace.
The question remains whether the Dutch legal framework is sufficiently adequate to categorise platform workers in the gig economy. In that respect we are looking forward to a Court judgment, if the Deliveroo courier continues his announced legal proceedings.
Who to contact
Kennedy Van der Laan
T +31 20 550 6832
E Soo-ja.Schijf [at] kvdl.com
The Gig Economy: Perspectives from Belgium
In its report of 2017, the Belgian High Council for Employment came to the conclusion that creating an alternative, third category of employment status for workers in the gig economy is not the most suitable solution to address the vulnerable position of those workers.
Liedekerke Wolters Waelbroeck Kirkpatrick shares the latest developments on the gig economy in Belgium
As in many other countries, the arrival of platforms like Uber and Deliveroo has raised questions about the relevance and sustainability of the current dual classification of workers into employees or self-employed workers, the latter having very few rights in respect of sick leave, unemployment, holidays, maternity, working time, pension, etc.
In 2015, the Social Security Administration investigated the status of the Uber drivers and came to the conclusion that, in principle, these drivers have to be regarded as self-employed workers, given their right to refuse work and to choose the when they work.
On 8 March 2018, however, the ruling commission of the Social Security Administration considered a Deliveroo courier to be a bogus self-employed worker. In February 2017, Deliveroo had obliged its couriers in Belgium to switch from being an employee to being self-employed, and started paying them per client order and no longer per hour. The President of this ruling commission is a judge to the Labour Court of Appeal in Brussels, so this might be an indication that more decisions of sham self-employment in the gig economy are to come yet.
In its report of 2017, the Belgian High Council for Employment, composed of labour market experts and the Minister of Work, came to the conclusion that creating an alternative, third category of employment status for workers in the gig economy is not the most suitable solution to address the vulnerable position of those workers.
On the basis of this report, the Federal Government has, for the time being, abandoned the idea of a third category of employment status and is now rather focussing on fine-tuning the two existing categories.
It also created a special benefit reserved for gig economy workers, in the form of a tax free amount of 5.000 € per year.
In our view, the increased impact of the gig economy will necessarily lead our legislator to narrow the aforementioned protection gap between employees and self-employed workers in the future
Who to contact
Liedekerke Wolters Waelbroeck Kirkpatrick
T +32 2 551.14.58
E p.geerebaert [at] liedekerke.com
The Gig Economy: Perspectives from Luxembourg
Uber does not currently operate on the Luxembourg market. However, there is no doubt that should courts be seized in Luxembourg, they would rule that Uber drivers are engaged in an employment relationship.
Bonn Steichen & Partners shares the latest updates on the gig economy in Luxembourg
Despite a very high penetration of Internet technologies with 97% of households having an internet connection, researchers have pointed out that only 13 Luxembourg residents out of 100 have already shared goods or services via platforms. This relatively low success of the sharing economy on the national market would be linked to several factors, such as regulatory limits related to the right of establishment or access to regulated professions.
In this context, no case has been referred up until now to the courts in Luxembourg in respect of the status of purportedly independent workers offering services on IT platforms.
It should be noted that Uber, which does not operate on the Luxembourg market, has been warned by the Government that they would have to comply with regulatory and social security requirements, should they want to operate in Luxembourg.
In addition, the ECJ has ruled on 20 December 2017 that the service provided by Uber connecting individuals with non-professional drivers is covered by services in the field of transport and that Member States can therefore regulate the conditions under which such services are to be provided in their respective country. The services offered by Uber must therefore be excluded from the scope of the freedom to provide services in general and Uber must comply with regulatory requirements applicable to the provision of transportation services in each Member state where they want to operate.
In determining the employment status of Uber drivers in Luxembourg, the following factors would be relevant:
Uber is not merely an information services provider but provides transportation services; andThe drivers do not operate as seperate businesses.
There is no room for doubt in this context that, should courts in Luxembourg be asked to rule on the employment status of Uber drivers, they would rule that Uber drivers are engaged in an employment relationship.
Technology is, however, evolving and the next step for Uber may be the use of autonomous vehicles, thus avoiding the pitfall of the characterisation of the employment relationship.
Who to contact
Bonn Steichen & Partners
E amorel [at] bsp.lu
The Gig Economy: Perspectives from Italy
Italian Courts have not yet been required to determine the employment status of individuals working within the gig economy, with the key obstacle to gig economy companies such as Uber so far coming in the form of regulatory challenges. However, bikers working for food delivery service Foodora have recently commenced proceedings in the Court of Turin, which may result in the determination of their employment status.
Gianni, Origoni, Grippo, Cappelli & Partners shares the latest updates on the gig economy in Italy
At present, Italian Courts have not been required to determine the employment status of individuals working within the gig economy.
Uber has, however, faced regulatory challenges to its Italian operations. Its UberPop service (which relied on non-professional workers without administrative authorisation) was banned for failure to comply with Italian Transport Law. Its UberBlack service (which relies on professional drivers) continues to operate in Italy for now, but forthcoming amendments to Italian Transport Law which will draw a distinction between taxi drivers and other professional drivers may change this.
The first Italian employment law decision in relation to gig economy workers may come in a case concerning Foodora (a food delivery business similar to Deliveroo and JustEat). Foodora’s bikers have protested in order to achieve better treatment and the company responded by disconnecting these workers from the smartphone app, preventing them from working. The six bikers have since made a claim to the Court of Turin, concerning the unfair dismissal and the compensation received during the relationship.
In determining whether an individual is an employee, the key question under Italian labour law is whether the employee is obliged to work if required to do so by the employer. If not, there cannot be an employment relationship. Therefore, if a driver or biker is at liberty to adopt the working hours that suit them, free to refuse trips and does not have their working time controlled by the company, they are unlikely to be an employee.
In Italy, as well as employee or self-employed status, there is a sort of third genus of “workers” called co.co.co consultants (i.e. continuous and coordinated collaborators) who are self-employed subject, to some extent, to an organisational coordination on the part of the principal. In certain limited circumstances, it is possible to stipulate these collaboration contracts on a continuous basis with individuals performing freelancer roles. Such a solution provides for some benefits to the workers in terms of social security provisions, while establishing a long-term relationship with the company concerned. However, co.co.co status can only apply where the company acts as an intermediary between the workers and the clients, and not where the company is the principal of the workers and the service provider to the client. In considering the regulatory issues in relation to Uber (mentioned above), Italian Courts have already found that Uber is not a mere intermediary and the performances of drivers are for the exclusive benefit of Uber.
With regard to the use of new technologies in employment relationships, Italian Labor Law has recently been reformed through the introduction of the so-called ‘smart working’. This provides for a more flexible discipline of the employment relationship, allowing the employee to freely organise working time within the business day. However, the worker is still obliged to work every business day, if required by the employer, who may control the fulfilment of such obligation. It is therefore unlikely that Uber or Foodora’s business models would meet the requirements for ‘smart working’.
Who to contact
Gianni, Origoni, Grippo, Cappelli & Partners
T +39 06 478751
E MFusillo [at] gop.it
The Gig Economy: Perspectives from Spain
The activities of individuals rendering services for the digital platforms, such as Uber, are under careful scrutiny by both the labor authorities and labor courts with many arguing for regulation of this sector.
Garrigues shares the latest updates on the gig economy in Spain
The main labor law issue posed by digital platforms, such as Uber, Blablacar, Deliveroo, Ubereats etc is whether the relationship between the digital platform and the supplier of the service should be treated as an employment relationship
The relationship between the platform and the supplier tends to be described as professional services or services on a self-employed basis. Labor inspectors and the judiciary continue to consider whether these relationships are an attempt to deflect employment law.
The key characteristics in determining whether a supplier is a self-employed worker are, among others: (i) freedom to determine the amount of work that the person wishes to accept, with no timetable commitments, and (ii) the use of their own equipment such as a computer or cellphone, bike, car. By contrast, the characteristics that bring them closer to employment law include: (i) the recommendations and instructions that they receive from the platform, in relation to the provision of the services, (ii) monitoring from the platform the service by the platform based on clients’ opinions (which shifts assessment of the service to the client), and (iii) the platform reserving the power to penalize the supplier if the rating or the provision of the service is deemed insufficient or deficient.
In this landscape, many people advocate the regulation of digital problem activities to define the rules of play, which would have to include competition, tax and labor rules. On the other hand, other people want a self-regulating market without any intervention by the state.
Irrespective of which of these options may be better from the standpoint of economic policy, careful attention will be required if regulation is ultimately considered, as it will have a material impact on companies playing in either the old or the new economy.
Who to contact
misi.borras [at] garrigues.com
( +34 93 253.37.00
- +34 93. 369.30 25
* Diagonal 654, 08034 Barcelona
The Gig Economy: Perspectives from Germany
In Germany, digital platform operators (who use the services of crowdworkers) must be careful, as under current legislation there is scope for inadvertently slipping into giving crowd workers a status similar to that of an employee. This could result in a crowd worker being entitled to (i) certain protections afforded by law, and (ii) social benefits.
Görg shares the latest updates on the gig economy in Germany
The present article is intended to provide an initial insight into this form of digitized work and show that crowdworking and the gig economy have long since become part of everyday reality for the vast majority of society, if not in terms of direct involvement, then at least indirectly. This introduction is then followed by a brief survey of opportunities and problem areas against the backdrop of legislation governing employment and social benefits.
Gig Economy, Sharing Economy, Crowdwork, Platform Work, Click Work, etc.
In the course of the past few years, what can be subsumed under the generic term ‘new work’ has given rise to a vibrant discussion at the scholarly and political levels that revolves around the implications of digitization and the concomitant transformation of the labor market. One important aspect of the ongoing discussion involves how to deal, not only today, but also in the future, with the various manifestations of platform-based marketing of labor, which are labeled by such terms as the ‘gig economy’, the ‘sharing economy’, ‘crowdwork’, ‘platform work’ or ‘click work’. Despite the different labels, these models all essentially consist of the following constituent elements, which also provide the basis for this article. In general, online platforms, the operators of which act as intermediaries or agents of a sort, are often used by companies or individuals to contract miscellaneous services out to ostensibly independent freelancers (crowdworkers), usually at very short notice.
These platform operators normally dictate certain standard conditions and retain a commission for their ‘referral services’. Crowdworkers are then as a rule free to accept or turn down offers and are regularly not bound to comply with orders or instructions from the platform operator. The performance of the services by crowdworkers is controlled indirectly, usually only in the form of feedback provided through the use of some type of rating or reputation system. The crowdworkers then generally receive payment for the work they perform directly from the clients, but also through the platform operator that refer the clients in some cases.
Manifestations and Relevance for Practitioners
Uber, Foodora, Deliveroo, Advocado, Careship, Test IO, jovoto, Testbirds, etc.
Although platform-based work takes many different forms, it is possible to make out two distinct categories on the basis of the nature of the customers or suppliers and the use of the services performed. One category includes platforms that market services and products that are used by companies and (re)integrated at various points along the value chain of the respective company, e.g., work preparation, production, quality control, etc. This category includes, for example, test portals such as Test IO, jovoto and Testbirds, which enable companies to have their apps, online shops, web sites, etc., tested by crowdworkers prior to a launch or update.
A second category consists of those platforms that typically enable crowdworkers to perform services for consumers. The range of services offered by crowdworkers in this category is extremely variegated, extending from the popular delivery services Foodora and Deliveroo to sites such as Careship, Helpling and Book a Tiger that refer nursing personnel and cleaning personnel or Advocado for legal advice and erstenachhilfe.de for tutoring services.
Another high-profile example from the second category is Uber, which was launched with an aggressive marketing strategy that created a sensation when it appeared and has been a source of considerable controversy throughout virtually the entire world ever since. In Germany, Uber has (up to now) been relatively unimportant since its core business, which it carries out through Uber Pop (transport by private drivers) and Uber Black (transport by licensed rental cars), has been consistently ruled illegal by the courts on the basis of laws governing competition and licensing arrangements. At the present time, Uber Taxi (taxi referrals) is the only Uber service now operating throughout Germany, which means that a crowdsourcing business model is not really involved here.
Labor Law Issues
Employee or Similar Status?
The key labor law issue inherent in the appearance of these platform models revolves around the question as to the nature of the status of crowdworkers as employees. The question that arises is whether crowdworkers are really (independent) contractors or whether they are in some cases perhaps employees or enjoy a similar status.
This is an extremely important question since the application of various pieces of legislation governing employee protections (e.g., Protection against Dismissal Act (Kündigungsschutzgesetz – KSchG), Working Hours Act (Arbeitszeitgesetz – ArbZG), Continuation of Remuneration Act (Entgeltfortzahlungsgesetz – EFZG), Maternity Protection Act (Mutterschutzgesetz – MuSchG), Federal Holidays Act, (Bundesurlaubsgesetz – BUrIG) and co-determination hinges upon the answer.
Given the current form of the most common platforms, crowdworkers are unlikely to qualify as employees within the meaning of legislation governing employment due to the absence of personal dependency – in particular as regards when, how and where they carry out their work – but the precise nature of the relationship between the platform operator and the crowdworker must still be carefully examined in each individual case. In any case, the slightest indication to the effect that a crowdworker may not be an independent contractor or is integrated into the operational organization of the platform operator or that of the ultimate client warrants closer examination. The question as to whether a crowdworker enjoys a status similar to that of employees in the individual case not by virtue of personal dependency, but by reason of economic dependency is equally important. This will regularly be a possibility whenever a crowdworker accepts work from different customers or clients through one and the same platform and earns a livelihood through such activity. This could, for example, be a ground for claiming paid vacation since the second sentence of § 1 of the Federal Holidays Act is also applicable to persons who enjoy a status similar to that of employees.
Issues under Co-Determination Law
Works Councils and Crowdwork(ers)?
Finally, the answer to the question as to the employment status of crowdworkers is also an important factor when it comes to determining whether or not they enjoy protection under co-determination law and can be represented by the works council of a platform operator if such a body exists, which will, however, regularly not be the case. In addition, a further aspect arises under co-determination law in the case of companies that would also like to rely both on the services of crowdworkers in the future as well as on their permanent employees. Such companies would be well advised to take into account the fact that the use of crowdwork may entail a change in operational organization pursuant to § 111 no. 4 of the Works Constitution Act (Betriebsverfassungsgesetz – BetrVG) or the introduction of “entirely new working methods” pursuant to § 111 no. 5 of the Works Constitution Act. In any case, whenever a company decides to contract work out to a crowdworker, either only once or sporadically, the possibility of application of legislation, in particular the above-mentioned provisions of law governing co-determination, should be carefully examined and the responsible works council representative contacted on a timely basis.
Issues Arising under Legislation Governing Social Benefits
Apart from the issue of employment status, the question as to the degree of dependency of crowdworkers within the meaning of § 7(1) of Social Code IV (Sozialgesetzbuch – SGB) is no less relevant for labor law practitioners because of the possible implications under legislation governing social benefits since a dependent working relationship would regularly trigger an obligation to contribute to the social security system.
Depending upon the legal relationship with crowdworkers, platform operators, and possibly their clients, as well are therefore exposed to the risk of having to remit social-security contributions for the latter as well as any late penalties accrued. In such cases, the liability of the putative employer would also include the employer’s share, and would apply retroactively and cover the past four years. Furthermore, the employer would face the possibility of criminal prosecution for failure to remit social-security contributions pursuant to § 266a of the Criminal Code (Strafgesetzbuch – StGB). In most cases, dependent employment will not be assumed since – in addition to assessment of the constellation under employment law – the requisite dependency of the crowdworkers would be lacking.
Crowdwork, or the gig economy as it were, is a new, innovative way of working that can prove advantageous to all parties involved – crowdworkers, platform operators and end-users. Especially for companies, this way of working represents enormous potential in terms of flexibility and as a result increased productivity. ‘Crowds’ give companies flexible access to a virtually inexhaustible source of personnel as a function of their needs and harness ‘crowd intelligence’. Working the crowd opens up a host of new possibilities and is already being hailed as the next revolution in the working world. In addition to corporate users, consumers also benefit from the use of crowds in the form of services that are usually more economical and can be accessed flexibly and without entailing any overhead costs.
Finally, crowdworkers also benefit from this flexibility since they can decide whether, how, when and in some cases ever where to work. On the other hand, it is also not possible to ignore the fact that crowdworkers are as a rule not likely to benefit from (the protection of) the provisions of either labor law or social benefits under current business models. In particular, the resultant concomitant lack of social benefits for crowdworkers has caused various participants in the current debate to urge that the government abandon the current ‘all-or-nothing’ system as regards social benefits and to some extent employee protections in favor of a more flexible approach.
Despite the fact that crowdworkers would obviously seem to fall into the category of independent contractors and self-employed workers, platform operators would be well advised to pay careful attention to the specific details and the legal aspects of their relationships with crowdworkers, in particular as regards legislation governing employment and social benefits. Not only platform operators, but also the companies that avail themselves of the services of crowdworkers must ‘pay attention’ and make sure they do not inadvertently slip into relationships of dependency by implementing supervisory structures or integrate workers into their companies’ operational structures.
In addition, they (or their legal advisors) should examine any plans they may have ‘to work the crowd’ to determine whether they could give their works council further co-determination rights under the Works Constitution Act and the extent to which it might be possible to come to a mutually acceptable agreement with the latter. Finally, companies must also be aware of the fact that any transfer of (personal) data to unrelated third parties will give rise to issues in connection with legislation governing data protection and that it is, for example, necessary to think about implementing an agreement concerning the processing of data by third-party providers.
It will be interesting to see how the legislature, the courts and those affected by the findings of the former will deal with the crowdwork phenomenon and changes in the area of employment in the future, all the more so since even ‘conventional’ employment is increasingly coming to resemble crowdwork models in many industries in the wake of digitization and the general trend towards greater flexibility.
In fact, models now common in the IT industry, for example, frequently no longer involve the use of permanent workstations; instead, employees may use ‘mobile work space’, but are not under any obligation to do so and can work on a project at home, in a café, restaurant or park or from any other location within the country or abroad. In fact, it is already common for employers to forego any formal requirements as regards location or working time; the results for the specific project are all that count.
Who to contact
Dr. Thomas Bezani
T +49 221 33660 544
E tbezani [at] goerg.de
T +49 221 33660 544
E praszawitz [at] goerg.de