EU to Treat Gig Workers as Employees

Reforms could affect 43 million workers by 2025.

Glovo courier Milan Italy
Glovo courier makes a delivery in Milan, Italy at night, February 17, 2019 (Unsplash/Andrea Ferrario)

European labor ministers have agreed to bring millions of gig-economy workers into regulation.

Reforms, which still need to be approved by the European Parliament, would put the onus on platforms like Deliveroo and Uber to prove their workers are not employees.

Employees are eligible for minimum wage and sick pay, protected against summary dismissal and they qualify for pension and unemployment benefits.

What is the problem?

Ministers, who met in Luxembourg on Monday, argue some 28 million “platform workers” in the EU, who clean homes, deliver food and drive taxis, are “misclassified” as self-employed.

The European Commission doesn’t go that far. When it drafted rules to improve working conditions for freelancers in 2021, it estimated that 5.5 out of 28 million were not genuinely self-employed. Yet the new rules would apply to all platform workers.

In two years, when the reforms take effect, the European Commission believes there will be 43 million.

How the new would work

Workers would be considered employees if their platform meets three of seven criteria:

  1. Limits the hiring of subcontractors.
  2. Limits their discretion to choose working hours or time off.
  3. Limits their discretion to accept or refuse tasks.
  4. Requires the worker to respect certain rules with regard to appearance, conduct or performance.
  5. Restricts work for third parties.
  6. Sets upper limits on the level of remuneration.
  7. Supervises the performance of work, including by electronic means.

That would essentially reclassify all couriers and taxi drivers as employees — if national regulators agree. Ministers agreed to allow exemptions “if it is manifest that the concerned person is not a platform worker.”

Wait! There’s more

Platforms would also be required to reveal their algorithms, which assign clients, decide working times and evaluate performance.

Major decisions, like terminating a contract, could no longer be automated, but must be taken by a person.

Nobody is happy

Trade unions are disappointed that gig workers would need to meet three of seven criteria and are not considered employees by default.

But they are also worried that the reforms will “[take] away independence from genuinely self-employed workers who want to retain that status.” (Well, which is it?)

Delivery Platforms Europe, which represents Deliveroo, Glovo and four other companies, warns that 250,000 couriers may quit if the EU reclassifies them as employees. That seems unlikely. They cite a Danish survey of 16,000 gig workers in 24 countries. Most said they valued the flexibility of gig work, but platforms wouldn’t be required to give everyone 9-to-5 contracts.

The real risk to platforms is that they will have to pay hourly wages, overtime, sick pay and benefits, which will push up their costs — and few are even profitable.

Delivero lost almost €290 million in 2022, Glovo some €160 million. It was fined €80 million in Spain for… misclassifying employees as contractors.

Spain pushed, then abstained

Spain didn’t wait for the EU. It reclassified gig workers as employees in 2021. The Netherlands is about to do the same.

The two countries led the push for EU-wide reform, yet Spain abstained from the final vote on Monday, objecting to the potential opt-out for national regulators.

Germany also abstained. Its government was divided: the ruling Social Democrats and Greens favor regulation, the liberal Free Democrats don’t.

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