Does the European Union finally want to regulate the digital platform market?

Growing trends in the development of digital platforms provide benefits to both companies and consumers. But they also facilitate the development of the gray zone in terms of employing workers through these platforms, including workers migrating for work from other continents. That is why the European Union wants to regulate this area of employment and work on improving employment conditions and the social rights of employees in this area has been going on for years.

However, it was only on December 13, 2023, that the European Parliament and the EU Council agreed on the content of the Platform Work Directive. From the moment of adoption of this directive, EU Member States will have 2 years to implement it into their national laws!

What is platform work according to the directive?

According to the draft directive, “platform work” should be understood as any work organized via a digital work platform, performed within the EU, by a natural person based on a contractual relationship between him or her with this platform.

However, a “digital work platform” is considered to be any entity providing commercial services that also:

are made available, at least partially, remotely by electronic means (websites or mobile applications);

are provided at the request of the service recipient;

include – as a necessary and important element – the organization of work performed by natural persons, regardless of whether this work is performed via the Internet or in a specific place.

As can be seen from the above definitions, under the new law, many employers may be recognized as a digital work platform and will be obliged to comply with the new regulations! All the more so because such platforms operate in various sectors of the economy – from services ordered almost every day (such as passenger transport services, delivery of goods or meals) to services that operate exclusively online (e.g. data coding, translation, design).

What will be the status of platform workers – full-time or self-employed?

Currently, most workers on these platforms are self-employed, but in practice, they have to fulfill duties similar to those of full-time employees, with the self-employed having worse access to entitlements such as the minimum wage, paid leave, working time protection, health care, sickness and unemployment benefits, easier access to protection against work-related accidents, the right to a pension. These people take legal action to have a given B2B contract recognized as an employment relationship, and the decision depends on the individual assessment of the court of a given country. However, the duration of these court proceedings effectively discourages many self-employed people from taking such actions.

The most controversial issue under this directive will therefore probably be the determination of the status of an employee of a digital employment platform, i.e. whether he is employed under an employment contract or, as a self-employed person, cooperates with the platform based on a B2B contract. In this respect, the directive is intended to introduce a legal presumption that these persons are employed full-time if at least 2 of the 5 criteria listed in the directive are met, namely:

imposed remuneration limits,

supervision (also electronic) over the performance of work,

control of the distribution or assignment of tasks,

control of working conditions and restriction of freedom to choose working hours,

restrictions on the freedom to organize one’s work and rules regarding the appearance or conduct of employees.

However, the directive allows both the platform and the employee to challenge this legal presumption in court or administrative proceedings, and the burden of proof is on the person who wants to prove that there is no employment relationship in a given case. The directive is intended to facilitate this process, especially for employees, as digital platforms will be obliged to provide appropriate information to persons who perform work through them, but these issues will only be clarified under the law of individual EU Member States.

What is the role of artificial intelligence in digital work platforms?

The directive will introduce, for the first time, EU regulations regarding the use of artificial intelligence (AI) to manage human resources in the workplace! This should no longer come as a surprise as we talk more and more about AI, which is starting to have more and more applications, and now digital platforms already use various functions of algorithms. However, the method of processing this data by AI may raise doubts due to the lack of transparency in the use of information obtained in this way for making decisions and processing personal data. These algorithms touch on such important issues as:

amount of remuneration for the service;

performance indicators that are not the work norm and are grounds for dismissal of an employee;

allocation of services to individual users.

Given these risks, the directive is moving towards introducing human factor control over AI decisions, which should be considered the right direction.

What might be the consequences of implementing the directive?

More employers may be recognized as digital work platforms – a larger group of entrepreneurs will be obliged to adapt to these requirements (change of business model, new information and consultation obligations, introduction of communication channels, as well as appropriate risk minimization measures and assessment of occupational health and safety threats, obligation to report employees to national authorities).

Presumption of an employment relationship – in practice, under Polish law, this may mean automatic recognition of all self-employed workers as working under an employment contract!

Increased employment costs and higher prices of services – the more widespread use of employment contracts will translate into the need for platforms to provide greater rights and protection to employees (including minimum wage, paid holiday leave, health care, retirement, and sickness benefits), which will probably translate into for higher prices of services and goods! This is always an obvious consequence of the need for employers to adapt to new legal requirements and the rising costs of running a business.

Interference with the principle of freedom of contract and equality before the law – this issue, in turn, may be assessed in terms of compliance with the Constitution of the Republic of Poland. It is not difficult to imagine this, especially considering the well-known fact that Poland is still struggling with the problem of the so-called junk contracts.

Polish legislative climate – almost whenever implementing EU directives into national legal acts, the Polish legislator also introduces other additional requirements or extends the scope of their application to other entities and areas, going significantly beyond the framework of EU requirements!

International digital work platforms and restrictions on activities – the detailed operating conditions of a given platform may vary depending on the country in which it provides services and employs employees! In practice, this may lead to the decision to terminate the operations of such platforms in some countries due to too great differences in the scope of obligations of the platforms in individual countries!

The Labor Platforms Directive, on the one hand, is intended to improve the working conditions of a large part of employees of EU countries, but on the other hand, it brings many new challenges for both employers and employees, but also for consumers themselves, who may feel its effects in the increase of ordered prices of services or goods, as well as situations when their favorite platform where they previously made purchases disappears from the market. This directive will mean the first serious interference in the freedom of economic activity, and the final shape of the EU and then national regulations will depend on the interests and economic conditions of various Member States. 

It is worth following the legislative process at the EU and national level. The Polish government will probably start working on adapting national regulations to this directive this year.

Written by Izabela Wilczkowska

https://www.consilium.europa.eu/pl/policies/platform-work-eu/

https://eur-lex.europa.eu/legal-content/PL/TXT/?uri=CELEX%3A52021PC0762