GT News

Taxes, accounting, law and more. All the key news for your business.

Veronika Odrobinová | July 25, 2023

Performing work through platforms: The EU Council is ready to negotiate

Share article:

On 12 June 2023, the Council of the EU issued a press statement on its readiness to enter into negotiations with the European Parliament on the Proposal for a Directive on the improvement of working conditions in platform work (“the Proposal”). The European Commission (“the Commission”) presented an initial version of the Proposal already on 9 December 2021. It took more than a year and a half to find a politically acceptable compromise, but now this legislative project is receiving quite specific outline.

Who is affected by the proposal?

The aim of the Proposal is to harmonise and clarify the legal status of individuals engaged in gainful activity in the EU through digital work platforms. This is often the case, for example, with couriers, taxi drivers, or service providers in someone else’s home. From the formal perspective, today they are mostly self-employed; however, practice shows that their cooperation with the platform often has the characteristics of an employment relationship.

According to the Proposal, a digital work platform is individual or legal entity, whether or not established in the EU, providing a service that:

  • is at least partly provided remotely by electronic means;
  • is provided at the request of the recipient of the service;
  • includes as a necessary and essential component the organisation of work performed by persons for remuneration; and
  • uses automated monitoring or decision-making systems.

Presumption of an employment relationship

The proposal works with seven indications of the existence of an employment relationship. If the relationship between the operator of the platform and the person, who performs work through it, exhibits – either “on paper” or in practice – at least three of these seven characteristics, a rebuttable presumption of the existence of an employment relationship will arise.  These are the following characteristics:

  • an upper limit of the amount of remuneration set by the digital work platform;
  • requirements of the digital work platform regarding appearance, behaviour towards the service recipient or work performance;
  • supervision of the digital work platform over the performance of work by electronic or other means;
  • limited option to choose working hours or periods of absence;
  • limited option to accept or reject assignments;
  • limited option to use a subcontractor or substitute;
  • limited option to build a client base or perform work for any third party.

The proposal obliges Member States to allow the digital work platform, as well as the person performing work through a platform, to rebut this presumption.  

The presumption shall apply in all administrative or judicial proceedings to determine the employment status of a person performing work through a platform. However, the proposal does not introduce an obligation to introduce this presumption for tax, criminal or social security proceedings.

In view of the principle of non-retroactivity, the presumption will apply only to contractual relations entered into or continuing after the expiry of the transposition period.

Automated monitoring or decision-making systems

The proposal comes with a set of new rules for the use of automated monitoring or decision-making systems (“automated systems”) to control persons performing work through the platform (whether within or outside the employment relationship). In particular, the proposal prohibits the use of automated systems for the processing of certain particularly sensitive personal data and private conversations. The platform is also obliged to transparently inform persons performing work through the platform about the automated systems used and to ensure both monitoring and human review of certain decisions of the automated systems.

Significant decisions of the automated system that will need to be reviewed by a trained person include, for example, decisions about the remuneration of a person performing work through the platform, the suspension or termination of their account, and other decisions that may materially affect a person’s ability to perform work through the platform.

The Significance of the Proposal

The proposal represents a major step in the fight against the “Švarc system” (employment relation disguised by another contract) in the sharing economy. While this compromise solution does not automatically put persons performing work through the platform on an equal footing with employees, it does provide them with a number of procedural and substantive guarantees of appropriate working conditions.

However, it is not only the positive content of the Proposal that has interesting implications, but also what has been left out for political reasons: the resignation of the EU institutions on harmonising the scope of the tax and social impacts of the proposed Directive may have a major impact on the business strategy of platforms in individual Member States.

Author: Veronika Odrobinová, Tatiana Podstolná