EU Platform Work Directive: deal reached on new rules to classify status of platform workers and automated decision-making

This week has seen the European Parliament and Council reach a "historic" provisional agreement on the Platform Work Directive. This seeks to give employment rights and new protections to people performing platform work within EU Member States. It also introduces "the first ever EU-rules on algorithmic management and the use of artificial intelligence in the workplace".

What is 'platform work'?

Platform work seems likely to be widely defined, and to include a wide range of workers selected or remunerated using automated systems.

This directive may therefore apply to many types of worker engaged through any intermediary that is using technology to make resourcing more efficient. This could include many types of traditional staffing company as well as some talent pool and staff bank arrangements.

Presumption of employment when 'two out of a list of five indicators' present

It is estimated by the EU that at least 5.5 million people performing platform work in the EU may be wrongly classified as self-employed, meaning that they miss out on "important labour and social protection rights".

The provisional agreement therefore seeks to establish a mechanism to ensure that those workers who have been wrongly classified are reclassified providing them with "easier access to their rights as employees under EU law".

Accordingly, under the provisional agreement, there will be a presumption of an employment relationship (as opposed to self-employment) when "two out of a list of five indicators of control or direction are present". While the "exact details" are still to be published, a press release from the European Council states that these indicators include:

• Upper limits on the amount of money workers can receive.
• Supervision of their performance, including by electronic means.
• Control over the distribution or allocation of tasks.
• Control over working conditions and restrictions on choosing working hours.
• Restrictions on their freedom to organise their work and rules on their appearance or conduct.

Control of pricing and of allocation of tasks may be the hardest indicators for some types of platform to avoid, and much thought will need to be done by them about the best commercial models going forward.

The provisional agreement provides that this list of indicators can be expanded upon by Member States, and some have already introduced their own rules (in advance of the directive) which may, in some cases, be stricter.

Affected companies should note that a presumption of employment based on these indicators can be triggered by action by the worker, their representatives and by the competent authorities in a Member State, on their own initiative. However, the presumption can be rebutted "if the platform proves that the contractual relationship is not an employment relationship".

The EU Parliament rapporteur, MEP Elisabetta Gualmini, has also indicated to the press that where one worker is reclassified, the local labour inspectorates will have a mandatory duty to check the contractual viability of all workers within that platform. Further details are awaited.

Provision of information on automated decision making

While the EU's General Data Protection Regulation provides data subjects with some rights to information on the logic of algorithms where automated decision-making is used, the provisional agreement is also stated to provide a specific obligation on affected companies to provide information to workers and their representatives on how algorithms, and how the behaviour of people performing platform work, affects decisions by automated systems.

Requirement for human oversight on 'certain important decisions'

The provisional agreement also prevents affected companies from taking "certain important decisions", such as remuneration, dismissals and decisions to suspend an account, without human oversight. It seeks to ensure more human oversight on the decisions of systems that directly affect the people performing platform work.

Platforms will also be obliged to assess the impact of decisions taken or supported by automated monitoring and decision-making systems on working conditions, health and safety, and fundamental rights.

Restrictions on processing personal data

The deal reached is also reported as preventing affected companies from processing certain kinds of personal data by means of automated monitoring or decision making systems, including:

• Personal data on the emotional or psychological state of platform workers.
• Data related to private conversations.
• Data to predict actual or potential trade union activity.
• Date used to infer a worker's racial or ethnic origin, migration status, political opinions, religious beliefs or health status.
• Biometric data other than data used for authentication.

Under the new rules these systems will need to be monitored by qualified staff who enjoy special protection from adverse treatment.

Persons working through intermediaries to enjoy the same level of protection

Affected companies will be prevented from circumventing the new rules by using intermediaries, that is, where a person has a direct contractual relationship with a party other than the relevant digital platform.

It will be for Member States, through their national laws, to make sure that people performing platform work working through intermediaries enjoy the same level of protection as those with a direct contractual relationship.

What does this mean for affected companies?

The next step is for the provisional agreement to be endorsed by the Council and Parliament and formally adopted.

Once the formal steps of adoption have been completed, Member States usually have two years to incorporate the provisions of the directive into their national legislation reflecting the minimum standards required.

Many countries already have laws reflecting some of the principles provided for in the provisional agreement, so for some it will partly be a levelling-up exercise within the EU.

It is not yet clear when formal adoption will take place, an initial debriefing for EU ambassadors is set to take place on 20 December, at which point further details of what has been agreed and a timescale may emerge.

In 2021, analysis by the European Commission found that there are more than 500 digital labour platforms active, with the sector engaging more than 28 million people – a figure expected to reach 43 million by 2025. As digital labour platforms are present in a variety of economic sectors, the significance of the directive when it comes into force should not be underestimated.

Rapporteur Elisabetta Gualmini has stated that "this is a revolutionary agreement and the first legislative framework for digital platform workers. We have transparency and accountability for algorithms, we have better rights for the least protected workers in the world and we have fair competition for platforms".

More traditional staffing companies (including US and UK staffing companies deploying contract workers in the EU) may also find themselves within scope given the increasing adoption and reliance on algorithmic decision-making in such organisations. It will be key for all staffing businesses to understand how a platform is defined in the agreed text, alongside any supporting guidance.

Further details and the final agreed text is still awaited. While it is now clear that the scope of the different indicators will be of relevance to platforms operating in a variety of ways across different sectors, platforms can take some comfort that the presumption of employment where the applicable indicators are demonstrated is open to rebuttal. However, this is unlikely to be a straightforward or quick process –during which the presumption will apply.

Osborne Clarke comment

While the UK is no longer a member of the European Union, all UK staffing businesses should be aware of and consider carefully these new rules from the EU.

And this will not just lead to employment costs. In many platform worker situations the biggest impact will be the increase in supply chain tax burden linked to workers moving to an employment relationship with the platform, triggering an obligation to charge end clients VAT and to apply employment tax and social security charges to sums paid to workers.

Not only will EU operations potentially be affected, but also the UK may see similar rules reflected in its own legislation. A general election is expected next year (or at the latest at the start of 2025) and this is an area where a new government may seek legislative convergence with the EU, particularly against the backdrop of a move towards giving platform workers more rights.