EU battle over gig economy worker rights to intensify

The battle over worker rights in the gig economy in Europe is about to intensify.

Legislators in Brussels have been engaged in discussions for years to work out what rights are required and what it means to be an employee, not a freelancer. But member states finally agreed earlier this month their negotiating position on what regulations should be introduced to protect gig economy workers. This marks just the start of a battle among parliamentarians, countries and the European Commission on this issue.

Lobbying hard to shape the rules, which are likely to come into force at the start of next year, are companies such as Uber and Deliveroo which argue they could have a huge impact on the gig economy and their business models. They believe workers actually want more freedom instead of more rights.

Still, EU regulators are moving a step closer to boosting economic conditions for gig workers in the bloc. Most platform workers today are presumed to be self-employed, which means they don’t have access to labour rights, such as sickness pay and minimum wages. But the EU’s proposals are seeking to correct that by reclassifying what constitutes a worker.

Member states want workers to be legally presumed to be employees of a platform if they meet three of seven criteria, including restrictions on their ability to turn down work. Still, seven nations, including Spain and the Netherlands, said the proposals lacked ambition, signalling division among countries. The European parliament’s negotiating position is more radical than that of the member states or the commission because it assumes that everyone working through a digital platform is a worker, which could lead to many millions of people being classified as such.

What constitutes a worker (rather than the self-employed) matters greatly to the industry. The extra cost for companies if they were to retain full-time workers in their books is high. The likes of Bolt and Uber will have to fork out extra cash to pay for benefits such as social security, parental leave, health insurance and pension contributions.

The industry also keeps arguing that more rigid rules will mean less flexibility for workers who might want to work less for digital platforms. In turn, that will mean less quality service for customers (think fewer drivers or delivery employees) and it will have a knock-on effect on the revenues of this business.

MoveEU, a lobby group of which Bolt and Uber are members, argues that ride-hailing platforms would cut their fleet sizes in response by 58 per cent, implying a reduction of employment of 149,000 workers in the bloc. MoveEU also expects a rise in fixed costs, which would lead to a hike in ride prices, reducing demand and employment further. It even predicts some platforms would cease trading in the EU altogether if there is a reclassification of workers, leading to even fewer jobs available.

But not all employers of gig economy workers in the EU feel similarly. Sacha Michaud, the founder of Barcelona-based delivery start-up Glovo, says the gig economy is “all about flexible working” and that even without EU-wide regulation, his company launched the so-called couriers’ pledge, which gives couriers basic social benefits. His firm suffered a blow in 2020 when Spain’s supreme court ruled riders at Glovo were employees, not freelancers. Michaud called on the EU to get the regulation right. He said: “The EU has a responsibility to regulate. We believe in the free economy but also in the importance of social benefits.”

Senior EU officials have pushed back against the sector’s lobbying. “Some very successful platforms are already employing their workers, showing that it is possible and profitable, so I am sceptical that the proposed directive would lead to an unmanageable increase in costs,” says Nicolas Schmit, EU commissioner for jobs and social rights. “Businesses that are not based online have to pay social security and abide by labour rules, so it’s just a question of levelling the playing field and making sure people get the rights they are eligible for.”

Dennis Radtke, a German MEP with Europe’s largest political group EPP, says that a reversal of the “burden of proof” where gig workers are by default employees and not self-employed is bound to take a toll on companies. “This is why the lobbyists are pushing very hard to keep the status quo on their business models,” he says.

But Radtke says the negative impact on the sector was overblown: “Some people say I am fighting against self-employment. That’s not true. I am fighting business models that deny workers minimum wages and social security. It’s also not true that these rules will have a major impact on the whole economy.”

javier.espinoza@ft.com

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