The EU is currently discussing the working conditions of the millions of employees working in what is referred to as the gig economy or the platform economy.
The gig or platform economy refers to a wide range of workers as under its umbrella one may include freelancers, consultants, professionals, as well as temporary contract workers doing jobs requiring a low level of skills.
The reference to the terms ‘gig’ and ‘platform’ is because the connection between organisations and these independent workers is through the internet.
One may say that there is nothing new in all this as consultants and freelancers and subcontractors and temps have been around for a long time.
What has changed is the way they and the organisations which have contracted them communicate with each other.
The point is that technology has made it easier for persons to start offering services over the internet, using one platform or another. For example, it has become much easier to set up, for example, a call centre in Asia to service European or American customers, or for a software developer in Eastern Europe to be providing a service to a company in Western Europe from the comfort of one’s home.
Moreover, demand for such services has also increased because of the pandemic and other factors. Without the effects of the pandemic, I doubt if the demand for riders and delivery services would have increased the way it did.
Since the relationship between organisations and such workers was not an employer-employee relationship, all too often the workers did not enjoy any rights. It may be argued that not all platform workers have been abused and, in any case, consumers have benefitted from lower prices.
We had been through something similar in the case of businesses that subcontract certain work (the most obvious examples in our country were security services and cleaning services) and the employees doing the work had little rights as very often they were paid less than what the contracting organisation would pay an employee for doing the same work and they were on temporary contracts.
We regulated these situations in Malta and employees of subcontractors started enjoying working conditions similar to the employees of the contracting organisations.
The European Commission has now published draft legislation aimed at ensuring that gig economy workers get the minimum wage, access to sick pay, holidays and other employment rights. Until now, gig economy workers have had to go to court to prove that they are employees or risk being denied basic rights. From now on, it is the employer that has to prove that there is no employer-employee relationship.
The legislation also clarifies certain situations which lead to an employer-employee situation. For example, if a delivery worker is not allowed to work for someone else and must provide one’s service exclusively to one company, then that should be considered as an employer-employee relationship.
Another important part of the legislation concerns the use of algorithms by employers operating in the gig economy. In certain situations, algorithms are used to measure the productivity of employees, and the algorithm would decide whether an employee should be fired or not, with no involvement from the HR function of an organisation. With the new legislation, workers will gain certain rights over these algorithms.
Data published by the EU demonstrates the size of the gig economy and the nature of the issue of employee rights. This data shows that around 5.5 million workers are classified as self-employed, when in fact they are to be considered as employees with benefits and protection. It is estimated that there are currently 28 million workers who earn their livelihood from the gig economy. That could rise to 45 million in five years’ time.
A number of member states are now introducing legislation to safeguard the rights of workers operating in this segment of the economy. However, the European Commission believes that no country has addressed the issue fully.
How businesses will react to the EU legislation will need to be seen. Some may even cease operations. Others will adapt to the legislative environment. In any case, these workers should enjoy the same rights enjoyed by those working in other segments of the economy. The internet platform does not change this fundamental principle.