The Commission's rationale for the Directive is the huge growth in the digital platform economy, with a fivefold growth between 2016 and 2020. Such growth has led to the need for enhanced clarity around the status of those working through these platforms. It is estimated that nine out of ten platforms in the EU deem their workers as self-employed, with over five million workers incorrectly placed in this category. The new rules will mean that many millions of workers must be reclassified, bringing with it significant issues for businesses from an employment law and tax or social security perspective.
What does "platform work" mean?
A platform is a commercial service provided through a website or app involving the need for individuals to perform work. Platform work arises when an individual has a contractual relationship with the platform provider, whether or not they also have a relationship with the recipient of the services. So the Directive only applies to part of the overall contingent worker population. Those directly hired by an end user, and many agency workers, will not be covered.
What does the Directive say about status?
On employment status, member states must have in place appropriate procedures to ensure the correct determination of workers. These must be "guided primarily by the facts relating to the actual performance of work, taking into account the use of algorithms in the organisation of platform work, irrespective of how the relationship is classified in any contractual arrangement that may have been agreed between the parties".
Significantly, there will also be a rebuttable presumption of employment status where at least two of five factors are present. These factors are centred around how work is controlled through the platform.
They include:
- determining remuneration;
- imposing rules with regard to appearance and conduct towards the recipients of the service;
- supervising the performance of work or verifying its quality
- restricting the freedom to organise work, in particular regarding the choice around hours worked and the use of subcontractors or substitutes;
- restricting the ability to build a client base or perform work for a third party
The similarities between these rules and the key concepts that have been applied by the Irish courts in determining worker or employee status in Ireland is noteworthy.
It is also important to highlight that the wider employment or self-employment status debate has been topical in Ireland for a number of years with the most prominent ruling on the issue being handed down by the High Court in December 2019, in a case focused on the delivery drivers of Domino's Pizza. The High Court upheld an earlier judgement that the drivers were employees.
What new rights will reclassified workers gain?
Where workers are reclassified as employees, they will have access to a range of employment related rights including minimum wage, working time, annual leave, equal pay protection as well as protection from unfair dismissal etc.
What's next?
While the introduction of this directive is still a significant way off, it is likely that the noise generated will result in a continued focus on this issue from the Irish authorities.
Following on from the 2019 Dominos case and the high-profile 2021 UK Supreme Court ruling involving Uber, we have already seen the introduction of a private member's bill "The Protection of Employment (Platform Workers and Bogus Self-Employment) Bill 2021" within the Oireachtais. Whilst this bill has to date not progressed beyond the Seanad Second Stage, the express purpose of the Bill is to introduce legislation with the aim of providing much needed clarity in this area. A similar bill "Organisation of Working Time (Workers' Rights and Bogus Self-Employment) (Amendment) Bill 2021" was also introduced in the Dáil in October 2021 by Sinn Fein, with the stated aim of the bill being to tackle "bogus" self employment.
2021 also saw an update to the latest Code of Practice on Determining Employment Status by an interdepartmental working group comprising the Department of Social Protection, the Workplace Relations Commission, and the Revenue Commissioners. A clear reference is made to the intention for the Code to be a "living" document with regular updates to reflect relevant legislative changes and case law.
What can employers do?
Given the likelihood of significant changes to the employment landscape over the coming years, it is important that employers take steps to identify any contractors currently being engaged and document the substance of these arrangements. This will then assist with the tracking of any future legislative or case law developments in order to determine whether a reclassification of employment status may be needed.
