Directive on working in platform economy on the horizon

The European Commission has published the draft of a Directive (the ‘draft’) aimed at improving working conditions for those in the so-called ‘digital-labour platform’ (or ‘gig’) economy. 

This reflects the exponential growth in platform or ‘gig’ type work in recent years across various sectors and the growing clamour seeking enhanced legal protections for workers in the industry. It also follows the recent decision of the Court of Appeal in Karshan v Revenue Commissioners in which the court observed that while the written contractual terms are not decisive of employment status, they are of crucial importance and should be respected inasmuch as there is no specific evidence that they do not represent the reality of the bargain struck between the parties.

Most obligations under the draft are limited in application to ‘digital-labour platforms’, defined to include only those organisations which, at a distance and through electronic means, match individual demand for work with an available supply of workers. As such, most employers will fall outside the ambit of the draft, as it relates only to those organisations which match individual client requests to available workers at a distance and via electronic means, such as those in the food delivery sector.

The proposal has the following specific objectives, which we will consider in turn: 

  1. to ensure that platform workers have their employment status properly classified;
  2. to ensure fairness, transparency and accountability in algorithmic management of platform workers;
  3. to enhance transparency in platform work; and 
  4. to enhance and improve enforcement of applicable rules. 

Employment status

The draft requires Member States to ensure the correct determination of platform workers’ employment status according to national definitions.

The draft covers everyone in the EU who has or may be deemed to have an employment relationship with a digital labour platform. Crucially, it includes a presumption of employment when a platform exercises control over work in at least two of the following respects:

  1. the determination of remuneration levels/limits;
  2. the setting of rules relating to workplace conduct, appearance, etc.;
  3. the supervision of work performance including by electronic means; and/or
  4. mutuality of obligation and restrictions on workers’ ability to substitute for/delegate to others.

This presumption can be rebutted, with the burden of proof on the digital labour platform and the focus on the substance and performance of work as done in reality without regard to the written or verbal designation by the parties in any contract. This can be contrasted with the comments in the Karshan case.  

In order to enhance the awareness of their rights among platform workers, the draft also requires information about the rebuttable presumption to be made publicly available to them, as well as requiring national authorities to develop guidance in this respect.

Algorithmic management

The GDPR establishes a clear framework for data processing, and in article 22 provides limited protection against automated decision-making. However, it permits more specific rules to be adopted in the employment context and the draft does so for algorithmic management in platform work. By ‘algorithmic management’, we mean digital platforms use of automated systems to, for instance, assign tasks, monitor performance, and to take other decisions in respect of platform workers.

The draft requires platforms to provide workers, from their first working day, with concise, intelligible and transparent information about automated monitoring systems, as well as explanations from a dedicated contact person for decisions taken by or supported by automated systems which ‘significantly affect’ working conditions. It also mandates human monitoring of such systems’ impact on working conditions, as well as human review and a written statement of reasons for significant decisions, such as decisions to suspend a worker’s account or refuse remuneration for work performed.

Importantly, the above protections surrounding data processing in algorithmic management apply to all platform workers, including those without an employment relationship, such as the self-employed or otherwise. Although a welcome extension of protections, the draft’s failure to capture workers in more traditional workplaces has been criticised, with the pandemic catalysing a shift to remote working and use of algorithmic management tools beyond platform work.

The draft could significantly affect collective consultation in the platform economy inasmuch as it provides key information about automated systems to workers. Workers must currently rely on individualised data protection rights to challenge decisions based on algorithms, and indeed platforms have in some jurisdictions have recently sought to characterise such data subject access requests as a coordinated abuse of rights by union officials. The draft was also accompanied by draft guidelines on collective bargaining rights for self-employed workers.

Transparency in Platform Work

Digital labour platforms will be required to publish and regularly update information about the number of workers, their employment status and their terms and conditions, on which public authorities and workers’ representatives will have a right to request further information. Public bodies will also be endowed with new powers to order platforms to disclose evidence. Digital labour platforms are required to create opportunities on their own digital infrastructure or other effective means for platform workers to communicate with one another and their representatives.


Enforcement of the Directive shall be within the remit of both relevant public authorities on a supervisory basis, and the courts. The draft includes protections against penalisation, dismissal or other adverse treatment by digital platforms in retaliation for any claim under the Directive, The transparency obligations noted above will support Member States’ obligations to ensure efficient redress, including by way of representative legal actions taken by those with ‘a legitimate interest in defending the rights of persons performing platform work.

Concluding Remarks

The draft may well render the clarity brought about by the decision in Karshan short-lived, as platform employers face a new wave of regulation. The proposed directive is in its embryonic stages and it can be expected that it will be some time before the draft is finalised, with national laws required to transpose its terms. Nevertheless, the current draft is a targeted and decisive effort to regulate algorithmic management of workers in the platform economy and to curtail the alleged avoidance measures of some within the industry. It can be expected that the draft will be the subject of some further amendment, and in any event, will permit individual Member States to adopt more expansive rules at a national level if they so decide. 

Also contributed by David McCauley and Juliana Gleeson

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.