Thoughts on Labour Law and the “Gig Economy”
The wage-labour model, inherited from previous industrial revolutions and the social struggles of the 20th century, is undergoing profound changes as a result of the digital revolution.
The term 'gig economy' comes from the United States during the financial crisis, in which lots of workers became self-employed, like musicians playing from one 'gig' after another. The gig economy thus encompasses an economic reality in which multiple self-employed workers are paid by job and not by month with a single employer. It has been made possible through online platforms mediating between customers and the worker. The platform usually gets financed through an 'intermediary fee' at user's expense.
The atypical employment forms emerging from it are replacing the traditional working day and wage. Indeed, the gig economy is challenging many labour law concepts such as the classical terms 'employer' and 'employee'.
Many questions arise from a labour law perspective. Are the current regulations adapted to protect workers in these new labour markets?
This article will first focus on the disruptive aspect of the gig economy, after what it will elaborate how national legislators and the EU responded to the challenges raised. Finally, the paper will try to propose some solutions.
Legal Issues Raised By The Gig Economy
The trend is going toward the outsourcing of work through platforms and apps. As a result, the current legislations tend to lack of adaptability regarding the labour law issues raised by the gig economy. However, most platform do not officially employ their workers. The platforms argue that they solely connect users and service providers, not providing the service themselves. If this provides for more flexibility, it also means less legal protection and more economic risks.
Legal Characterization Of The Work Relationship - A central issue is the characterization of the legal relation binding the different actors (platform, worker, user). It remains possible to argue that platforms bear common features of employers.
The German example can help to understand. According to article 611a BGB, the employee is the person performing his/her work for another person in personal dependence and under instructions. Platforms explicitly classify their workers as independent contractors in their terms and conditions. Still, a case study in Berlin showed that platforms such as 'Deliveroo' have a strong authority over their workers. Uber can indirectly control working times by making the early and late shifts financially more attracting. It also can control the drivers' itineraries. In this case and according to German labour law, isn't it the case of an employee obeying the instructions of his/her employer? So in cases where the platforms have a strong authority over the workers, they find themselves in a legal grey area between 'mere' mediator and 'full' employer.
Following this argumentation, a London court ruled that Uber needs to enforce the rights of its drivers, since its terms of use strongly committed them. So drivers are therefore employees of Uber and are entitled to minimum wage and holiday pay.
In the US, a lawsuit underlined the fact that Uber and Lyft both have very strict codes of conducts for their drivers. If they do not comply, their account can be deactivated. US courts ruled that these platforms were companies, and drivers their employees. Furthermore, the court argued that the company's main source of income was through the offering of rides and not through mere mediation.
Many gig-platforms have tried to implement alternative measures to answer criticism, such as Lyft, which introduced a pension scheme for its workers and Airbnb, insuring landlords against 'third-party risks'.
But other issues still are to be tackled.
Working Time - The boundary between working and free time gets erased through the gig economy. Indeed, some workers must respond to a proposed task within 30 minutes after reception, otherwise they risk the deactivation of their profile. They also need to accept at least 85% of the tasks. This system tend to erase the limit between working and non-working time, since the worker always has to be ready to accept a task.
Social Insurance / Security - The fact that the gig-workers often are characterized as independent contractors means that the platform is liberated from its obligation to participate to social insurance. This means a great loss of contributions and taxes into the social system.
Wage Uncertainties And Notice Period - Some gig-workers are existentially dependent of their work with the platform. It does not prevent platforms to profit from considerable cuts of the pays (eg. Upwork: 20%, TaskRabbit: 15%).
Big platforms (eg. Uber, Deliveroo) do not let the workers decide their rate. They keep dragging down the wages. Gig-workers are not employees in most of the cases, so platforms can deactivate their account without any previous notice.
National Responses To The Labour Law Issues
The main question is to what extent current labour regulations can or should be applied to these new atypical work relations. Indeed, legislations were designed based on a traditionally bilateral, permanent employment relationship.
Most countries applied their existing regulations to the gig-economy. It can be efficient because there is a direct legal binding effect, which allows a precise case-by-case analysis by the courts. On the other hand, the resulting legal uncertainty can be unpredictable, due to fast business-tech mutations.
Others chose a midway approach, by making the characterization of a 'self-employed' stricter. For example, the US is on the way to introduce an intermediate 'independent worker' category.
Germany opted for self-regulation of the platforms through the signing of a code of conduct providing for compliance with national rules on minimum wages and setting prices on the platforms. This 'bottom-up' solution is not legally binding though, and limited in its scope.
As for the Benelux countries, they opted for a rebuttable presumption of employment.
In some cases, the stakeholders regulated themselves through collective agreements (eg. Denmark). This is the result of the involvement and agreement of both workers and platforms. But this is still a very sector specific solution.
Finally, France paved the way for innovation and applies a new specific legislation for gig-workers, regardless of their status. This regulation provides that workers benefit from an insurance for accidents at work (which is the responsibility of the platform). Also, they can constitute a trade union and take collective action in defense of their interests. This approach permits a targeted and legally binding regulation. On the other hand, it does not resolve the core issue of the employment status, and somehow just circumvents the main problem.
The Old Continent Keeping Its Head Hidden in the Sand
The EU shares competence with the Member States on several employment issues, so that it can play a role.
The Commission considers that the definition of 'worker' by the Court of Justice of the EU in the context of the free movement of workers can be extended to gig-workers. Also, the Commission argues for an extension of the workers' rights of information to gig-workers, regardless of their status. Furthermore, it aims to define core labour standards for all workers, particularly for the protection of atypical, hence for gig-workers.
The Commission also urged Member States to harmonize their legislations by providing similar social protection rights to all workers as stated in the Council Recommendation in Access to Social Protection of 2017.
So the EU is making a move to regulate the situation of gig-workers. By leaving it to the Member States to implement their own regulation, part of the problem is bypassed. Some voices get louder in favor of a harmonized European regulation, arguing that the EU is not playing the strong role it is meant to.
What next?
So there still remains a need for solutions to the main challenges raised by the gig economy.
As in Scandinavian countries, it might be interesting to cultivate workers' solidarity through cooperatives and unions. A co-ownership of digital labour platforms would be in favor of wealth and a more equal sharing among workers, while also compelling platforms to be accountable to their platform's users.
Another solution would be to adopt regulations incenting platforms to improve workers' experiences. Some platforms freely chose to hire their workers rather than contracting independent contracts with them (eg. MyClean, Hello Alfred). Employees feel grateful and stay on long-term, reducing recruitment costs. Also, it positively affects the image of the company.
Conclusion
The paper exposed legal issues raised by the gig-economy. The EU is not playing the role it aimed to, so national legislators are acting on their own. This can lead to legal uncertainties, due to the freedom of movement of workers in the European single market.
Some Member States, with France as a herald, have proposed the creation of a European minimum social system. This 'Social Europe', in addition to harmonizing the scattered national legislations, would also make it possible to tackle the problems linked to the gig economy. Indeed, the mutation of labour markets through digitalization is current and global, and only a common European response is capable of matching up to the challenges.
Additional literature:
Ashford, Susan, George ; Elizabeth ; Blatt, Ruth. "Old Assumptions, New Work: The Opportunities and Challenge of Research on Nonstandard Employment," The Academy of Management Annals 1(1), 65-117, 2007.
Bertram, E. "The Political Development of Contingent Work in the United States: Independent Contractors from the Coal Mines to the Gig Economy," E-Journal of International and Comparative Labour Studies, 2016.
Garben, Sacha. "Tackling Social Disruption in the Online Platform Economy," Foundation for European progressive studies, 2019.
Harris, Seth ; Krueger, Alan. "A Proposal for Modernizing Labour Laws for Twenty-First Century Work: The 'Independent Worker'," Hamilton Project, 2015.
Ivalova, Mirela. "Foodora and Deliveroo: The App as a Boss?", Arbeit | Grenze | Fluss - Work in Progress interdisziplinärer Arbeitsforschung Nr. 2, Frankfurt (Oder), 2018.
Minter, Kate. "Negotiating labour standards in the gig economy: Airtasker and Unions New South Wales," The Economic and Labour Relations Review 28(3). 438-454, 2017.
Ravenelle, Alexandrea. "Hustle and Gig: Struggling and Surviving in the Sharing Economy," Oakland University of California Press, 2019.
Schäfer, Matthias ; Schwarzkopf, Natascha. "Gig economy: Opportunity or risk for the labour market?", Konrad Adenauer Stiftung, 2019.
Schneider, Nathan. "An Internet of ownership: Democratic design for the online economy," The Sociological Review 66(2), 320-340, 2018.
Case law:
Employment Tribunal London Central, 28.10.2016 - Case No. 2202550/2015 & Others (Aslam & Farrar v Uber).
Legal sources:
Bürgerliches Gesetzbuch, German Civil Code.
Social Policy Title in the Treaty on the Functioning of the EU.
Communication on a European agenda for the collaborative economy of 2 June 2016: "the essential feature of an employment relationship is that for a certain period of time a person performs services for and under the direction of another person in return for which he receives remuneration."
Written Statement Directive 91/533/EEC ('Transparent and Predictable Working Conditions Directive')
Collective bargaining contract between the United Federation of Danish Workers (Fagligt Fælles Forbund) and 'Hilfr' (a cleaning services digital platform), April 2018.
Act of 8 August 2016 on work, modernization of social dialogue and securing of career paths (loi no 2016-1088 du 8 août 2016 relative au travail, à la modernisation du dialogue social et à la sécurisation des parcours professionnels).