The EU Directive on Transparent and Predictable Working Conditions
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American Bar Association
International Labor and
Employment Law Conference
Berlin, Germany
The EU Directive on Transparent and Predictable Working
Conditions
Written By: Cristiano Cominotto and Sarah Melone
Piazza Cinque Giornate, 3
20129 Milano
c.cominotto@alassistenzalegale.it
+39 02 5450823Table of Contents Introduction 1 –Defining an Employment Relationship 2 – Current Problems Regarding the Gig Economy Focus on Europe 1 - Overview of What an EU Directive Is 2 –EU’s Objectives for Change for the Gig Economy 3 – The Nuances of the Directive Relevant Cases and Best Practices 1 – Italy 2 – United Kingdom 3 – USA 4 – India
Introduction The gig economy refers to companies that utilise independent contractors and freelancers instead of full-time employees to operate their business. Any position that is not full-time and is temporary work is considered part of the gig economy1. In 2021 Uber had revenues of 17.455 billion dollars which was a 57% increase from 20202. In 2021 Deliveroo had revenues of 1.824 billion great British pounds, which is equivalent to around 2.39 billion dollars3. Both of these companies, and many others like them, rely on the gig economy to function. Without gig economy workers, these platforms would not exist. There have been calls for more regulation regarding gig economy workers in recent years. Whether or not these workers should be considered employees or self-employed has been a hot topic of debate. When a person is classified as an employee, they are entitled to certain rights, but when they are considered self-employed or gig economy workers, they are not permitted those same rights. The debate has been centred around how much control the platforms have over the work of their drivers/delivery persons. This paper will address how various countries and the European Union have taken action to address concerns about the gig economy and protect gig economy workers. 1 - Defining an Employee Relationship Every country has their own set of guidelines that must be followed when determining if someone should be considered an employee or not. This is partly what has made addressing gig economy workers so tricky. In the United States, an employee is defined as “an individual who works under the supervision or control of an employer; a worker who an employer employs.” An employee works in the employer's 1 Team, The Investopedia, “What Is a Gig Economy?” Investopedia, Investopedia, 6 April 2022, https://www.investopedia.com/terms/g/gig-economy.asp. 2 “Uber Announces Results for Fourth Quarter and Full Year 2021,” Uber Technologies, Inc. - Uber Announces Results for Fourth Quarter and Full Year 2021, Accessed 5 April 2022 https://investor.uber.com/news-events/news/press-release-details/2022/Uber-Announces-Results-for-Fourth-Quarter- and-Full-Year-2021/. 3 Deliveroo. 2021 Annual Report. March, 2021, Accessed 5 April 2022 https://dpd-12774-s3.s3.eu-west-2.amazonaws.com/assets/9916/4856/5872/Deliveroo_plc_Annual_Report_2021.pd f
service under an express or implied contract of hire that gives the employer the right to dictate the
employee’s work duties4. The common law control test determines whether a worker is an
employee. A worker is considered an employee when the employer controls when, where, and how
the worker carries out their work5. Determining whether the employer has these controls is much
more complicated and can be determined using numerous factors.
In the UK, the law is similar, and there are also specific areas you can evaluate to determine whether
or not someone should be considered an employee. Some factors that can help determine whether
someone is an employee are:
● The employer, manager, or supervisor is in charge of your workload and how the work
should be completed
● The employee is required to work regularly unless on leave
● The employee cannot refuse to do the work
● The employee is employed to do the work themselves6
Under Italian law, when a principal exercises organisational, directive, and disciplinary power, the
person may claim the status of employee7. According to Article 2094 of the Italian civil code,
subordinate work is the work done by a subject under the authority and direction of another
person8.
An employment relationship can also be recognised in cases such as
● Workers must comply with the principal’s strict instructions
● Performance within a location and/or underworking hours established by the principal
● Stable and continuous nature of the relationship
● Stable inclusion of the worker within the principal’s organisation
● The worker has to submit reports on their activity periodically
● Working hours equal to a full-time amount
● Fixed compensation on a monthly, weekly, or hourly basis
4
“Employee,” Legal Information Institute, Legal Information Institute, Accessed 31 March 2022,
https://www.law.cornell.edu/wex/employee#:~:text=An%20employee%20is%20an%20individual,dictate%20the%20em
ployee's%20work%20duties.
5
webmaster, ORDP. “Social Security,” Course: Applying Common Law Control Test for Employer/Employee
Relationships, Accessed 7 April 2022 https://www.ssa.gov/section218training/advanced_course_10.htm#4.
6
“Types of Employment Status: Checking Your Employment Rights,” Acas, Accessed 31 March 2022,
https://www.acas.org.uk/checking-your-employment-rights.
7
“Legal Framework Differentiating Employees from Independent Contractors,” LE Global Interactive Microsite,
Accessed 5 April 2022,
https://knowledge.leglobal.org/eic/country/italy/legal-framework-differentiating-employees-independent-contractors-
10/.
8
Italian Civil Code● Use of the principal’s tools and materials
● Exclusivity obligations
● Employee has a duty of loyalty (Art. 2105 cc)
● Employee has a duty of diligence (Art. 2104 1cc)
● Employer has power of control with limit of privacy
● Employer has disciplinary power
● Employer must guarantee safety in the workplace9
Defining a person as an employee or a self-employed worker is so important because depending on
what type of worker someone is, it changes the benefits that they are entitled to receive.
2 - Current Problems Regarding the Gig Economy
The gig economy and the platforms that employ many gig economy workers have grown rapidly in
the past years, so it has been hard for government regulations to stay on top of this new type of
work. On top of that, when governments create laws to address the growing issues in workers'
rights and protections, companies find loopholes or slightly modify their business models so that
the regulations do not apply to them10.
Gig workers are very vulnerable and are not offered the protections employees have. They do not
have a set salary, so it can be difficult to plan financially for their future. They also do not receive
individual insurance such as health insurance, and they are not given the right to form unions or
participate in collective bargaining11.
Right now, many gig economy workers are working in a grey area between employees and
self-employed workers because when a platform is an employer, it can be challenging to determine
who has control in the relationship. Platforms benefit from using gig workers instead of employees
because employers do not have the duties and obligations to self-employed workers as they do to
employees.
There are also health and safety concerns that the gig economy has brought about that were
recently evaluated by the Health and Safety Executive (HSE). The primary safety concerns that
were discovered were
● Drivers may have no maximum driving times, and heavy workloads may cause accidents
● Visual fatigue
9
Italian Civil Code
10
Christine Ro, “Why Gig Work is so Hard to Regulate,” BBC, 9 March 2022,
https://www.bbc.com/worklife/article/20220308-why-gig-work-is-so-hard-to-regulate.
11
“Labor and Employment Issues in the Gig Economy: Q&A With Professor Paul Oyer,” Analysis Group, April 2017,
https://www.analysisgroup.com/Insights/ag-feature/q-and-a/labor-and-employment-issues-in-the-gig-economy--qand-
a-with-professor-paul-oyer/.● Association between occupational injuries and precarious employment
● Lack of proper safety induction
They also found several health-related concerns that are
● Psychological health issues due to work-related stress linked to tight deadlines, lack of sick
pay protection, lack of job control, and lack of job security
● Lack of occupational health care
● Elevated risk of depressive symptoms linked to job insecurity and precarious work12
This is just a summary of some of the health and safety problems facing the gig economy right now.
Many of these problems are why gig economy workers have been pushing for legislation that offers
them more protection. This new EU Directive wants to ensure that workers of all classifications
receive a minimum level of protection that align with the EU’s standards. The requirements of this
directive will help gig workers receive more protection, so they cannot be taken advantage of.
Focus on Europe
In this section, there will be an evaluation of the status of the gig economy in Europe and what the
EU is doing regarding the gig economy. This will include a discussion of what an EU directive is,
the objectives of the new EU directive, and an in-depth analysis of the nuances of the directive.
1 - Overview of What an EU Directive Is
A directive is one of the ways that the EU governs and regulates the behaviours of all the Member
States. A directive requires the Member States to achieve a specific result, but the Member States
have the freedom to choose how they achieve these results. The directive lays out everything that
the EU wants to see applied in all Member States, and then the Member States have the
responsibility to incorporate these wishes into their national law. Member States then have a certain
amount of time, in the case of this directive Member States have until 2022, to transpose the
objectives into their own national law. If a Member State does not do this, the Commission may
initiate infringement proceedings13.
2 –EU’s Objectives for Creating This Directive
The European Union states that the purpose of this directive is “to improve working conditions by
promoting more transparent and predictable employment while ensuring labour market
12
Health and Safety Executive, Understanding the Health and Safety Implications of the Gig Economy (HSE 2019),
https://www.hse.gov.uk/research/rrpdf/rr1143.pdf.
13
“Types of EU Law”, European Commission, Accessed 5 April 2022,
https://ec.europa.eu/info/law/law-making-process/types-eu-law_en.adaptability.” The directive is meant to lay down a minimum level of rights that will apply to every
worker in the Union that has an employment contract or an employment relationship.
The directive has a broad personal scope, and the aim is to ensure that these rights are applied to
“workers in all different forms of work including workers in the most flexible non-standard and
new forms of work such as zero-hour contracts, casual work, domestic work, voucher-based work,
or platform work.”
This directive is a revision of the current Written Statement directive, which was put forth in 1991.
This directive gives employees the right to be notified in writing about the aspects of their
employment relationship. When evaluating the effectiveness of this directive, the EU recognised
that many employees never received written confirmation or did not receive the confirmation in a
timely manner. The EU also recognises that much has changed in the labour market since 1991,
and updates were needed to address these changes. This directive will repeal the current Written
Statement directive14.
The objective of this directive was not solely to address the gig economy, but there are provisions in
the directive that will affect gig economy workers. It is also interesting to note that in December
2021, the EU proposed a new directive that will specifically address labour issues regarding
platform workers. This directive has not been made official yet, but the proposal has been made.
2 – The Nuances of the Directive
The articles in Chapter II of the directive specifically focus on information about the employment
relationship that must be communicated to the employee.
Article 4 talks about the obligation to provide information. The article states that member states
must ensure that employers are informing workers about the essential aspects of the employment
relationship. The article specifies many criteria that the employer must inform the employee about,
such as:
● The identities of the parties to the employment relationship
● The place of work; where there is no fixed or main place of work, the principle that the
worker is employed at various places or is free to determine his or her place of work, and the
registered place of business or, where appropriate, the domicile of the employer
● The date of the commencement of the employment relationship
● In the case of temporary agency workers, the identity of the user undertakings when and as
soon as known
● The training entitlement provided by the employer, if any
14
“Transparent and Predictable Working Conditions,” European Commission, Accessed 5 April 2022,
https://ec.europa.eu/social/main.jsp?langId=en&catId=1313.This article is meant to apply to all workers, and while many of the specifics of the article apply to
the traditional employment relationships, the provisions will also impact gig economy workers.
The place of work and the provision of temporary workers are especially interesting to gig economy
workers because both are common practices for gig economy workers.
Article 5 examines the timing and means of the information provided. The article states that the
information referred to in points (a) to (e), (g), (k), (l), and (m) of Article 2 must be provided in the
form of one or more documents and must be provided within the first week of employment. The
other information referred to in Article 2 must be provided within one month of the first working
day.
Member states will be able to develop templates and models for the creation of the required
documents and can make them easily available to any worker or employer who may need them. The
Member States also have to ensure that the information is made generally available and free of
charge in an easily accessible manner through distance and electronic means.
Article 7 discusses information regarding workers that are sent to another Member State or to a
third country. This article states that when a worker is required to work in another Member State
or a third country, they still must be provided with the documents referenced in Article 5(1) before
the worker leaves for that country. The documents must also include at the least the following
information:
● The country or countries in which the work is abroad is to be performed and its anticipated
duration
● The currency to be used for the payment of remuneration
● Where applicable, the benefits in cash or kind relating to the work assignments
● Information as to whether repatriation is provided for, and if so, the conditions governing
the worker’s reputation
The Article also states that unless a Member State specifies otherwise, the provisions will not apply
if the time the workers work outside of he/she’s home country is four consecutive weeks or less.
The articles in Chapter III of the directive address minimum requirements that employers must
meet relating to working conditions.
Article 8 considers the maximum duration of any probationary period. The article states that the
Member States must ensure that when there is an employment relationship subject to a
probationary period, that period cannot last more than six months. In a fixed-term contract, the
probationary period must be proportionate to the expected duration of the contract. If the
contract is renewed, another probationary period is not permissible. The only exception to these
terms is when it is in the best interest of the worker or when it is justified due to the nature of thework. If a worker is absent during the probationary period, the period can be extended based on the
duration of the absence.
Article 10 provides rules regarding the minimum predictability of work. The article states that
when a worker’s work pattern is completely or mostly unpredictable, the worker cannot be
required to work by the employer if the following conditions are fulfilled:
● The work takes place within predetermined reference hours and days as referred to in
Article 4 of the directive
● The worker is informed by his or her employer of a work assignment within a reasonable
notice period established in accordance with national law, collective agreements or practise
as referred to in Article 4 of the directive
If neither of the above two requirements is met, a worker can refuse work without facing any
adverse consequences.
The provision about adverse consequences is one of the more interesting pieces of this article that
could impact the gig economy because many could argue that the platforms do punish their
workers when a job is refused. The algorithms for many of these platforms reward workers who
take more jobs and will often punish workers who do not take jobs. This makes workers feel
pressure to accept every job they receive because if they do not, the algorithm will punish them in
the future15. This means that if platforms do not alter their algorithms to prevent this from
happening, the platforms could be in violation of the law.
Article 11 addresses complementary measures for on-demand contracts. The article focuses
specifically on preventing abusive practices when an employer is using an on-demand working
contract. The measures that an employer must take to prevent abusive practices are:
● Limitations to the use and duration of on-demand or similar employment contracts
● A rebuttable presumption of the existence of an employment contract with a minimum
amount of paid hours based on the average hours worked during a given period
● Other equivalent measures that ensure effective prevention of abusive practices
Article 12 analyses the transition to another form of employment. This article states that when a
worker has worked for at least six months for the same employer, the worker may request
employment with more predictable and more secure working conditions. The worker is entitled to
receive a written reply to this request. The employer must provide a written reply within one
month of the request from the worker. Member States can allow this deadline to be extended to no
15
Griesbach et. al, “Algorithmic Control in Platform Food Delivery Work,” Sage Journals, 30 August
2019, https://journals.sagepub.com/doi/full/10.1177/2378023119870041more than three months, and employers may give an oral response if the situation of the worker
remains unchanged.
This article is particularly interesting when evaluating the gig economy because if a worker works
for the same platform for more than six months, they could be entitled to request more predictable
and secure working conditions. This article could be applied to gig economy workers in various
ways, and there could be various ways that gig economy workers use this article to receive more
rights as workers.
The articles in Chapter IV of the directive discuss horizontal provisions that the EU determined
were necessary to clarify.
Article 15 reviews the legal presumptions and early settlement mechanisms. Specifically, the article
addresses what the Member States must do in the case that a worker does not receive, in a
reasonable time, the documents that are referred to in Article 5 or Article 6. If a worker does not
receive these documents, the following apply:
● The worker shall benefit from favourable presumptions defined by the Member State,
which employers shall have the possibility to rebut
● The worker shall have the possibility to submit a complaint to a competent authority or
body and to receive adequate redress in a timely and effective manner16
All of these articles were created to ensure that all workers in the EU receive a bare minimum level
of protection and rights. These articles do not specifically mention the gig economy or platform
workers, but they will have an impact on the future of gig economy workers' rights and how gig
economy workers will be treated.
Relevant Cases and Best Practices
This section will have an evaluation of the different court cases that have impacted the gig economy
in various countries throughout the world. This section will also evaluate the common practices in
each of the countries.
1 - Italy
Italy emerged as one of the major fronts where the battle between gig economy workers and digital
labour platforms emerged. Gig economy workers in Italy have held numerous strikes demanding
more protections and rights, and there have been multiple court cases addressing the gig economy.
16
“Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and
predictable working conditions in the European Union,” EUR-Lex, 11 July 2019,
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32019L1152.The first major case regarding the gig economy occurred in 2018 when the Labour Court of Turin ruled on a case between Foodora and its delivery drivers. The original ruling of the court was that Foodora’s drivers were freelance workers because they were not subject to Foodora’s organizational, directive, and disciplinary power. Then, in January 2019 the Court of Appeals of Turin confirmed, but also partially rejected the original ruling. The Court stated that the relationship between drivers and Foodora was not an employment agreement because the driver had the ability to determine if he/she wanted to perform their duties or not, but the Court determined that the riders fit under a third status of workers because Foodora did have control over the working hours and workplace. With this information, the Court determined that the drivers had to receive the same economic treatment as employees according to s2 of Legislative Decree no. 81/2015, and Foodora had to pay the affected riders the differences in salary between the minimum hourly wages established by the national collective bargaining agreement of Foodra’s sector17. On January 24, 2020, the Italian Supreme Court overturned the ruling of the Court of Appeals of Turin, stating that based on 2015 legislation that stated all workers whose work is organised by someone else should receive employment and labour protection. The Supreme Court ruled that the drivers for Foodra should be considered employees, which faced a lot of backlash from platforms and was a major victory for platforms workers18. In September of 2019, Decree Law No. 101/2019, informally known as the Riders Decree, was issued and came into force on November 22, 2019. This law established a minimum level of rights for delivery workers when entering into a service contract with a platform-based company. Under the law, the compensation of workers can be determined based on deliveries made, and collective bargaining agreements can define basic and incentive remuneration systems that take into account different organisational models. Also, an hourly wage is applicable as long as a worker accepts at least one call for every working hour19. The most recent and most impactful case occurred in March 2021 when a Milan court ordered four major food delivery platforms to officially hire more than 60,000 workers and pay a £733 million fine after the platforms were found violating health and safety conditions. The Court found that the algorithm forces riders to accept all orders, or they will get demoted in ranking and 17 Francesco Pedroni, “Appeal Court Deems Foodra Riders Self-Employed With Certain Workers’ Rights,” Lexology, 13 March 2019, https://www.lexology.com/commentary/employment-immigration/italy/stanchi-studio-legale/appeal-court-deems-foo dora-riders-self-employed-with-certain-workers-rights. 18 Antonio Aloisi, Valeria De Stefano, “Delivering Employment Rights to Platform Workers,” il Mulino, 31 January 2020, https://www.rivistailmulino.it/a/delivering-employment-rights-to-platform-workers 19 “Italy: New Provisions on Worker Protection and Employment-Related Corporate Crises Take Effect,” Library of Congress, 25 October 2019, https://www.loc.gov/item/global-legal-monitor/2019-10-25/italy-new-provisions-on-worker-protection-and-employ ment-related-corporate-crises-take-effect/
then receive less work, so the algorithm makes it too difficult to take holidays or sick leave. The companies also have to pay riders overdue contributions and give riders adequate equipment20. 2 - United Kingdom The gig economy in the United Kingdom more than doubled from 2016 to 2021, and around 15% of working adults work for a platform. It was also found that a majority of the people doing platform work are using the work as a supplemental form of income and not their main form of income21. In a 2016 tribunal hearing, the court ruled that Uber drivers were workers and not self-employed contractors, and that decision was upheld by the UK Supreme Court in 2021. The Court took issue with the contracts that Uber made their drivers sign stating the contracts “can be seen to have as their object precluding a driver from claiming rights conferred on workers by the applicable legislation.” The Court found that Uber controlled the fares of the trips and did not inform the riders of the passengers' destination until the passenger was picked up, and this was Uber exercising control over its drivers enough for the drivers to be considered employees. The ruling states that the drivers should be considered workers, but this does not mean the drivers are considered employees. This will give drivers more rights than they had as independent contractors but fewer rights than if they were considered employees22. 3 - United States The United States was one of the first countries where the gig economy began and really started to find traction. This being said, it has also faced numerous problems regarding the gig economy, and it is becoming an increasingly talked about and litigated topic. In 2018 the case Lawson v. GrubHub Inc. was heard by a federal court in California. This court ruled that the driver, Lawson, should be classified as an independent contractor. The question the Court examined was how much control GrubHub had over the work-life of its drivers. GrubHub argued that Lawson controlled where, when, and how frequently he performed deliveries, so Lawson had control over when he worked and how much he earned. The decision of this case was guided by the multi-factor test that emerged in the case S.G. Borello & Sons Inc. v. Department of Industrial Relations. This test focuses on “whether the person to whom service is rendered had the 20 Emilio Parodi, “Milan Prosecutors Order Food Delivery Groups to Hire Riders, Pay 733 Million Euros in Fines,” Reuters, 24 February 2021, https://www.reuters.com/article/us-italy-prosecutors-riders-idUSKBN2AO2FG 21 Sarah Butler, “Gig-Working in England and Wales More than Doubles in Five Years,” The Guardian, 5 November 2021, https://www.theguardian.com/business/2021/nov/05/gig-working-in-england-and-wales-more-than-doubles-in-five-y ears. 22 Sarah Butler, “Uber Drivers Entitled to Workers’ Rights, UK Supreme Court Rules,” The Guardian, 19 February 2021, https://www.theguardian.com/technology/2021/feb/19/uber-drivers-workers-uk-supreme-court-rules-rights.
right to control the manner and means of accomplishing the result desired.” Ultimately, GrubHub did not give Lawson training, tell him which orders to accept, or even tell him how to look when making deliveries which led to the decision that Lawson was an independent contractor, not an employee23. The Biden administration came in with a focus on workers' rights, and numerous court battles are happening across the country that is tackling the issue of employment status. One thing that has upped the call for workers' rights protections was the Covid-19 pandemic. During the pandemic, Uber drivers and delivery drivers were considered essential workers, so they continued to work throughout the pandemic. There have been no decisive decisions that have favoured gig workers in the United States as there have been in Europe; however, there are cases in Massachusetts that are waiting to be heard, and two cases that the Supreme Court will be ruling on that will have a great impact on the status of gig economy workers. These cases could cement those app-based workers should be classified as independent contractors and would then be entitled to job benefits such as a minimum wage, accident insurance, and a healthcare stipend24. 2 - India The emergence of the gig economy in India occurred later than in other countries in Europe and North America, but it is a booming area of the economy. Because the emergence of the gig economy in India happened late, the emergence of laws regarding the gig economy also happened late. Two court cases in India, Dhrangadhara Chemical Works v. the State of Saurashtra and Ram Singh and Ors v. Union Territory, Chandigarh and Ors, established a precedent for determining whether an employee-employer relationship exists. The worker is considered an employee when the employer has control over the employee’s actions and is paying the employee’s wages. In 2020 Social Security Code 2020 was passed to provide protection to gig workers. This act defined a gig worker as “A person who performs work or participates in a work arrangement and earns from such activities outside of the traditional employer-employee relationship.” Once this is 23 Daniel Pasternak, “California Federal Court Finds That ‘Gig Economy’ Workers are Independent Contractors, Not Employees,” Squire Patton Boggs, 14 February 2018, https://www.employmentlawworldview.com/california-federal-court-finds-that-gig-economy-workers-are-independent -contractors-not-employees-us/ 24 Allsup et. al, “Gig Economy Companies Brace for Crucial Year as Challenges Mount,” Bloomberg Law, 4 January 2022, https://news.bloomberglaw.com/us-law-week/gig-economy-companies-brace-for-crucial-year-as-challenges-mount
registered, registration is mandatory, and the gig worker is entitled to social security benefits such as life and disability coverage, accident insurance, health and maternity benefits, and old age protection. There still are no laws or policies that protect gig workers regarding occupational safety and decent working conditions. There are also no laws that allow for collective bargaining or trade unions, and there are also no laws that protect against discrimination against gig workers. Employers also do not have to pay the gig workers a minimum wage25. Conclusion The gig economy has caused changes in every place that it has emerged. The debate about employee status and gig economy workers will likely continue for the foreseeable future as many countries try to create legislation that is able to keep up with the everchanging landscape of the gig economy. Right now, the EU is the first to take legal action to protect gig economy workers, but it is likely that other countries will follow their lead soon. Platforms are going to have to find ways to adjust to new regulations, and it will be important that whatever regulations are put in place are actually enforced by these platforms. 25 Darshit Vora, “Analysis of Labour Laws with Respect to Gig Workers,” Pleaders, 12 December 2021, https://blog.ipleaders.in/analysis-of-labour-laws-with-respect-to-gig-workers/.
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