Dead deal walking: Why the EU law on platform workers is hanging by a thread

The Platform Workers Directive (PWD) was supposed to be a turning point in the so-called Gig Economy as millions of self-employed people who work through platforms across the bloc would be re-classified as employees and benefit from basic rights such as minimum salary, healthcare, accident insurance and paid leave.

But after going through six rounds of negotiations between the European Parliament and member states, the directive was stopped dead in its tracks, right when it was about to reach the finish line.

A meeting in late December, mere hours before Brussels grounded to a halt for the winter break, revealed a larger-than-expected group of countries opposed the draft law that had emerged from the talks.

France, Ireland, Sweden, Finland, Greece and the Baltic countries were among those making it clear they could not support the text on the table, spearheaded by the left-wing government of Spain as holder of the Council’s rotating presidency.

“When you move towards (rules) that would allow massive reclassifications, including self-employed workers who value their self-employed status, we cannot support it,” Olivier Dussopt, then-French minister of labour, said in December.

The co-legislators are expected to honour the deal hashed out in negotiations and push it forward to the final votes so the last-minute resistance, paired with its seize, sent alarm bells ringing.

Another bruising round of negotiations is now all but guaranteed, although no date has yet been selected.  

The situation is particularly precarious as the June elections to the European Parliament impose a deadline for concluding interinstitutional talks by mid-February.

A question of presumption

The objections voiced by the no-go coalition all coincide in one critical point: the legal presumption of employment foreseen by the directive. This is the core pillar of the proposed law, without which the PWD would be effectively bereft of its raison d’être.

The legal presumption is the system under which a digital platform would be considered an employer, rather than just an intermediate, and the worker would be considered an employee, rather than a self-employed person.

Under the original proposal by the European Commission, the re-classification would happen if two out of five conditions are met in practice:

1. The platform determines the level of remuneration or sets upper limits.
2. The platform electronically oversees the performance of workers.
3. The platform restricts the ability of workers to choose their working hours, refuse tasks or use subcontractors.
4. The platform imposes mandatory rules of appearance, conduct and performance.
5. The platform limits the ability to build a client base or to work for a competitor.

According to the Commission’s estimates, about 5.5 million of the 28 million platform workers active across the bloc are currently misclassified and would therefore fall under the legal presumption. Doing so would make them entitled to rights like minimum wage, collective bargaining, work-time limits, health insurance, sick leave, unemployment benefits and retirement pensions – on par with any other regular worker.

The re-classification could be challenged, or rebutted, by either the company or the workers themselves. The burden of proof would fall on the platform to demonstrate the relation of employer-employee does not correspond with reality.

‘Pretty delicate’

From the very start, the directive proved contentious among member states, which are traditionally protective of their labour policies and welfare systems.

Before heading into talks with the Parliament, the 27 countries agreed on a common position that made considerable alterations to the legal presumption, expanding the criteria to seven and adding a vague provision to bypass the system in certain cases.

Meanwhile, MEPs opted instead for a general presumption clause that would apply, in principle, to all platform workers. The criteria to re-classify as employees would only kick in during the rebuttal phase, making it harder for companies to circumvent the system. Lawmakers also strengthened the transparency requirements on algorithms and turned up the heat on penalties for non-compliant firms.

The gap between the Council and the Parliament slowed down the negotiations, known as trilogue, with six rounds needed to reach a deal, a particular high number. 

But while MEPs cheered on the breakthrough, a rebellion erupted in the Council. 

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The resistance stems from the legal presumption of employment, which the trilogue reverted to the original 2/5 criteria, the balance between full-time and part-time workers, the administrative burden placed on private companies and the potential adverse effects on the digital economy as a whole.

“All in all, the issue is that the text doesn’t provide legal clarity and is not in line with the Council’s agreement,” said one diplomat from the group of countries that oppose the deal under condition of anonymity. “Protecting workers, yes, but competitiveness should remain.”

Another diplomat said the position struck in the Council was “pretty delicate” and left minimum space for concessions. “It’s difficult. It’s not an easy file,” the official noted.

From Spain to Belgium

As of today, the trilogue deal decisively falls short of the necessary qualified majority to move forward. Adding an extra twist, Germany, the bloc’s largest country, has so far kept silent, which has been interpreted as the prelude to an abstention. If Berlin sits out the vote, the path to a qualified majority becomes even steeper.

Coincidentally, some of the reluctant countries are home to some of the most prominent digital platforms in Europe: Bolt (Estonia), Wolt (Finland), Free Now and Delivery Hero (Germany). These firms, together with Glovo (Spain), Uber (US) and Deliveroo (UK), have  set up industry associations in Brussels and boosted their lobbying spending to defend their corporate interests and influence the draft law.

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One of these associations, Move EU, publicly celebrated the December rejection and called the directive “not fit for purpose.” The statement sharply criticised the legal presumption, arguing it would “overwhelm national courts and undo positive reforms.”

By contrast, the European Trade Union Confederation (ETUC) said the proposed law was being “held up for no good reason” and called on the institutions to wrap up the file. “The agreement found in trilogues was far from ideal but finally brought some basic standards to the sector,” the confederation said.

The political hot potato is now in the hands of Belgium, which took over the Council’s presidency on 1 January. Belgium intends to come up with a new common position and head into a seventh round of negotiations with MEPs.

“We’re very determined to reach an agreement, but not at any price. Because, of course, we have to maintain the initial ambition” set by the Commission’s proposal, Pierre-Yves Dermagne, Belgian’s minister for the economy and labour, said last week.

“We know the timing is quite tight. We’re talking a matter of weeks, really.”

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But the road ahead is ridden with obstacles. A fresh push in the Council to satisfy the demands of the blocking coalition may trigger the backlash of left-wing governments. France, in particular, is seen as adamantly opposed to the directive.

And even if the Council manages to somehow overcome the odds and overhaul its common position, there is no guarantee that MEPs will be willing to give in and water down the December deal. If the text fails to complete the trilogue phase by mid-February, the cut-off date imposed by the elections, it will be plunged into legislative limbo.

“We are now in a stalemate, with the Belgian Presidency faced with the task of reconciling such opposing positions that the outcome risks being a very weak regulation,” said Agnieszka Piasna, a senior researcher at the European Trade Union Institute (ETUI).

“If the Council doesn’t change its position, we could see a directive that sets the minimum floor so low that conditions for platform workers in some countries could actually worsen, and even obstruct the legal route – which, despite being incredibly costly and cumbersome, has so far been an effective way for workers to defend their rights.”