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Gig Economy Workers To Become Employees By Default

New EU rules mean that platform economy workers will be presumed to be employees of the digital platform that engages them.  This in turn will require apps and platforms to ensure that their workers receive minimum wage, paid holidays and pension rights.  Most of their workers are currently engaged as self-employed, and therefore with no automatic rights, so this will be a significant (and potentially costly) change.  The change will affect millions of gig economy workers across Europe who use apps and platforms to find work, for example drivers, couriers, cleaners, gym trainers, and DIYers to name just a few.

The new rules have been announced in response to workers potentially being exploited, some of whom may actually be disguised employees who are missing out on social protections.  In addition, the EU wants to ensure that work is properly declared to relevant national authorities so that tax and social security contributions are paid appropriately where the work is actually taking place.

The defining characteristics of the “presumed employment” will be based on the facts of how work is controlled by the platform rather than the contractual relationship, including:

  • whether a platform sets the level of pay for the work;
  • any conditions on the conduct or performance of the workers;
  • supervision of the performance of work or verification of quality;
  • any restrictions on when or if a worker can work;
  • any restrictions that prevent a worker building up their client base or working for third parties.

These defining characteristics all seem very sensible and broadly mirror some factors that have been important in employment status and IR35 cases over the years.

A key point is the presumption of employment, meaning that workers can seek to overturn their status, and the planned legislation requires workers to be treated as employees during any such period of trying to change their status.  In reality it seems unlikely that anyone will seek to do so!

There is a long way to go before the changes become European law as the detail needs to be agreed with EU countries.  Brexit means that the UK will not be obliged to follow the new legislation when it comes in, but it’s likely to put pressure on the government to stop turning a blind eye to issues.

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