European Commission Proposes Strict Rules For Gig Economy Firms Like Uber And Deliveroo

The European Commission has suggested strict new regulations for gig economy companies—a free market system in which temporary roles are common and firms engage independent individuals for short-term commitments—like Uber and Amazon-backed Deliveroo.

The draft rules, which were released on 9 December, are considered as a major step toward requiring gig economy companies to classify drivers, couriers, cleaners, fitness coaches, masseuses and other workers who find work through apps and online platforms as employees.

Depending on the country where they worked, employees are entitled to a minimum salary, holiday pay, unemployment and health benefits and other legal safeguards.

While the labour unions have praised the measures by European legislators, according to reports, the regulations may affect an estimated 4.1 million gig economy employees across Europe. But these newly proposed guidelines need to pass various legislative hurdles before becoming law.

Companies in the gig economy have traditionally designated their employees as independent contractors, allowing them to cut costs and limit legal obligations. Working for these companies appeals to those individuals who don't want to commit to a 9-to-5 job and the platforms have made activities like moving about and ordering food more convenient for customers.

However, the Covid-19 pandemic has demonstrated how vulnerable these platforms can be. During lockdowns, Uber drivers' work soon dried up, causing many of them to look for new professions.

Uber and other gig economy companies, predictably, are opposed to the commission's new recommendations, which might have a significant impact on their business models. They could face billions of dollars in increased charges as a result of the new laws.

As per Reuters, an Uber spokesperson said: "Uber is committed to improving the working conditions for the hundreds of thousands of drivers and couriers who rely on our app for flexible work.”

"But we are concerned the Commission's proposal would have the opposite effect - putting thousands of jobs at risk, crippling small businesses in the wake of the pandemic and damaging vital services that consumers across Europe rely on,” the spokesperson added.

Similarly Dominick Moxon-Tritsch, VP Regulation and Public Policy at Bolt, said: "We are disappointed that the European Commission is proposing to sacrifice the flexibility and efficiency of platform work through the reclassification of employment. It seems to be a one-sided approach that doesn't take all available options into consideration.”

According to him, the plan implies that hundreds of thousands of ride-hailing drivers and delivery couriers will lose access to platform work as platforms are obliged to transition to an exclusive full-time employment model.

Additionally, he said: "This would negatively impact working conditions for platform workers, reduce their earning opportunities, and severely impact tens of millions of European citizens who benefit from platform services today."

Just Eat, on the other hand, supports the reforms. Just Eat's CEO, Jitse Groen, stated on Twitter that the company supports “@EU_Commission’s proposals to improve conditions for workers and help them access social protections. Lead, Deliver, Care”.

Similarly, Germany-based online food delivery company Delivery Hero said that it fully supports the European Commission’s aim to improve the labour conditions of platform workers.

But in addition, it said: “We strongly believe that the suggested criteria to trigger the proposed rebuttable presumption of employment and reversed burden of proof are too broad and would not contribute to that goal.”

“This would also have disproportionate restrictions for self-employed platform workers and put limitations on the flexibility we know they value most," the company further added.

Petra Bolster of Dutch labour union FNV, which won lawsuits against Deliveroo and Uber over employment, said: “This proposal tackles abuse and exploitation of a large group of workers. We see this proposal as a great step forwards.”

"Platform workers deserve security about their income and work, protection from sickness and say over their working hours. Provisions such as pay to be on call, sick pay, time off, vacation pay and pensions must apply to them too," she added.

Although some nations have previously passed their own regulations governing the gig economy, the European Commission's proposal is the most universally applicable. Additionally, the EU said that the number of individuals employed by digital platforms in the EU would increase from 28 million to 43 million by 2025.