EUROPEAN COMMISSION Brussels, 9.12.2021 SWD(2021) 396 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT REPORT

Accompanying the document Proposal for a Directive of the European Parliament and of the Council On improving working conditions in platform work {COM(2021) 762 final} - {SEC(2021) 581 final} - {SWD(2021) 395 final} - {SWD(2021) 397 final}



COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT REPORT

Accompanying the document Proposal for a Directive of the European Parliament and of the Council On improving working conditions in platform work Table of Contents 1. Introduction 1.1 Political context 1.2 Legal context 2. Problem definition 2.1 What is the problem? 2.2 What are the problem drivers? 2.3 Why is it a problem? 2.4 How will the problem evolve? 3. Why should the EU act? 3.1 Legal basis 3.2 Subsidiarity: Necessity and added value of EU action 4. Objectives: What is to be achieved? 5. What are the available policy options?

5.1 What is the baseline against which options are assessed? 5.2 Policy options addressing the risk of misclassification (Policy Area A) 5.3 Policy options addressing algorithmic management (Policy Area B) 5.4 Policy options on enforcement, traceability and transparency, including in cross-border situations (Policy Area C) 5.5 Accompanying measures 5.6 Options discarded at an early stage 6. What are the impacts of the policy options? 6.1 Impacts of options under Policy Area A 6.2 Impacts of options under Policy Area B 6.3 Impacts of options under Policy Area C 7. How do the options compare? 7.1 Effectiveness 7.2 Efficiency 7.3 Coherence 8. Preferred option 9. How will actual impacts be monitored and evaluated? Annexes: Table of Contents Glossary

For the purpose of this document, the terms below have the following meaning: ·“people working through platforms” or “persons performing platform work” refers to individuals performing work organised via a digital labour platform, regardless of these people’s legal employment status (worker, self-employed or any third-category status). The term ‘platform worker’ is only used as an equivalent when quoting official documents which contain such term; · “digital labour platform” refers to a private internet-based company which provides an online service ensuring the supply of on-demand work, performed by individuals for individual or corporate customers, regardless of whether such work is performed on-location or online. Throughout the report, the term is used interchangeably with “platform”; ·“on-location labour platform” refers to a digital labour platform which only or mostly organises work performed in the physical world, e.g. ride-hailing, food-delivery, household tasks (cleaning, plumbing, caring…) ·“online labour platform” refers to a digital labour platform which only or mostly organises work performed in the online world, e.g. AI-training, image tagging, design projects, translations and editing work, software development; ·“platform work” refers to the work performed on demand and for remuneration by people working through platforms, regardless of their employment status, of the type of platforms (on-location vs online) or the level of skills required; ·“algorithmic management” refers to automated monitoring and decision-making systems through which digital labour platforms control or supervise the assignment, performance, evaluation, ranking, review of, and other actions concerning, the work performed by people working through platforms; ·“false self-employment” refers to a situation in which a person is declared as self-employed while fulfilling the conditions characteristic of an employment relationship.

1.Introduction 1.1Political context The digital transition, accelerated by the COVID-19 pandemic, is re-defining the EU’s economy as well as its labour markets. Platform work has become an important element of this newly emerging social and economic landscape. It carries a great innovation potential and creates many opportunities, by helping people complement their revenues from other jobs and expand their entrepreneurial activities. The flexibility in working hours enables many to enjoy a better work-life balance. It also offers new job-opportunities to people who face high entry-barriers to labour markets, such as youth and migrants. Still, it presents important challenges. Many of the issues faced by people working through platforms (see Section 2) are difficult to address with existing legal frameworks (see Section 1.2). As digital labour platforms disrupt traditional services and introduce new ways of working, technological change must go hand in hand with fairness in line with the EU’s social model. This is why, in her Political Guidelines , President von der Leyen pledged to address the changes brought by the digital transformation to labour markets, by looking into ways to improve the working conditions of people working through platforms and supporting the implementation of the European Pillar of Social Rights. The Pillar and its Action Plan, endorsed by Member States, social partners and civil society at the Porto Social Summit in May 2021, provide a framework at EU level for tackling the challenges posed by digitalisation. The European Parliament , the Council , the European Economic and Social Committee and the Committee of the Regions have all called for specific action on platform work, allowing its opportunities to be reaped and its challenges tackled in view of supporting the conditions for a sustainable growth of digital labour platforms in the EU. The Commission Work Programme for 2021 announces a legislative initiative based on Article 153 TFEU in the fourth quarter of the year, subject to consultation of social partners. The two-stage consultation took place between 24 February and 7 April (first stage) and between 15 June and 15 September (second stage) . For a synopsis of social partners’ responses in the two-stage consultation, see Annex 2. 1.2 Legal context 1.2.1 Relevant social and labour acquis The Charter of Fundamental Rights of the European Union protects and promotes a broad range of rights in the work context. The EU has created a minimum floor of labour rights that apply to workers in all Member States, although their enforcement is for national authorities. A number of EU legal instruments regulate working conditions, for instance on limitations to working hours, occupational health and safety risks and on the lack of predictability and transparency of working conditions, as well as access to social protection. However, most of these only concern people classified as workers, which is not the case for many of those working through platforms (see Section 2.2.1). Furthermore, the specific challenges of algorithmic management in the platform work context (see Section 2.2.2), are not covered by existing labour laws at EU level. (For an analysis of the relevant EU social and labour acquis, see Annex 6.) 1.2.2 Relevant internal market acquis The EU’s acquis on the internal market includes relevant laws for the platform economy, such as the General Data Protection Regulation and the Platforms-to-Business (P2B) Regulation. The European Commission has also put forward new legislative proposals of relevance, such as the Digital Services Act (DSA) package and the Artificial Intelligence Act (AIA), and is preparing an initiative to ensure that EU competition law does not stand in the way of collective agreements that aim to improve the working conditions of certain solo self-employed people (including those working through platforms). (For an analysis of the relevant EU internal market acquis, see Annex 7.) In spite of these, many platform work challenges remain (see Section 5.1). For example, in the algorithmic management context, such challenges reflect the important role that the representatives of people working through platforms and labour inspectorates could play in bringing about better working conditions. The personal and/or material scopes of these instruments do not cover the full array of specificities of platform work. Also, the case-law on the applicability of the EU’s internal market acquis to digital labour platforms is not conclusive. (For an overview of relevant court and administrative decisions, see Annex 10.) 1.2.3 Relevant national initiatives National responses to platform work are diverse and developing unevenly across Europe. A few EU Member States (EL, ES, FR, IT and PT) have adopted national legislation specifically targeting the improvement of working conditions and/or access to social protection in platform work. In some Member States (AT, DK, EE, FI, HU, HR, LU, RO, SK and SI) people working through platforms may be indirectly affected by wider, non-platform specific legislative initiatives. In others (DE, LT and NL), potentially relevant legislation is being debated. (For an overview of national responses, see Annex 9.) 2.Problem definition The below ‘problem tree’ illustrates how the drivers analysed in the following section relate to the problem this initiative aims at tackling, with its underlying consequences for different stakeholders. 2.1 What is the problem? Some people working through platforms face poor working conditions and inadequate access to social protection. In many cases, this concerns people working through platforms who are false self-employed, i.e. their employment status is misclassified (see Section 2.2.1). Those who are workers are entitled to the rights and protections of the national and EU labour acquis, such as on collective bargaining, minimum wage, working time, paid annual leave, parental leave, and occupational health and safety. In most instances, workers are also the only ones to have adequate access to social protection. The genuine self-employed do not have access to such rights and protections (with some exceptions ). Some, but not all, may be able to improve their situation by means of their autonomy and stronger labour market position. Misclassified people working through platforms have thus neither the rights and protections of the national and EU labour acquis that workers have, nor the autonomy and stronger labour market position enjoyed by some genuine self-employed people (see Section 2.2.1). In concrete terms, this means that they may not have access to: ·Decent pay – Around 55% of people working through platforms earn less than the net hourly minimum wage of their country. ·Balanced working time schedules – On average, people working through platforms spend 8.9 hours per week doing unpaid tasks (such as researching tasks, waiting for assignments, participating in contests to get assignments and reviewing work ads), against 12.6 hours doing paid tasks. The unpredictability of platform work may be detrimental to the work-life balance of those performing it. ·Health and safety provisions – Accidents and occupational injuries insurance is only made available by 23% of digital labour platforms , with one survey highlighting that circa 42% of people working through delivery platforms have been involved in a collision. A study has found that only 18% of riders in Spain wears a helmet , possibly because of a lack of provision of it by the platform, lack of obligations to do so and personal risk-taking attitudes. Approximately 50% of people working through online platforms suffer from clinical levels of social anxiety, well above the 7-8% found in the general population.

·Coverage against occupational risks – Platforms representing 97% of earnings in platform work in the EU do not pay contributions towards unemployment benefits. Most platforms do not want to offer social protection to people working through them because they fear this might be used in court to reclassify them as employers. ·Facilitated procedures to claim their rights – In most Member States, the only way for people working through platforms to challenge a misclassification (and/or retrieve the rights linked to another employment status) is by judicial means. Such procedures require some knowledge of legal procedures or access to relevant professionals (e.g. lawyers), and entail substantial costs. These may range from EUR 300 (in DE, based on a person’s income) to EUR 5000 (in IE, including lawyers’ fees). Platforms have played an important role at the beginning of the pandemic in allowing many businesses the flexibility to stay afloat. For example, many restaurants kept working during lockdown, supported by the services food-delivery platforms offered. Despite this flexibility, the COVID-19 crisis has further highlighted the importance of access to social protection and support against occupational risks for people working through platforms. The EIGE 2021 survey has showed that 80% of people engaged in platform work experienced some kind of negative effects related to COVID-19 lockdowns at some point, affecting their or their partner’s ability to work (e.g., they or their partners lost jobs, had financial difficulties, got sick, had to take leave, had to take care of sick children or elderly people). However, only less than half of them received government support (e.g., sick or unemployment benefits, wage support). Few on-location platforms voluntarily compensated for lost income of people working through them in case they became sick with COVID-19 or had to quarantine due to coming in contact with an infected person. In parallel, some of these people are subject to a certain degree of control by some platforms, which use algorithms to assign tasks to, monitor, evaluate and discipline them. Such technologically-enabled control is often referred to as “algorithmic management” , which further exacerbates their working conditions and their risk of being misclassified (see Section 2.2.2). Understanding how one’s behaviour (e.g. whether one accepts a task or not) influences access to future task opportunities is paramount, as it has implications for the income of people working through platforms, irrespective of their employment status. Since algorithmic management is a relatively new phenomenon and is largely unregulated, the challenges it poses are also faced by those working through platforms who are classified as workers and by the genuine self-employed. The negative effects of a potentially widespread misclassification of the employment status compounded by the control exerted by the platforms through algorithmic management, as well as by the difficulties related to enforcement, traceability and transparency in cross-border situations, are not limited to platform work. However, they are much stronger and more frequent on platforms – whose business models are founded on algorithmic management – than in ‘traditional businesses’ : according to one survey, only 42% of EU enterprises use at least one AI-based technology. Data access and collection challenges make it difficult to estimate the exact number of people working through platforms, and thus the exact number of those who may be affected by the aforementioned downsides of platform work. Based on a survey done in preparation of this report, there may be around 28.3 million people working through platforms in the EU-27 (6 million on on-location platforms, 22 million on online ones). A relevant share of these may be misclassified (see Section 2.2.1). The same difficulty exists for the estimation of the number of digital labour platforms active in the EU. A very conservative estimation found there may be more than 500 active platforms – a majority of which are on-location –, mostly concentrated in Western and Southern Member States (DE, ES, FR, IT, NL) and some Eastern Member States (PL, RO). Approximately 361 of them are SMEs , against 155 larger enterprises. The former may face unfair competition by the latter. Amongst other factors contributing to larger platforms’ size and success, there is the compensation of losses by investors with the aim to establish future quasi-monopolies by driving competitors out of business. Such losses are dampened through high profits, thanks to artificially low costs vis-à-vis consumers, made possible, among other things, by lowering labour costs through the misclassification of workers as false self-employed. The business models of many digital labour platforms may often be based on cutting social costs in the short-term to be more competitive and gain significant shares of the market they operate within in the medium-term. Such economic strategy is not conducive to long-term economic sustainability. It may also challenge the levelling of the playing field within the platform economy. Moreover, the aforementioned challenges in platform work are spurring governments to take action. This creates significant legal uncertainty for platforms, who have to comply with diverging policy approaches and heterogeneous judicial outcomes across Member States (see Annexes 9 and 10, respectively). Such context does not support the conditions for a sustainable growth of digital labour platforms in the EU. 2.2 What are the problem drivers? 2.2.1 Risk of employment status misclassification The key challenge in platform work is the risk of misclassification of the employment status. The employment status, i.e. being classified as a worker or as a self-employed, determines access, or lack thereof, respectively, to the EU and national labour acquis. It is therefore a key gateway to tackle most of the challenges in platform work which are related to working conditions and access to social protection, apart from the specific challenges posed by algorithmic management in the context of platform work. Determining the correct employment status is not straightforward and depends on national laws and CJEU case-law. However, in most cases, the level of control exerted over the person performing the work is one main element to consider. High levels of control are generally a defining characteristic of an employment relationship. Of the 28.3 million people working through platforms in the EU-27, circa 5.5 million are estimated to be subject to a certain degree of control from the platform they work through. These are spread between on-location platforms (2.3 million people) and online ones (3.2 million people). The risk of misclassification is proportionately much higher in the former (2.3 million out of 6 million, i.e. 38%) than in the latter (3.2 million out of 22 million, i.e. 15%). Given that around 90% of people working through platforms are estimated to be formally self-employed , it is likely that most of those 5.5 million people are misclassified. The assessment of such risk of misclassification is based on the supposed subordination of these people to the platform they work through, and not on the frequency/intensity of work they perform (i.e. weekly number of hours and/or percentage of income derived from platform work). The risk of misclassification is primarily driven by a lack of regulatory clarity. No Member State has so far comprehensively addressed the risk of misclassification in platform work. Some Member States (IT, ES, FR) have opted for sectoral legislation, focusing on transport and delivery platforms. A large number of Member States (BE, DE, EL, ES, FR, IE, IT, MT, NL, SE) clarify ambiguous employment relationships through legal, administrative or case law-based procedures which refer to general labour market situations and do not take into account the specificities of platform work. The flexibility inherent in, and the constantly evolving business models of, platforms have largely prevented the latter set of tools’ effectiveness. This is mirrored in the high number of court and administrative procedures initiated across the EU and beyond. Indeed, the lack of regulatory clarity on the employment status in platform work is compounded by the unconsolidated jurisprudence on the matter. In Member States and beyond, there have been more than 100 court decisions and 15 administrative decisions on cases of alleged misclassification in platform work. Although these procedures have often produced contradictory outcomes, most have led to the reclassification of the concerned people working through platforms (particularly on on-location ones in the transport and delivery sectors, which are likely the ones exerting the most control, see Section 2.2.2). The risk of misclassification is also driven by the weak labour market position of many of those concerned by it. Challenging a misclassification requires people to be knowledgeable about their rights and to be able to organise themselves and face the potential consequences of a lawsuit. This is especially difficult for people in a weak labour market position, such as low-income groups, young people and those with a migrant background. Minimum wage earners make up half the digital labour platforms’ workforce (see Section 2.1). People working through platforms in the EU are younger than workers in ‘traditional businesses’. In 2018, the average age was 33.9 years in platform work compared to 42.6 years in ‘traditional’ businesses. The proportion of foreign-born people doing platform work as a main occupation in the EU was 13.3%. Stakeholders’ views: Social partners agree with the Commission that the risk of misclassification is an important challenge in platform work. Other stakeholders, such as civil society organisations and associations representing people working through platforms, generally agree on its importance within the debate on platform work. 2.2.2 Issues related to algorithmic management Poor working conditions in platform work are also related to algorithmic management, which is inherent to the business model of digital labour platforms. Algorithmic management is particularly relevant for the allocation of tasks. More than half of platforms active in the EU (mostly on-location ones) grant low autonomy on task allocation (i.e. people are not free to choose which tasks to perform). It also entails surveillance, which is present in some form in platforms representing over 90% of overall earnings in the platform economy. The degree of algorithmic control varies a lot across sectors and platforms. On-location ones (particularly in food-delivery) exert significant algorithmic control. Furthermore, it can conceal employment subordination behind a claim of independence, based on a lack of human managers (it thus facilitates misclassification). Where there might be humans reviewing automated decisions, they might lack protection against undue repercussions for not enforcing automated decisions affecting people working through platforms. The lack of autonomy and the surveillance induced by algorithmic management in platform work can have negative impacts on the working conditions of people subject to it, for instance in terms of psychosocial stress (as people working through platforms feel constantly watched and evaluated) , risk of accidents (as algorithms may incentivise dangerous behaviour, for instance by offering bonuses for faster deliveries) and income unpredictability (algorithmic scheduling allows the allocation of shifts at short notice). Algorithmic management in a workplace context is not limited to digital labour platforms. It is used in very different ways - from very basic monitoring of work schedules, shifts and working hours to more complex applications aimed at task allocation and pay calculation. The foremost example is that of online retailers’ warehouses, where products for delivery are arranged according to an order that is only known by the algorithm underpinning hand-held devices, through which the workers are guided in their filling up of delivery trollies in the most efficient order. Such management systems are now spreading to supermarket warehouses too (Wood, 2021). There is currently limited evidence on the size of the issue. Estimates range from 7% (Eurostat) to 12% (ESENER) of enterprises using AI, but these concern different applications and types of AI-enabled technology. A survey carried out for the purposes of this report found that 42% of European companies use at least one AI-based technology. Such discrepancies show that, to date, it is not yet clear to what extent its limited application to ‘traditional’ workplaces affects people’s working conditions there, nor what is its actual take-up by companies in terms of automated management tasks. To the contrary, algorithmic management is inherent to the business model of platforms, where all but a few management tasks directly related to the services offered are automated. To date, algorithmic management is therefore a platform work quasi-specific challenge, which is not replicated to the same extent in the wider employment context. Because it is a relatively new phenomenon, algorithmic management remains largely unregulated under both the labour and internal market EU acquis (see Annexes 6 and 7, respectively). It can thus have nefarious effects on the working conditions of people working through platforms, regardless of their employment status. Genuine self-employed people working through platforms are negatively affected by the lack of safeguards against monitoring, surveillance and unaccountable, automated decisions concerning their contracts. People working through platforms as workers face the same challenges and more, including the impossibility for their representatives to be fully informed and consulted by platforms and the lack of appropriate safety and health rules catering to the specificities of platform work. Those affected the most are however false self-employed people, who, in addition to all of the above issues, struggle to challenge their employment status even more so than in ‘traditional companies’ with similar misclassification practices. This is because platforms are able to conceal their employer-like behaviour behind algorithmic management, the true functioning of which is difficult to both understand and prove in legal and administrative proceedings. Such challenges are driven by information asymmetries and insufficient dialogue between platforms and (representatives of) people working through them (see Annex A11.2). Platforms contribute to these challenges through their terms and conditions, which may unilaterally regulate pay, working time, dispute resolution, customer service etiquette and more, while using technological means to monitor, evaluate and discipline people’s work. This leads to unclear responsibilities and lack of redress mechanisms vis-à-vis unintelligible and unaccountable decisions, for instance as regards work sanctions and contract terminations. In 2019, riders were unfairly discriminated against by Deliveroo’s algorithm, which did not distinguish illegitimate from legitimate reasons for being unable to work, such as being sick. In 2020, people working through UberEats blamed unexplained changes to the algorithm for affecting their jobs and incomes. When they asked for explanations, they were told there was no “manual control” on task allocation , leading to lack of clarity for the people working through the platform on how the algorithm affects their working conditions.

The impossibility to transfer reputational data across platforms is also problematic. Although reputational data is not exclusive to digital labour platforms, in this context client-driven ratings determine people’s access to future tasks and/or job assignments. Because such ratings are linked to the platform through which they were given, the people they refer to are also tied to that very platform. This often causes a ‘lock-in effect’, by which people face too high an opportunity cost (in terms of future task assignments) to switch to the competitors of the platform through which they have built their online reputation. This issue also causes a complementary problem, by which incumbent people working through a platform who have good ratings tend to attract all the best assignments, to the detriment of newcomers with scarce or negative ratings (‘superstar effects’) . Overall, these issues reduce the professional mobility and weaken the bargaining power of people working through platforms, and prevent genuine competition between platforms. To date, there is no evidence of such problems existing or being particularly prominent outside of the platform economy. The General Data Protection Regulation and the forthcoming Artificial Intelligence Act both include important provisions for the challenges of algorithmic management, but do not fully address challenges of platform work from a labour law perspective (see Section 5.1 and Annex 8). The same is true for the P2B Regulation and the forthcoming Digital Services Act (see Section 5.1 and Annex 7). Stakeholders’ views: Trade unions recognise the challenges of unregulated algorithmic management in platform work and have expressed the fear that they may spread beyond platform work. Employers’ representatives stress that the spread beyond platform work is already happening. A majority of platforms believe there is a need to increase the basic level of transparency vis-à-vis algorithms (without touching upon business secrets and intellectual property issues), their ‘understandability’ and human oversight. National authorities, academics and experts also agree on the importance of ‘algorithmic management’ within the debate on platform work. 2.2.3 Issues related to enforcement, traceability and transparency, including in cross-border situations Issues related to enforcement, traceability and transparency, including in cross-border situations exacerbate the problem of poor working conditions and inadequate access to social protection. National authorities do not have easy access to data on platforms and people working through them, e.g. on their employment status, on the share of them who are actually active (and not merely enrolled without having done any tasks ) and on platforms’ terms and conditions. Only a minority of platforms’ terms and conditions (19%) clearly spell out the contractual relations with the people working through them. The problem of traceability is especially relevant when platforms operate in several Member States, making it unclear where platform work is performed and by whom. There is, generally speaking, an insufficient identification of platforms operating in the EU. Furthermore, 59% of all people working through platforms in the EU engage with clients from outside their country of origin, often simultaneously and under different employment statuses and terms and conditions. 22% of platforms operating in the EU are from third countries, while 19% do not have EU legal representatives; 41% operate in more than one Member State. It is noteworthy that traceability is not only a problem within online platforms work, but also in on-location ones. Indeed, even if the latter intermediate work which is carried out physically in a specific place, it is often far from clear where such platforms are legally based and which rules on employment, tax and social protection contributions inform their terms and conditions. This has repercussions for people working through platforms, but also for Member States’ authorities (see Section 2.3). Stakeholders’ views: Social partners agree that the Commission has sufficiently acknowledged the cross-border dimension of platform work in its preliminary analysis. Trade unions believe this is one of the main reasons warranting EU action. Most platforms acknowledge that enforcement, traceability and transparency, especially in cross-border situations, is a noteworthy issue in platform work, as do a majority of public authorities and many academics and experts. 2.3 Why is it a problem? Consequences for people working through platforms: As a result of their employment status misclassification, some people working through platforms may not be covered by the rights and protections of the EU and national labour acquis they should be entitled to. This often leads to low and unpredictable earnings, precariousness, poor safety provisions, higher risk of accidents due to a lack of protective equipment, lack of career perspectives and training opportunities. These challenges are exacerbated by platforms’ use of algorithmic management, which is characterised by information asymmetries and lack of scrutiny in social dialogue and collective negotiations. Platforms can thus conceal misclassification practices more easily. Also, many people working through platforms are unable to appeal against algorithmic management decisions because of unclear responsibilities and a general lack of redress mechanisms. As an indirect effect of Member States’ difficulties in accessing and processing relevant information on platforms, including in cross-border situations, people working through them are negatively impacted by the lack of enforcement of rules aimed at improving their situation, and by the potential inefficacy and/or limitations of future policies. Consequences for businesses, markets and consumers: Because of Member States’ diverging approaches to platform work and national courts’ heterogeneous decisions on the employment status, digital labour platforms face legal uncertainty and obstacles to the scaling-up of their business. This prevents a sustainable growth of the platform economy in the EU and leads to a general fragmentation of the single market. Platforms which contract genuine self-employed people may refrain from providing social benefits, insurance or training measures on a voluntary basis, for fear of being reclassified as employers as a result (‘chilling effect’). Platforms employing workers and traditional businesses may face unfair competition by platforms which cut costs by misclassifying as self-employed the people working through them. The same unfair practice may give them a dominant position in the market, with detrimental effects for consumer welfare. Businesses in sectors where algorithmic management is not widespread may face unfair competition by platforms and other companies cutting costs through unfair or illicit algorithmic management practices. Algorithm-driven unfair practices may also undermine consumer trust and affect consumer welfare, in view of their negative impact on working conditions in platform work and the general reputation of platforms. The difficulties faced by Member States vis-à-vis data access and enforcement of rules, including in cross-border situations, may result in further legal uncertainty for businesses. SME platforms may face unfair competition vis-à-vis bigger, international players who are able to conceal their operations behind multi-market presence claims. Consequences for Member States: The misclassification of people working through platforms translates into fewer revenues flowing into public budgets, since self-employed people tend to pay lower taxes and seldom pay into social protection schemes. Some self-employed people may autonomously decide not to pay social protection contributions due to individual risk-aversion (‘behavioural bias’). The lack of legal certainty concerning the employment status challenges Member States’ agency, by preventing their enforcement of labour, social protection and tax rules. Such challenges are mostly felt in Member States with higher shares of people working through platforms (DE, FR, IT, ES, NL, PL and RO), which are also, to date, the most active in terms of relevant policy actions (alongside AT, BE, DK, EL, IE, LU and PT). Member States’ prospective attempts at tackling the challenges of platform work are also constrained by the lack of relevant information because of data access and sharing challenges, including in cross-border situations. Indeed, it may be difficult for Member States to retrieve information on where platform work is performed and by whom, especially if platforms are based in one country and operate through people based elsewhere. 2.4 How will the problem evolve? Without policy action, the number of people working through platforms under poor working conditions and without adequate access to social protection will most likely continue to increase (see Section 5.1), in parallel with the growth of the platform economy as a whole. This makes the aforementioned challenges all the more pressing. In the last five years, the EU’s platform economy revenues have increased dramatically. A conservative estimate puts this growth at around 500%, from EUR 3 billion in 2016 to EUR 14 billion in 2020. An estimated three-quarter of these revenues originated from ride-hailing and delivery platforms. A more realistic estimate puts revenues in 2020 at EUR 20.3 billion. This was part of a total e-commerce sales growth of 12.7%, amounting to EUR 717 billion. Megatrends such as globalisation, digitalisation and other societal changes will spur a similarly sustained growth in the next few years (see Annex 12). Alongside North America, Europe will drive the growth of the global ‘gig economy’, which will likely reach EUR 385.9 billion in 2023, up from EUR 184.9 billion in 2018. The number of platforms active in the EU has also grown incrementally and will likely keep doing so in the next few years. Online platforms were predominant until 2015, but since then have been surpassed by on-location ones. A conservative estimate in 2020 found there were 235 active online platforms to 355 on-location ones in the EU-27. The Member State from which most platforms originate is FR (89), followed by BE (49), ES (44), DE (41), NL (38) and IT (26). In terms of aggregate earnings of people working through platforms, DE-originated platforms are largest (about EUR 1 billion), followed by FR (EUR 0.7 billion), NL (EUR 0.4 billion), ES (EUR 0.4 billion) and EE (EUR 0.2 billion). The 25 largest platforms of the same conservative estimate account for about four-fifths of the total earnings of people working through platforms, suggesting the digital labour platform economy in the EU-27 is arguably highly concentrated. Most of these offer on-location services (ride-hailing and delivery). Most platforms are of EU origin (77% in absolute numbers). These account for half of the aggregate earnings of people in platform work, with the overwhelming majority of the other half coming from platforms originally from the US. These numbers could decrease if smaller platforms are pushed out of the market, while total revenues will keep on growing. A projection done for this report foresees fewer than 300 on-location platforms in the EU-27 by 2030, while global revenues from ride-hailing platforms alone are expected to more than double by 2026, from EUR 95.8 billion (2020) to EUR 195 billion. This could result in the predominance of large platforms, which might thwart competition, innovation and the bargaining power of people working through platforms, with detrimental effects for their working conditions. New, transnational trends like the emergence and growing popularity of ‘dark kitchens’ and ‘dark stores’ , or other responses to changing consumer preferences, might pose new challenges to the world of work and make policies targeting platform work even more difficult to future-proof. 3.Why should the EU act? 3.1 Legal basis Article 153(1) TFEU provides the legal basis for the Union to support and complement the activities of the Member States with the objective to improve working conditions, social protection and social protection, workers’ health and safety, and the information and consultation of workers, among others. In those areas, Article 153(2)(b) TFEU empowers the European Parliament and the Council to adopt – in accordance with the ordinary legislative procedure – directives setting minimum requirements for gradual implementation, having regard to the conditions and technical rules obtaining in each of the Member States. This legal basis would enable the Union to set minimum standards regarding the working conditions of people working through platforms, where they are in an employment relationship and thus considered as workers. The Court of Justice of the European Union (CJEU) has ruled that “the classification of a ‘self-employed person’ under national law does not prevent that person being classified as a worker within the meaning of EU law if his independence is merely notional, thereby disguising an employment relationship”. False self-employed people would thus also be covered by EU labour legislation based on Article 153 TFEU.

Should possible Union action also address the situation of genuine self-employed people working through platforms in relation to the protection of their personal data processed by algorithmic management systems, it would be appropriate to base it, in as far as those specific rules are concerned, on Article 16 TFEU. Article 16 TFEU empowers the European Parliament and the Council to adopt – in accordance with the ordinary legislative procedure – directives laying down rules relating to the protection of individuals with regard to the processing of personal data by Union institutions, bodies, offices and agencies, and by Member States when carrying out activities which fall within the scope of Union law, and the rules relating to the free movement of such data. This legal basis could be combined with Article 153 TFEU, as both share the same legislative procedure, and would allow including genuine self-employed into the scope of a Directive addressing algorithmic management, as far as the processing of personal data by automated monitoring and decision-making systems is concerned. Alternatively, a Directive addressing the situation of genuine self-employed people working through platforms as business actors could be based on an internal market legal basis. Possible provisions in the TFEU include Article 53(1) – which empowers the EU to issue directives coordinating national provisions concerning the uptake and pursuit of activities as self-employed persons – or Article 114 allowing for the approximation of laws with regard to the establishment and functioning of the internal market. The situation of genuine self-employed people working through platforms might otherwise be addressed through measures based on Article 352 TFEU. This would either imply a Directive or a Council Recommendation (in coordination with Article 292 TFEU, by which the Council can adopt recommendations acting on a proposal from the Commission). 3.2 Subsidiarity: Necessity and added value of EU action Only an EU initiative can set common rules on how to address the risk of misclassification of the employment status that apply to all relevant platforms operating in the EU, while also preventing fragmentation in existing and forthcoming regulatory approaches to algorithmic management and addressing the cross-border dimension of platform work. The specific EU added value lies and results in the establishment of minimum standards in these areas, below which Member States cannot compete, but which can be expanded at national level. This may foster upwards convergence in employment and social outcomes across Member States. Such action would not unduly increase the possible administrative burden for platforms, and would take into account the impact on SMEs (see Annex A3.3). National action alone would not achieve the EU’s Treaty-based core objectives of promoting sustainable economic growth and social progress, as Member States may compete with one another to attract platforms’ investments by lowering the social standards and working conditions of people working through them, or simply by not enforcing their own rules. Some Member States may also see their interests damaged by the limitations posed to policy action by the legal uncertainty and lack of clear information on platform work, stemming from heterogeneous national legislative approaches across the EU and from authorities’ lack of means to ensure compliance of digital labour platforms with such rules. The working conditions and social protection of people doing cross-border platform work is equally uncertain and depends strongly on their employment status. National authorities (such as labour inspectorates, social protection institutions and tax agencies) are often not aware of which platforms are active in their country, how many people are working through them and under what employment status. Risks of non-compliance with rules and obstacles to tackling undeclared work are higher in cross-border situations, in particular when online platform work is concerned. In this context, relevant actions aimed at tackling the cross-border challenges of platform work, including but not limited to social dumping risks and lack of data to allow for a better enforcement of rules, are best taken at EU level. 4.Objectives: What is to be achieved? The EU’s ambition is to be digitally sovereign in an open and interconnected world, and to pursue digital policies that empower people and businesses to seize a human-centred, sustainable and more prosperous future. The general objective of this initiative is to: Improve the working conditions and social rights of people working through digital labour platforms, including with the view to support the conditions for sustainable growth of digital labour platforms in the European Union. The specific objectives through which the general objective will be addressed are to: (1) Ensure that people working through digital labour platforms have – or can obtain – the correct legal employment status in light of their actual relationship with such platforms and gain access to the applicable labour and social protection rights. (2) Ensure fairness, transparency and accountability in algorithmic management in the platform work context.

(3) Enhance transparency, traceability, and awareness of developments in platform work and improve enforcement of the applicable rules for all people working through digital labour platforms, including those operating across borders.

5.What are the available policy options? The below graph illustrates the intervention logic underpinning the development of the policy options, based on the analysis of the problem drivers and the problem definition (see Section 2). 5.1 What is the baseline against which options are assessed? Platforms’ business models will likely spread to new sectors and transform them. This can lead to certain improvements, such as more efficient processes, with algorithms effectively managing a vast pool of data and proposing user-friendly solutions. This can in turn expand business opportunities and lead to job creation. Still, such positive developments are unlikely to reflect on the quality of jobs in the platform economy. In a scenario of no relevant action at EU level, the number of people working through platforms who experience poor working conditions and inadequate access to social protection is expected to increase, in parallel with the growth of platform work as an overall trend. There are 28.3 million people working through platforms in the EU-27. It is estimated that this number will reach 43 million by 2025 and remain stable thereafter. The risk of misclassification of the employment status in platform work will continue to be unaddressed at EU level. Some Member States may put forward relevant policies to address this risk and may also tackle its underlying problem of inadequate access to social protection in the context of their national implementation of the Council Recommendation on access to social protection for workers and the self-employed. However, in the absence of common minimum standards across the EU, platforms will take advantage of fragmentation and, as is already happening , quit stringently regulated markets, while remaining active in Member States with laxer rules (‘regulatory shopping’). The fear of losing the platforms’ investments, sources of income for people working through them and services appreciated by consumers will push national governments to compete with one another to offer the most accommodating conditions to platforms. In the medium to long term, only large platforms will be able to grow and sustain a loss-making business model in a market dominated by legal uncertainty, due to heterogeneous jurisprudential approaches across Member States. The already high costs of non-compliance with rulings on misclassifications will multiply. This will push smaller players who are unable to sustain such costs out of the market, contributing to the concentration of the EU’s platform economy. Traditional companies employing workers in sectors where platforms are also active will continue to face unfair competition by the false self-employment model. The forthcoming initiative on collective bargaining for self-employed people in a weak position will likely bring benefits to those falling under its scope, especially in terms of stronger bargaining power in the labour market (for further details on the overlaps and differences between this latter initiative and the one supported by this report, see Annex 7). However, the problems related to misclassification will persist. Without further action, issues related to algorithmic management in platform work will persist. Relevant challenges will be partially addressed at EU level through a combined effect of the Platforms-to-Business (P2B) Regulation, the General Data Protection Regulation (GDPR) and the Artificial Intelligence Act (AIA). The P2B Regulation may prevent some unfair practices of platforms vis-à-vis the self-employed people falling under its scope – e.g. on the transparency and intelligibility of platforms’ terms and conditions, on fair contract termination notice periods, and on fair redress mechanisms – although workers (including reclassified ones) will remain unprotected. Building on the GDPR , some Member States may decide to introduce specific rules on the processing of workers’ personal data and algorithmic management, but this may lead to ‘regulatory shopping’ practices by platforms similar to those expected vis-à-vis national rules aiming to address the risk of misclassification. Automated decisions taken solely by algorithms will remain subject to the GDPR if producing legal or similarly significant effects. More legal clarity on what constitutes such effects and on the exceptions to the rule in the context of platform work will remain necessary to ensure an efficient protection of the rights of people working through platforms. Platforms could exploit this loophole. Existing transparency provisions under the GDPR will continue not to extend to the representatives of people working through platforms and labour authorities. The adoption of the AIA will tackle discrimination and bias in high-risk AI systems, ensuring the protection of fundamental rights in the EU. This will lead to improved trust in AI systems and to a better uptake of the technology. However, within the meaning of the proposed AIA, platforms, and not the people working through them, are to be considered as the ‘users’ of high-risk AI systems. The transparency provisions for high-risk systems therefore do not extend to the people affected by such systems. Once adopted, the AIA will improve transparency before the placement of algorithmic management systems on the market – by ensuring that platforms as users of high-risk AI systems have access to the necessary information on the potential consequences of said systems for employment contexts. Issues related to transparency on how the behaviour of people working through platforms affects their access to tasks which arise post-placement will remain unaddressed. This will leave them exposed to the risks of a use of algorithms potentially shaped by platforms against the interests of people working through them. It is estimated that around 72.5 - 101 million Europeans could be already exposed to some algorithmic processes at their workplace (on data uncertainties regarding the use of algorithms in the broader labour market, see the box in section 2.2.2.). If left unregulated in platform work contexts, it is unlikely that a horizontal approach will effectively address the challenges posed by AI to the world of work, since these will be too broad for constantly evolving business models not to filter through potential legal loopholes. The negative aspects of algorithmic management will thus continue to affect stress levels, work-life balance and income stability in platform work, only to be then replicated in traditional businesses once a sufficient number of these will have taken up AI-driven practices. Issues related to transparency and enforcement, including in cross-border situations, will remain unaddressed. The growth of platform work in all sectors will spur Member States to take action through policies tackling its different challenges. Said policies would however be thwarted by the lack of cross-border data sharing and reporting obligations. In the continued absence of relevant rules at EU level, non-transparent business models will likely spread among platforms, which by means of their cross-border nature would be able to operate in different Member States while only being registered in one (or, illegally, none). This lack of transparency would exacerbate the difficulties faced by Member States in understanding where some types of platform work are being performed, by whom and according to which regulations (or lack thereof). Some forthcoming EU initiatives would introduce binding Business-to-Government (B2G) data-sharing schemes and corporate reporting obligations , but their scope would be too narrow and too wide, respectively, for platforms to be captured in any meaningful way. Governments will face growing difficulties in the enforcement of rules on labour, tax and social protection, especially in cross-border situations. They may also face increasing fiscal shortfalls caused by platforms not paying taxes nor social protection contributions. Some Member States may introduce reporting obligations, but platforms’ ‘regulatory shopping’ would make them ineffective. 5.2 Policy options addressing the risk of misclassification (Policy Area A) The policy options to address the risk of misclassification of the employment status in platform work differ in strength and expected impacts. Most of the following options are not mutually exclusive. Depending on the desired level of ambition, options A1 and/or A2 could be combined with either A3a, A3b or A3c. 5.2.1 Option A1: Interpretation and guidance This option would provide non-binding guidance to economic actors, policy-makers and legal institutions on the interpretation of national (and EU) case law on the concept of ‘worker’, notably on the jurisprudence on misclassification in the platform economy. This would include possible criteria or indicators in favour of, or against, the existence of an employment relationship (or of self-employed activity) in platform work. 5.2.2 Option A2: Shift of the burden of proof and measures to improve legal certainty This option would introduce the below set of procedural facilitations and dispute prevention mechanisms. They would allow misclassified self-employed people on platforms to challenge their employment status, and digital labour platforms to ascertain the correct employment status for a given business model:

—a rule on shifting the burden of proof: to contest their self-employed status in legal proceedings, people doing platform work would only have to establish basic proof of elements indicating an employment relationship (prima facie evidence). It would then be for the digital labour platform to prove that the person is in fact self-employed; —a certification procedure would enable digital labour platforms, as well as people working through them (or their representatives), to obtain legal certainty concerning the correct designation of the contractual relationship between the digital labour platform and the person working through it. The decision to certify such status would be taken through a simplified out-of-court procedure by an independent body (e.g. labour authority, university), after analysing relevant facts and hearing both sides. It would apply to all contractual relations of the digital labour platform sharing the same organisational features and be valid for as long as the platform does not substantially change the contractual conditions; -a clarification that insurances, social protection and training measures voluntarily provided or paid by the platforms should not be considered as indicating the existence of an employment relationship. This would remove the ‘chilling effect’ that keeps platforms from improving working conditions of the genuine self-employed. The combination of these instruments would ensure a balanced approach to achieving the correct employment status classification. Platforms operating through genuine self-employed people would have an incentive to engage in the certification procedure, through which they would obtain a certain legal certainty for their business model in a relatively hassle-free and low-cost process. It would be possible to challenge decisions on certification in court, but such challenges would no longer benefit from the shift in the burden of proof. The clarification on insurances, social protection and training measures would further reassure platforms operating through genuine self-employed people, while allowing for the latter’s conditions to improve. In situations of misclassification, the shift of the burden of proof would guarantee that false self-employed people working through them have a simplified way to obtain their correct employment status classification. 5.2.3 Option A3: Rebuttable presumption (including a shift in the burden of proof) This option would introduce a rebuttable presumption of the existence of an employment relationship with digital labour platforms. It would thus determine the employment status that should apply as a standard rule. The presumption would not be absolute. Digital labour platforms would be able to counter it in legal or administrative proceedings by proving that the person working through them is correctly classified as self-employed. It thus contains a shift in the burden of proof, as in Option A2, but without the need for the claimant to present any prima facie evidence. Moreover, such presumption could be relied on not only by individuals in reclassification claims before courts or administrative bodies, but also by: -trade unions when organising collective representation, action or bargaining; -labour inspectorates when conducting inspections or imposing sanctions; -social protection or tax authorities when collecting contributions or taxes. The personal scope of this option could be diversified as follows: ·Sub-option A3a: Rebuttable presumption applied to on-location digital labour platforms, where misclassification is frequent. All successful reclassification cases identified (both jurisprudential and administrative) concerned on-location platform work. ·Sub-option A3b: Rebuttable presumption applying to all digital labour platforms exerting a certain degree of control over people working through them and their work. Such control by digital labour platforms could be established through a non-exhaustive list of indicators, including, for instance, the following: -effectively determining, or setting upper limits for, the level of remuneration; -controlling or restricting the communication between the person performing platform work and the customer after the intermediation has taken place; -requiring the person performing platform work to respect specific rules with regard to appearance, conduct towards the customer or performance of the work;

-verifying the quality of the results of the work. ·Sub-option A3c: Rebuttable presumption applied to all digital labour platforms, regardless of the type and /or control exerted. 5.2.4 Stakeholders’ views Most platforms and employers’ representatives oppose the idea of reclassification of people working through them as workers through a rebuttable presumption, as per Option A3. Two notable exemptions are represented by Dutch food-delivery platform JustEat Takeaway and Finnish food-delivery platform Wolt. Some online platforms say they would consider leaving the EU market if such options concerned them. Employers’ representatives acknowledge the challenges related to the risk of misclassification, but maintain that addressing them should be a national prerogative. Some on-location platforms advocated a certification procedure similar to that proposed under Option A2. The preferred option for most on-location platforms would be reassurances allowing people to remain self-employed while gaining the right to collectively bargain (which is the subject of another initiative under preparation by the Commission) and being given some social protection by platforms, e.g. sick leave and insurance (Option A2). While agreeing with platforms and employers’ representatives that businesses and consumers would probably face higher costs as a result of reclassification, trade unions and representatives of people working through platforms stress that the improvement of employment standards should be the priority of this initiative and that concerns over costs cannot overshadow the need for better working conditions in platform work. All trade unions and representatives of people working through platforms agree that a clarification of an employment relationship is needed. According to many of them, platforms should employ people working through them if they fall under the criteria of an employment relationship (Option A3b). Some, stressed that the chosen policy option should allow for case-by-case determination of an employment relationship, as there are different types of platforms with various forms of work organisation. This would be possible under Option A3b. Some trade unions said that reclassification should be limited to on-location platforms only, where false self-employment is more frequent (Option A3a). Others would prefer a rebuttable presumption applying to all platforms. Some expressed a preference for a simplified, out-of-court administrative procedure to reclassify workers (Option A2). The European Parliament has called on the Commission to introduce a rebuttable presumption of an employment relationship for people working through platforms (Option A3), combined with the reversal of the burden of proof and possibly additional measures. Some representatives of national authorities expressed a preference for the non-binding guidance (Option A1). However, there were diverging opinions. A majority of the representatives prefer either a rebuttable presumption (Option A3) or the shift in the burden of proof (Option A2). A majority of experts and academics agreed that recommendations/guidance from the EU would not be effective or bring any change. Most experts called for hard law which could help to bring claims in courts, specifying that a rebuttable presumption might only be suitable for on-location platforms. All interviewed experts agreed that introducing a third category status would be ineffective and would increase legal uncertainty. 5.3 Policy options addressing algorithmic management (Policy Area B) Algorithm-driven business models and automated decision-making bring challenges to working conditions, in particular in platform work. The initiative would build upon the existing instruments (labour law, GDPR, P2B) and proposed ones (AIA, DSA) to introduce new rights in this area to ensure fairness and transparency in algorithmic management in the platform work context, notably by bringing data rights within the remit of labour law, where actors such as trade unions and labour inspectorates play an important role. The options considered build on the evidence that algorithmic management is, to date, a platform work quasi-specific challenge which should be addressed as such. They differ in the level of ambition and in the personal scope considered (workers and self-employed), but remain within the remit of digital labour platforms, catering to their business specificities. 5.3.1 Option B1: Guidance This option would consist in non-binding guidelines regarding possible actions (e.g. best practice sharing, information campaigns, setting up of national ombudsmen offices to deal with complaints) by Member States or digital labour platforms to strengthen the rights of people working through platforms vis-à-vis algorithmic management, without prejudice to the role of the European Data Protection Board in issues falling under the scope of GDPR. 5.3.2 Option B2: Transparency, consultation, human oversight and redress This option would build on existing data protection and other legislation by specifying the application of certain GDPR rules in the context of platform work and by creating new labour rights and obligations for platforms [/employers] regarding: -transparency of automated monitoring and decision-making systems, to make them more intelligible to the people affected, their representatives and labour inspectorates (including on task allocation and performance assessment); -consultation with workers’ representatives on substantial changes in work organisation or in contractual relations linked to algorithmic management;

-human oversight and review of significant decisions taken by algorithms in individual cases (e.g. termination and suspension of accounts or decisions with similar effects); protection against undue repercussions for human supervisors; -requests to provide written explanations for such decisions and/or to reconsider them within reasonable time periods (e.g. one week, longer deadline for SMEs); -restrictions on the collection of certain data (e.g. while the person is not working); -risk assessments on the impact of algorithmic management on the safety and health of workers. The personal scope of these rights could cover: ·Sub-option B2a: employed people working through platforms; ·Sub-option B2b: employed and self-employed people working through platforms. Foreseen new material rights under option B2 would be key for shedding further light on the possible concealment of the exercise of control by platforms via algorithms. As such, they will reinforce potential new measures to address the misclassification of the employment status (Policy Area A). Beyond the notion of control, however, algorithmic management influences the access to tasks (and hence income). Understanding how people’s behaviour affects algorithmic decisions on task allocation might therefore be particularly important for the genuine self-employed working through platforms, who do not have the minimum level of income security and predictability guaranteed by the status of worker. Some of the provisions in existing and proposed EU legislation are relevant for the identified algorithmic management challenges, still, specificities of employment relations necessitate further action beyond what is achievable with these instruments. For example, the proposed Artificial Intelligence Act (AIA) would ensure transparency and provision of information to users of high-risk AI systems (platforms), but such rights do not extend to the people affected by such systems. Because it is essentially a product safety legislation, the AIA introduces safeguards before AI systems are placed on the market, put into service and used. Its rationale therefore does not and cannot take into account the specificities of employment relations. For instance, it does not reflect the importance of social dialogue in the world of work. It also cannot be the basis for specific rights and rules in employment relations, which have been established over decades. Furthermore, the AIA proposal is based on an internal market legal basis (Article 114 TFEU). Without an EU-level labour framework for regulating algorithmic management, there is a risk that national regulations in this area (such as the recent Spanish ‘Ley Riders’ law) might be seen by courts as infringing the functioning of the internal market and thus be struck down. An EU-wide labour law framework would not pose this risk. Besides, it is not an uncommon practice to introduce specific labour legislation even where general product safety rules exist already. Occupational safety and health rules are one such example. While GDPR provisions are relevant for increasing transparency to individual data subjects, they do not apply to worker representatives or to labour inspectorates. GDPR provisions (Article 22) granting the right for data subjects not to be subject to a decision based solely on automated processing do not specify which automated decisions are significant enough in the platform work context to necessitate human review. They are not very specific on which kind of information regarding automated monitoring and decision-making systems are to be made available. In the fast-moving platform work context it is also important to ensure that periods for reaction are shorter than those provided by redress opportunities available under the GDPR. For further analysis on the complementarities between Option B2 and the AIA and GDPR, see Annex 7. Finally, the Platforms-To-Business (P2B) Regulation provides for transparency, safeguards and complaint mechanisms for certain self-employed ‘business users’ of online intermediation services (those engaged in direct transactions with clients). Moreover, its material scope does not address issues such as the need for human monitoring of automated systems, the need for transparency in automated monitoring and decision-making systems (apart from ranking) and the need for a specific review mechanism vis-à-vis automated decisions with significant impacts on working conditions, so Option B2 would address these gaps for self-employed people to whom the P2B Regulation already confers relevant rights and for those excluded from its scope, while creating new rights for people classified as workers. 5.3.3 Option B3: same as Option B2 + portability of reputational data In addition to the rights granted under Option B2, this option would promote the use of the existing right to data portability under the GDPR and extend it to reputational data (including ratings by platforms and clients) to ensure better professional mobility across the platform economy. Platforms would need to make their reputational systems compatible and interoperable to ensure that such extended right to data portability could be exercised efficiently. The scope of this option could differentiate between: ·Sub-option B3a: employed people working through platforms; ·Sub-option B3b: employed and self-employed people working through platforms. 5.3.4 Stakeholders’ views Most platforms and employers’ representatives believe that the GDPR, P2B and proposed AI Act regulations are sufficient to address algorithmic management challenges. If a new instrument is to be pursued, they believe guidelines would suffice (Option B1). Some have called for an approach based on transparency, human oversight and accountability in full respect of data protection. Platforms agree that the new measures should aim at increasing the ‘understandability’ of algorithms, human oversight and right to redress. A majority of platforms and employers’ representatives saw ratings portability as unfeasible from a technical infrastructure viewpoint. Even if it were feasible, some platforms believe they could not trust the ratings of competitors. They thus oppose Option B3. All trade unions and representatives of people working through platforms support EU action to address algorithmic management in the platform work context through hard law (as per Options B2 and B3). They claim that non-binding guidance or recommendations as envisaged by Option B1 would be ineffective. A set of standards or rights established by the EU should allow for domestic negotiations and the development of national rules. Most representatives are against the automatic termination and suspension of accounts and support the idea of eliminating such practice from platform work, as envisaged by Options B2 and B3. Some support Option B3, saying that the portability of ratings is important to ensure people working through platforms are not dependent on one platform and feel ‘locked in’.

The European Parliament has called on the Commission to ensure algorithmic transparency in platform work. Such action should improve rights in case of restriction, suspension or termination by the platform, by ensuring all people working through platforms have the right to a prior reasoned statement, and, if this is disputed, a right of reply and to effective and impartial dispute resolution (Option B2). Some representatives of national authorities advocate for guidance (Option B1) to strengthen the rights of people working through platforms vis-à-vis algorithmic management. Such guidance should be flexible and adjustable in view of the rapid developments in the field. Others worried that if guidance (instead of measures envisaged under Option B2 and B3) are introduced, national regulatory actions may be too heterogeneous, leading to further problems of cross-border social dumping. National representatives believe transparency obligations should concern a platform’s dealing with the working conditions (including information on how wages are determined) and people’s performance evaluations. Most interviewed academics argue that guidance (Option B1) might be overlooked by Member States. They also agree that while regulating at EU level is essential, new rules should leave room for national social dialogue and regulations. Most interviewed experts agree that a new law enshrining algorithmic management rights in the labour acquis is necessary to complement the GDPR and P2B regulation. 5.4 Policy options on enforcement, traceability and transparency, including in cross-border situations (Policy Area C) Cross-border platform work creates additional challenges to national authorities, related to verifying platforms’ compliance with existing laws and their enforcement, including as regards collection of taxes and social protection contributions. Cross-border and technology-driven business models are inherent to platform work and constitute part of the attractiveness of its working conditions. Indeed, the competitive advantage of some platforms may rightfully lie in their superior technological know-how, efficient algorithmic practices and strategically built multi-market presence. The following policy options take stock of this reality while aiming at increasing transparency in platform work and improving data access for authorities, including in cross-border situations. Platforms would therefore not be required to disclose the detailed functioning of their automated monitoring and decision-making systems, including algorithms, or other detailed data that contains commercial secrets or is protected by intellectual property rights. Rather, the following options would simply require them to make publicly available the data they hold on the number of people working through them, the jurisdiction under which they do so and based on what remuneration/working contracts agreed with them.. 5.4.1 Option C1: Clarification on the obligation to declare platform work, including in cross-border situations This option would clarify the obligations of platforms which act as employers to declare the work performed through them to the authorities of the Member State in which people working through platforms as workers pursue their activity, and to share relevant data (e.g. remuneration paid) with those authorities. This would support the traceability of cross-border platform work, close data gaps and provide clarity on applicable rules, notably labour law, social protection coverage and coordination, and rules regarding jurisdiction and applicable law, and thereby contribute to the enforcement of existing rules. It would also ensure that digital labour platforms are treated on an equal footing with offline businesses. 5.4.2 Option C2: Publication requirements for platforms This option would require platforms to publish on their websites – for each Member State in which they are active – information on their most up-to-date Terms and Conditions for people working through them, the number of people working through them, their employment status and social protection coverage, as well as operational data such as the average remuneration, working time and number of tasks accepted/refused per worker. Such information would have to be updated on a regular basis (e.g. twice per year) or provided upon request by relevant authorities. Some of such obligations could be more stringent for platforms of a certain size, allowing for a more proportionate approach vis-à-vis SMEs. SMEs would thus be required to update their websites less frequently. Measures under Option C2 would complement the provisions foreseen at the moment of writing this report in the forthcoming Data Act in situations where governments need to access data held by platforms for reasons of public interest (platforms qualifying as small and micro enterprises would likely be excluded from the obligation to provide such data). 5.4.3 Option C3: Register of platforms This option would involve a central public register, covering all platforms active in a given Member State. Similarly to Option C2, this register could also include the most up-to-date terms and conditions of platforms, the number of people working through them and information on under which status and social protection coverage they do so, as well as other operational data. Having these data in one central register would bring more transparency and easier access to information for regulators, enforcement authorities, people working through platforms, and other relevant stakeholders. Such information would have to be updated on a regular basis and could be more stringent for platforms of a certain size, allowing for a more proportionate approach vis-à-vis SMEs. SMEs would thus be required to input such a register less frequently. In addition to the options considered above, the relevance of platform work will be taken into account in the pilot project on the European Social Security Pass, whose aim is to explore the feasibility of a solution to digitise the cross-border verification of social protection coverage and entitlements. Such a digital solution could address challenges in the identification of people working through platforms across borders or in two or more Member States for social protection coordination purposes. Since this is a separate initiative, it will not be assessed in this report. More information is provided in Annex A11.3. 5.4.4 Stakeholders’ views Employers’ representatives call for additional transparency on platform data, including in cross-border situations, but stress that it should not imply too many bureaucratic burdens for smaller platforms. Some platforms stress that reporting is only relevant for platforms which do not employ their workers (as those who do already report data to national authorities). They pointed to single market rules that are relevant to cross-border issues, which also apply to platforms and self-employed people working through them. SGI Europe singled out the European Labour Authority (ELA) as an enabler of cross-border good practices. Online platforms put forward the idea of EU action to create a system for easing legal checks on freelancers. They believe it is currently difficult to carry out such checks (e.g. on work permits) on people who want to work through them, which discourages them from entering markets in other Member States. Some platforms and associations have endorsed the importance of public institutions accessing privately held data for policymaking purposes. Trade unions and representatives of people working through platforms would want platforms to have a representative in each Member State they do business in, to increase legal accountability. They also stressed the importance of applying existing rules on the choice of jurisdiction (Brussels Ia and Rome I Regulations) to the context of platform work and that of existing and forthcoming initiatives on social protection coordination (e.g. European Social protection Number). ETUC underlined border cooperation between labour inspectorates is very important and that ELA could play a crucial role in this. The European Parliament has called on the Commission, in collaboration with Member States, to collect robust and comparable data on people working through platforms. This should provide a more accurate idea of the scale of digital labour platform activity and deepen the knowledge of the working and employment conditions of people working through platforms. Representatives of national authorities stress that Member States have different sets of competences and working methods vis-à-vis cross-border social protection and taxation. Some thus support having guidance, which they believe would therefore benefit all actors involved. Many of them endorsed having publication requirements, but stressed these should be limited to platforms above a certain size. Academics think some information held by platforms would be useful for policymaking purposes, since it is currently hard for policymakers to estimate how many people work through platforms, for how long, earning how much. Others do not believe that cross-border issues overall are a very urgent matter.

5.5 Accompanying measures All policy options in the three areas presented above could be introduced in combination with accompanying measures. These could be part of a separate Communication or Recommendation, and could include: 1.Inviting Member States to provide information, advice and guidance to people working through platforms on the tax, social protection and/or labour law obligations and data protection rights related to their platform activity via information websites and hotlines; 2.Supporting social dialogue and capacity building of social partners in platform work, including establishment of communication channels allowing worker representatives to contact people working through the platforms and provide them with relevant information; 3.Encouraging the exchange of best practices and mutual learning between Member States. The accompanying measures would have the purpose to enhance the effectiveness of Policy Areas A, B and C. They would serve as a bridge between this initiative and other related initiatives of the European Commission, such as that aimed at removing obstacles to collective bargaining for the self-employed in a weak position (see Annex 7) and other pre-existing measures pertaining to the EU’s social and labour acquis (see Annex 6). Given the high-level and general character of these Accompanying Measures, their specific impacts would be too difficult to assess. They thus do not feature in Section 6. Nevertheless, in Section 8 their positive effects are considered in combination with the measures under the Preferred Option. 5.6 Options discarded at an early stage Three options addressing the employment status of people working through platforms have been discarded so far: -Defining ‘workers’ at EU level to clarify under which conditions people working through platforms benefit from labour rights. In accordance with the Treaties, EU labour law can only “support and complement” Member States’ activities. While CJEU case law interprets the personal scope of labour law directives, interfering with national concepts of ‘worker’ and ‘self-employed’ to determine the employment status of people working through platforms at EU level could run counter the subsidiarity principle. Neither trade unions’ nor employers’ representatives support the introduction of an EU definition of ‘(platform) worker’. -Establishing a ‘third’ employment status at EU level to grant certain labour and social protection rights to all people working through platforms, irrespective of their employment status. Both trade unions’ and some employers’ representatives reject the idea of establishing an intermediary status between ‘worker’ and ‘self-employed’ at EU level, on subsidiarity grounds. Imposing such third status on Member States would be equally sensitive from the point of view of subsidiarity, as it would imply going beyond the field of working conditions into matters of social protection. During the consultations carried out for this report, most interviewed representatives of public authorities said people working through platforms should be included in the EU’s two existing categories of employment (i.e. worker and self-employed) without creating a third one. -Introducing a conclusive (‘irrebuttable’) presumption to the effect that all people working through platforms (possibly in a certain sector) would be deemed to be in an employment relationship, without any possibility for platforms to prove the contrary. Such an option seems disproportionate, as certain platforms which are legitimately based on a self-employed business model could fall within the scope of this presumption, merely because of their sector of activity. 6. What are the impacts of the policy options? The measures under the three Policy Areas considered in Section 5 may have different impacts on different stakeholders, depending on which options are implemented. Options under Policy Area A may have low to high costs for businesses, offset by low to high benefits for public authorities and, most notably, people working through platforms. Options under Policy Area B are likely to have low costs for businesses and high benefits for people working through platforms, both workers and self-employed depending on the chosen personal scope. Options under Policy Area C may have low costs for businesses and public authorities, with moderate to high benefits for the latter and, indirectly, for people working through platforms.

Furthermore, the combination of measures under Policy Area A and C may ensure a level playing field between platforms currently operating through false self-employed people, on the one hand, and platforms operating through workers as well as traditional businesses, on the other. The level playing field would come through the aligniment of the costs (in terms of tax and social protection contributions) that would be faced by the former – following a reclassification– to those already borne by the latter as employers. Importantly, measures under Policy Area B concern the platform work-specific challenge of algorithmic managament. Although they aim at the introduction of new obligations which would only be faced by digital labour platforms, this would not disadvantage them, since traditional businesses do not make use of AI-driven practices to the same extent (see box in Section 2.2.2). These measures would thus not negatively affect the level playing field. All measures considered under Policy Area A, B and C would have stronger impacts in those Member States where platform work is more widespread (mostly Western and Southern Member States – see Annex A4.2, Figures B and C). When it comes to territorial impacts, cities with up to 100,000 inhabitants could be impacted the most in terms of availability of services since platforms, if forced to optimise their business activities because of compliance costs with this initiative, might quit small smarkets in favour of larger cities, where they could take advantage of economies of scale. Such impacts would however only relate to on-location platform work. For this type of platform work, it is already the case that platform work is relatively more available in larger cities. Such platforms operate in only 3% of all cities with up to 100,000 inhabitants, but in 39% of cities with more than 1 million inhabitants. Evidence from the survey conducted for the study underlying this report shows also that most of the people who work through platforms are concentrated in larger cities. Among the respondents who provide on-location services, 28% were based in cities with up to 100,000 inhabitants, while the remaining 72% were in larger cities. For a more fine-grained territorial impacts analysis, see Annex A4.2. It should be noted that the analysis of impacts are subject to a certain degree of uncertainty, given the general scarcity of data available on platform work and the high number of assumptions which the projections and forecasts had to build upon. Further details on the limitations of the impacts’ analysis are given in Annex A5.1. 6.1 Impacts of options under Policy Area A 6.1.1 Economic impacts Benefits for businesses, markets and consumers: Measures under Policy Area A would benefit platforms that already employ workers by making sure that platforms operating through false self-employed people follow the same regulations and do not engage in unfair competition. For the same reason, temporary work agencies – e.g. those which supply riders to some delivery platforms – stand to gain from the measures under Policy Area A if, as it is likely, platforms reclassified as employers were to use their services to deal with surges in consumer demand. Most of the platforms affected under the different options would be of EU origin (see Tables 6-9, Annex 4.1): from 77% under options A1 and A3c to 90% under options A2 and A3a. ‘Traditional businesses’ that compete with platforms by operating in the same sector would enjoy indirect benefits from measures under Policy Area A, thanks to a newly level playing field in the costs for social protection contributions (which, to date, are on average 24.5% higher for companies that employ workers compared to those, including platforms, that rely on self-employed contractors ). Platforms which offer services through genuine self-employed people may benefit from increased legal certainty vis-à-vis potential court challenges. Platforms operating through false self-employed would also benefit from increased legal certainty and lower non-compliance costs, which it is estimated would reach EUR hundreds of millions in the baseline scenario (see Section 5.1). Measures under Policy Area A may increase the quality of services offered to consumers on platforms. Interviewed stakeholders and experts argued this could be the case thanks to reclassification, since workers would receive training on how to improve their work. For example, people employed by Hilfr, a cleaning services platform in Denmark which signed a collective agreement with trade union 3F, are now eligible to receive training on the safe use of chemicals. This may explain why 60% of Hilfr’s revenues come from cleaners employed by the platform , even though customers can also choose to hire the self-employed cleaners who provide services at a lower price. Costs for businesses, markets and consumers: Measures under Policy Area A would affect a varying number of platforms (see Tables 6-9, Annex 4.1). Options A1 and A3c would affect all digital labour platforms currently active in the EU. Option A2 would affect mostly ride-hailing and delivery platforms (around 25% of all platforms). Option A3a would affect on-location platforms representing around 64% of all platforms. Option A3b is expected to affect platforms representing around 32% of the total. If forced to hire their self-employed contractors following a court’s reclassification, platforms would be faced with annual costs of up to EUR 4.5 billion, depending on the measures introduced (see Table 1, Annex 4.1). These costs would include the increase in earnings for people who previously earned less than the minimum wage (which they would be entitled to after reclassification), the social protection contributions made on their behalf, as well as taxes. Platforms facing such costs may decide to partially pass them on to their newly acquired workers (e.g. by lowering the salaries of those who were already earning above the minimum wage, see next section), to businesses to whom they offer services or to their customers. Businesses that rely on platforms in their operations may be faced with higher service fees. These, compounded by the reduced number in people working through platforms, may lead to some decrease in overall revenues (a lack of data does not allow to quantify objectively such loss). However, new companies might emerge to gain the market share of platforms going out of business because of the law. Companies based on alternative business models, such as cooperatives, might have opportunities to grow once the playing field were levelled. Interviewed academics and trade unionists foresee similar scenarios and pointed to the correlation between better working conditions of workers and their companies’ productivity that is found in literature , which could also apply to platforms after reclassification. Options under Policy Area A may increase the service prices paid by consumers, depending on how many platforms would become employers and on the revenue available to them to compensate for higher costs (instead of passing them entirely onto consumers). One platform estimated such hikes could hover around 30-40% if it fell under the scope of the rebuttable presumption (option A3). A more realistic estimate, based on available case studies, puts this figure at around 24%. In the delivery sector, consumers may face longer waiting times as a result of fewer people offering services through platforms. The increase in consumer prices as a result of reclassification might be lower in more competitive markets, where companies might be pushed to cut costs (or profits) to remain competitive. The impact on EU-wide competitiveness and innovation potential may be null to moderate, depending on the platforms affected. Most on-location platforms (i.e. delivery and ride-hailing) would be impacted equally in all Member States and their services’ extra-EU exportability, which by the very nature of these services is low to null, would not change. A minority of on-location platforms might quit less profitable markets at local or national level (e.g. if knowledge of local languages is not needed to perform that very service) to compensate for overall higher costs. Online platforms operating in the EU may become less competitive vis-à-vis their counterparts active in more laxly regulated markets. They could either go out of business or leave the EU. Such negative effects should be considered against a scenario of increased regulatory certainty and reduced legal risks. Benefits for Member States: Measures under Policy Area A facilitating reclassification may increase annual revenues for public authorities by up to EUR 3.98 billion. These would come in the form of additional tax and social protection contributions coming from platforms, workers (including newly reclassified ones) and genuine self-employed people (including those obtaining such status as a result of measures under Policy Area A). Up to EUR 2.64 billion would concern on-location platforms, and up to EUR 1.33 billion online ones. Public authorities would also enjoy enhanced legal certainty and procedural clarity vis-à-vis reclassification requests’ assessments and decisions. Costs for Member States: Options A2 and A3 could entail some costs for public authorities, who would have to deal with the certification and/or reclassification procedures. Such costs (entailing setting up new bodies) may be negligible or may be compensated by the revenues generated by those very bodies. For instance, in Italy, the setting up of work contracts certification committees entailed una tantum expenses that were then offset by the income generated through fees paid by the parties to the certified contracts (such fees are established at local level and vary between EUR 100 and 800). Among the interviewed representatives of national authorities (see Annex A2.3), most could point to existing bodies which could deal with the changes brought by the initiative. Processing misclassification claims would arguably fall under the already foreseen running costs of courts and administrative bodies. Furthermore, the increased legal certainty stemming from options under Policy Area A may reduce the overall number of court and administrative cases related to misclassification in platform work. 6.1.2 Social impacts Benefits for people working through platforms: Measures under Policy Area A would improve the access to, and ease the process of, litigation to address misclassification. This may lead to the reclassification of up to 4.1 million people (up to 2.35 million on on-location platforms, 1.75 million on online ones) depending on the measures implemented (see Table 2, Annex 4.1). As a consequence, these people working through platforms reclassified as workers would be covered by the existing EU and national labour and social acquis. This would bring them substantial social benefits in terms of improved working conditions, including health and safety, employment protection and access to training opportunities. As workers, they would also gain access to social protection according to national rules. People who currently earn below the minimum wage would enjoy increased annual earnings of up to EUR 484 million, as statutory laws and/or industry-wide collective agreements would cover them as well. This means an average annual increase in EUR 121 per worker, ranging from EUR 0 for those already earning above the minimum wage before reclassification to EUR 1800 for those earning below it. In-work poverty would thus decrease as a result of reclassification. Income stability and predictability would improve. Genuine self-employed people working through platforms (and those confirmed to be so after reclassification) would benefit from increased legal certainty. Up to 3.78 million people at risk of misclassification would be confirmed to be genuine self-employed, and possibly obtain more autonomy and flexibility as a result. If implemented, option A2 may also lead between 1.5 and 2.47 million genuine self-employed people to enjoy better working conditions and improved access to social protection, as a result of the removal of the ‘chilling effect’ on platforms willing to offer such benefits. Costs for people working through platforms: Measures under Policy Area A may negatively affect the flexibility enjoyed by people working through platforms. However, such flexibility, especially in terms of arranging work schedules, may be only apparent, since actual working times depend on the real-time demand for services, supply of workers, and other factors. It is difficult to meaningfully quantify the impacts of measures under Policy Area A on overall employment levels. Such a quantification would have to consider a very high number of variables (e.g. evolving national regulatory landscapes, shifts in platforms’ sources of investment, reallocation of tasks from part-time false self-employed to full-time workers), as well as assumptions on the behaviour affected actors would have in response to the measures. There are some real-life examples which give an idea of how diverse the reactions could be to reclassification measures, depending on local circumstances and various factors. There is one example provided by Uber, in Geneva, which reduced employment as a result of reclassification; another example provided by Glovo, in Spain, which employed some of its couriers and changed conditions for others so that they would operate as genuine self-employed; a third example comes from Uber Eats, in Spain, which turned to temporary agency work. Only one platform in Spain (Deliveroo) announced it would leave the market as a result of the Ley Riders. It should be noted that this platform had then a weak position in