COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE 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
Date: 2021-12-09
Institutions: Directorate-General for Employment, Social Affairs and Inclusion, European Commission
Subjects: EU employment policy, digital transformation, labour law, online platform worker, self-employed person, staff, working conditions

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  EN 

   EUROPEAN COMMISSION  Brussels, 9.12.2021  SWD(2021) 397 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE 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) 396 final}  
 
 
What is the problem being addressed? 

A. Need for EU action 

Some  people  working  through  digital  labour  platforms  face  poor  working  conditions  and 
inadequate access to social protection. In many cases, this concerns people who are false self-
employed, i.e. their employment status is misclassified. Misclassified people working through 
such platforms have 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  many 
genuine self-employed people. There are around 28 million people who are estimated to work 
through  platforms  in  the  EU.  22.5  million  of  these  people  are  believed  to  be  correctly 
classified, either as workers or as self-employed (the vast majority, as the latter). 5.5 million 
of  the  total  28  million  people,  however,  may  be  at  risk  of  misclassification.  The 
misclassification of the employment status in platform work has been the subject of over 100 
court and 15 administrative decisions across the EU. 

Some  people  experience  a  certain  degree  of  control  by  the  platforms  they  work  through, 
which use algorithms to assign tasks to, monitor, supervise, evaluate and draw consequences 
which  have  repercussions  for  them.  This  “algorithmic  management”  can  have  a  negative 
impact on some of their working conditions and their risk of being misclassified, because it 
can  conceal  subordination  behind  complex  digital  arrangements.  People  working  through 
platforms  need  to  understand  how  their  behaviour  influences  access  to  future  task 
opportunities  determined  through  the  algorithms.  Access  to  tasks  has  implications  for  their 
income, irrespective of their employment status. Hence, algorithmic management challenges 
are relevant for both workers and self-employed people working through platforms.  

Difficulties in enforcing existing obligations, driven by issues of transparency and traceability 
of  platform  work,  including  in  cross-border  situations,  also  have  an  impact  on  working 
conditions and access to social protection. National authorities have difficulties in accessing 
data on platforms and on people working through them, as well as on platforms’ terms and 
conditions.  Issues  of  traceability  are  especially  relevant  when  platforms  operate  across 
borders in several Member States, making it unclear where platform work is performed and 
by  whom.  This  should  be  done  with  a  view  to  improving  legal  certainty,  creating  a  level 
playing  field  between  digital  labour  platforms  and  offline  providers  of  services  and 
supporting the sustainable growth of digital labour platforms in the Union. 

What is this initiative expected to achieve? 

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  the  sustainable  growth  of  digital  labour  platforms  in  the  European  Union. 
Specifically,  the  initiative  aims  to  i)  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;  ii)  ensure  fairness,  transparency  and  accountability  in  algorithmic 
management  in  the  platform  work  context;  and  iii)  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. 

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What is the value added of action at EU level? 

EU  action  is  necessary  to  achieve  the  EU’s  Treaty-based  core  objectives  of  promoting 
sustainable economic growth and social progress (Article 3 TEU). 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.  

B. Policy options 

What legislative and non-legislative policy options have been considered? Is there a 
preferred choice? Why? 

The  impact  assessment  considered  three  policy  areas  (A  –  addressing  the  risk  of 
misclassification,  B  –  issues  related  to  algorithmic  management,  and  C  –  issues  related  to 
enforcement,  traceability  and  transparency,  including  in  cross-border  situations),  which, 
taken  together,  address  the  identified  challenges.  Within  these  policy  areas,  the  examined 
policy options differed in terms of their personal and/or material scope. Options to define the 
concept  of  worker,  establish  a  third  employment  status  at  EU  level,  or  introduce  an 
“irrebuttable” presumption of employment were discarded at an early stage.  

Under  Policy  Area  A  (addressing  the  risk  of  misclassification),  the  preferred  option  is  a 
rebuttable  presumption  limited  to  those  platforms  that  exercise  a  certain  degree  of 
control. This option also includes a shift in the burden  of proof: once the presumption is 
triggered, in case it is challenged, it is for the platforms which are presumed to be employers 
to prove otherwise.  Under Policy Area B (algorithmic management), the preferred option is a 
package of rights regarding transparency, consultation, human oversight and redress for both 
workers  and  the  self-employed.  Under  Policy  Area  C  (enforcement,  transparency  and 
traceability,  including  in  cross-border  situations),  the  preferred  option  is  to  combine  a 
clarification on the obligation to declare platform work, including in cross-border situations, 
with a duty for platforms to publish information on their Terms and Conditions, the number 
of  people  working  through  them,  their  employment  status,  social  protection  coverage  and 
other relevant data.  

In  terms  of  choice  of  the  legal  instrument,  the  cornerstone  of  the  package  would  be  a 
Directive. A Directive is regarded as the most suitable, proportionate and effective instrument 
to  deliver  on  the  objectives  of  the  initiative.  It  provides  binding  minimum  requirements, 
while it leaves room for the Member States to adapt to the specific national contexts.  

Who supports which option? 

The  preferred  option  under  Policy  Areas  A  and  B  are  supported  by  trade  unions, 
representatives  of  people  working  through  platforms  as  well  as  by  many  representatives  of 
national  authorities  and  some  platforms.  Most  stakeholders  paid  less  attention  to  options 
under  Policy  Area  C.  Trade  unions  support  improving  the  transparency  and  traceability  of 
platform  work  across  borders.  Representatives  of  national  authorities  support  a  duty  for 
platforms  to  publish  certain  information,  if  limited  to  platforms  above  a  certain  size. 
Employers’ organisations support the need to address the risk of misclassification, although 

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they  believe  this  should  be  done  at  national  level.  They  agree  on  the  need  for  more 
transparency  on  algorithmic  management  and  have  stressed  existing  regulations  should  be 
taken  into  account  to  this  end.  The  preferred  option  package  is  in  line  with  the  European 
Parliament’s  resolution  of 16 September 2021  on fair working  conditions, rights and social 
protection for platform workers (2019/2186(INI)).  

What are the benefits of the preferred option? 

C. Impacts of the preferred option 

As  a  result  of  action  to  address  the  risk  of  misclassification  (Policy  Area  A),  between  1.7 
million and 4.1 million people are expected to be reclassified as workers. This would grant 
them access to the rights and protections of the national and EU labour acquis. The earnings 
of people working through platforms may increase by up to EUR 484 million per year. New 
rights  related  to  algorithmic  management  in  platform  work  (Policy  Area  B)  may  lead  to 
improved working conditions for 28 million people. The obligation to declare platform work 
and the publication requirements (the preferred combination of options under Policy Area C) 
will (indirectly) improve working conditions, legal certainty and business transparency. 

What are the costs of the preferred option? 

Action to address the risk of misclassification (Policy Area A) could result in increased costs 
per year for platforms between EUR 1.9 billion and EUR 4.5 billion. Businesses relying on 
them  and  consumers  may  be  faced  with  part  of  these  costs,  depending  on  if  and  how 
platforms  decide  to  pass  them  onto  third  parties.  New  rights  related  to  algorithmic 
management  (Policy  Area  B),  as  well  as  the  preferred  combination  of  options  on 
enforcement, transparency and traceability (Policy Area C) imply negligible to low costs. 

How will enterprises and SMEs be affected? 

Conservative estimations found that there are more than 500 active platforms – a majority of 
which are on-location – active in the EU. Approximately 360 of them are SMEs. SMEs may 
face unfair competition by  larger platforms  and  are therefore expected to  gain  from a level 
playing field.  

Will there be significant impacts on national budgets and administrations? 

Action  to  address  the  risk  of  misclassification  will  result  in  up  to  EUR  4  billion  increased 
revenues per year for Member States (in the form of social protection and tax contributions). 

Will there be other significant impacts? 

No other significant impacts are expected. 

When will the policy be reviewed? 

D. Follow-up 

The  Directive  would  be  evaluated  5  years  after  it  enters  into  force.  This  would  take  into 
account a two-year period of transposition by Member States. 

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