COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid 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

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 9.12.2021  SWD(2021) 395 final  COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid 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) 396 final} - {SWD(2021) 397 final}  
 
 
1.  Can the Union act? What is the legal basis and competence of the Unions’ intended 

action? 

1.1 Which article(s) of the Treaty are used to support the legislative proposal or policy 
initiative? 

The legal basis for a Directive on improving working conditions in platform work would be a 
combination of Articles 16 and 153 TFEU.  

Article  153  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 
security  and  social  protection,  workers’  health  and  safety,  and  the  information  and 
consultation  of  workers,  among  others.  It  would  thus  cover  the  provisions  on  the  correct 
determination  of  the  employment  status,  provisions  on  specific  algorithmic  management 
rights  pertaining  to  the  working  conditions  of  workers,  information  and  consultation  and 
health  and  safety  at  work,  and  provisions  on  the  transparency  of  platform  work.  Article  16 
TFEU provides the legal basis for the Union to lay down rules  relating to the protection of 
individuals  with  regard  to  the  processing  of  personal  data.  It  would  cover  provisions  on 
specific  algorithmic  management  rights  for  self-employed  people  and  workers  vis-à-vis  the 
processing of their data by automated monitoring and decision-making systems. 

1.2  Is  the  Union  competence  represented  by  this  Treaty  article  exclusive,  shared  or 
supporting in nature? 

In  the  case  of  social  policy  and  data  protection,  the  Union’s  competence  is  shared  for  the 
aspects defined in the Treaties. For the purposes of this initiative, it is relevant that the Union 
has  shared  competence  as  regards  social  policy  (and  most  notably,  working  conditions  in 
accordance  with  Article  153(1)(b)  TFEU),  and  the  protection  of  personal  data  (Article  16 
TFEU). 

2.  Subsidiarity Principle: Why should the EU act? 

2.1 Does the proposal fulfil the procedural requirements of Protocol No. 21: 
-  Has there been a wide consultation before proposing the act? 
- 

Is there a detailed statement with qualitative and, where possible, quantitative indicators 
allowing an appraisal of whether the action can best be achieved at Union level? 

Before  proposing  the  act,  the  Commission  consulted  widely.  On  24  February  2021,  it 
launched  a  two-stage  consultation  of  the  European  Social  Partners,  based  on  Article  154 
TFEU. The first stage ran until 7 April 2021. The second stage ran between 15 June and 15 
September 2021.  

Before launching the two-stage consultation of Social Partners, the Commission organised a 
series of informal fact-finding events  and workshops, engaging social partners, associations 
representing  people  working  through  platforms,  platform  companies  and  associations 
representing platforms, academics and civil society actors.  
In  September  2021,  after  the  end  of  the  two-stage  consultation  of  Social  Partners,  the 
Commission organised two further exchanges with platform companies and representatives of 
people working through platforms.  

1 Available online.  

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The  Explanatory  Memorandum  of  the  act  and  the  Impact  Assessment  report  (Section  3) 
contain a section on the Principle of Subsidiarity (see question 2.2 below). 

2.2 Does the explanatory memorandum (and any impact assessment) accompanying the 
Commission’s  proposal  contain  an  adequate  justification  regarding  the  conformity 
with the principle of subsidiarity? 

Yes, the explanatory memorandum contains an adequate justification of why the proposal is 
conform with the principle of subsidiarity. The following is a relevant excerpt of it (it reflects 
the arguments presented in the IA report, Section 3).  

Flexibility  and  constant  adaptation  of  business  models  are  key  features  of  the  platform 
economy, whose primary means of production are algorithms, data and clouds. As they are 
not  tied  to  any  fixed  assets  and  premises,  digital  labour  platforms  can  easily  move  and 
operate  across  borders,  swiftly  starting  operations  in  certain  markets,  sometimes  closing 
down for business or regulatory reasons and re-opening in another country with laxer rules.  

While Member States operate in one single market, they have taken different approaches on 
whether  or  not  to  regulate  platform  work,  and  in  what  direction.  More  than  100  court 
decisions  and  15  administrative  decisions  dealing  with  the  employment  status  of  people 
working through platforms have been observed in the Member States, with varying outcomes 
but predominantly in favour of reclassifying people working through platforms as workers. , 
with varying outcomes but predominantly in favour of reclassifying people working through 
platforms  as  workers.  In  addition  to  the  legal  uncertainty  this  entails  for  the  digital  labour 
platforms  and  for  those  working  through  them,  the  high  number  of  court  cases  points  to 
difficulties  in  maintaining  a  level  playing  field  among  Member  States  as  well  as  between 
digital  labour  platforms  and  other  businesses,  and  to  avoid  downward  pressure  on  labour 
standards  and  working  conditions.  Certain  digital  labour  platforms  may  engage  in  unfair 
competitive  practices  with  respect  to  other  businesses,  e.g.  if  they  do  not  comply  with  the 
same  rules  and  operate  under  the  same  conditions.  Consequently,  EU  action  is  needed  to 
ensure  that  the  highly  mobile  and  fast-moving  platform  economy  develops  alongside  the 
labour rights of people working through platforms.  

Digital labour platforms are often based in one country, while operating through people based 
elsewhere.  59%  of  all  people  working  through  platforms  in  the  EU  engage  with  clients  in 
another country.2 This adds complexity to contractual relationships. The working conditions 
and  social  protection  coverage  of  people  performing  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 authorities) are often not aware of 
which  digital  labour  platforms  are  active  in  their  country,  how  many  people  are  working 
through  them  and  under  what  employment  status  the  work  is  performed.  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 notably the 
lack of data to allow for a better enforcement of rules, are best taken at EU level.  

National action alone would not achieve the EU’s Treaty-based core objectives of promoting 

2 PPMI (2021). Study to support the impact assessment of an EU initiative on improving working conditions in 
platform work. Available online. Section 7.1.  

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sustainable  economic  growth  and  social  progress,  as  Member  States  may  hesitate  to  adopt 
more stringent rules or to strictly enforce existing labour standards, while they compete with 
one another to attract digital labour platforms’ investments.  

Only  an  EU  initiative  can  set  common  rules  that  apply  to  all  digital  labour  platforms 
operating in the EU, while also preventing fragmentation in the fast-developing single market 
for digital  labour platforms. This  would ensure  a level  playing field  in  the area  of  working 
conditions  and  algorithmic  management  between  digital  labour  platforms  operating  in 
different  Member  States.  Hence,  the  specific  EU  added  value  lies  in  the  establishment  of 
minimum standards in these areas which will foster upward convergence in employment and 
social  outcomes  across  the  Union,  and  facilitate  the  development  of  the  platform  economy 
across the EU. 

2.3 Based  on  the  answers  to  the  questions  below,  can  the  objectives  of  the  proposed 
action be achieved sufficiently by the Member States acting alone (necessity for EU 
action)? 

The  objectives  of  the  proposed  initiative  cannot  be  sufficiently  achieved  by  the  Member 
States acting alone. There is therefore necessity for EU to ensure minimum social standards 
in platform work in all Member States, prevent cross-border legal fragmentation and uphold 
the functioning of the internal market.  

(a) Are there significant/appreciable transnational/cross-border aspects to the problems 

being tackled? Have these been quantified? 

Platforms’ business models are intrinsically cross-border. This cross-border nature is indeed 
one of the main problem drivers identified by the IA report (Section 2.2.3), where the issue is 
analysed  in  depth  and  its  consequences  for  stakeholders  quantified  to  the  extent  possible 
(Sections 2.3 and 5.1 of the IA report).  

(b) Would  national  action  or  the  absence  of  the  EU  level  action  conflict  with  core 
objectives  of  the  Treaty3  or  significantly  damage  the  interests  of  other  Member 
States? 

National action alone or the absence of EU-level action would not achieve the EU’s Treaty-
based  core  objectives  of  promoting  sustainable  economic  growth  and  social  progress,  as 
countries  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 relevant 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 the platforms’ atypical way 
of  recruiting  a  large  workforce  outside  of  traditional  labour  law  practices,  as  well  as  by 
authorities’ lack of means to ensure compliance of online platforms with such rules.  

(c)  To what extent do Member States have the ability or possibility to enact appropriate 

measures? 

3 Available online.  

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While  Member  States  have,  to  some  extent,  the  ability  to  enact  appropriate  measures  at 
national level, these would only have a limited impact and would not address the cross-border 
challenges  of  platform  work.  Notably,  they  would  face  a  risk  of  race-to-the-bottom 
competition in social standards between countries, caused by the lack of a level playing field 
in  employment  and  algorithmic  management  rules.  They  would  also  risk  engaging  in 
misinformed  policy-making  and  enforcement,  due  to  insufficient  access  to  data  concerning 
international, multi-market digital labour platforms. 

(d) How  does  the  problem  and  its  causes  (e.g.  negative  externalities,  spill-over  effects) 

vary across the national, regional and local levels of the EU? 

The problem and its causes do not vary substantially across the national,  regional and local 
levels of the EU. Although platform work is mainly carried out in cities and urban centres, 
the same challenges related to the employment status, algorithmic management and the cross-
border nature of platform work persist when it is to be found elsewhere.  

(e)  Is the problem widespread across the EU or limited to a few Member States? 

Although platform work is more prevalent in Western and Southern Member States (ES, NL, 
IT, FR, DE), its related challenges are observable in every market where platforms operate, 
including in Eastern Member States (e.g. PL, RO) where platform work is less widespread. 
The fact that they have been more prominent in the media and on the policy agenda of certain 
Member  States  can  be  explained  with  different  industrial  relations  systems,  where  certain 
actors have been more successful in bringing the issues to the fore. 

(f)  Are  Member  States  overstretched  in  achieving  the  objectives  of  the  planned 

measure? 

No, the proposed measures are proportionate, as they impose few administrative burdens on 
Member  States  while  bringing  substantial  social  benefits  (e.g.  increased  fiscal  revenues, 
improved  policy-making  quality,  better  working  conditions  and  more  adequate  access  to 
social protection for people working through platforms).  

(g) How  do  the  views/preferred  courses  of  action  of  national,  regional  and  local 

authorities differ across the EU? 

Different  authorities  across  the  EU  may  have  heterogeneous  views  on  how  to  address  the 
challenges  of  platform  work,  with  some  Member  States  preferring  harmonising  approaches 
and others demanding that many issues be tackled through social dialogue. 

2.4 Based  on  the  answer  to  the  questions  below,  can  the  objectives  of  the  proposed 
action be better achieved at Union level  by reason of scale or effects of that action 
(EU added value)? 

There are clear benefits stemming from EU-level action, which outweigh the costs caused to 
some  stakeholders.  EU  action  allows  for  a  more  efficient  pursuit  of  the  objectives  of  the 
initiative.  This  will  tackle  legislative  fragmentation  and  provide  legal  clarity  to  all 
stakeholders concerned, thereby preventing social dumping and improving the functioning of 
the internal market. 

(a) Are there clear benefits from EU level action?  

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Yes,  there  are  clear  benefits  stemming  from  EU-level  action,  notably  the  establishment  of 
common  minimum  standards,  that  would  prevent  race-to-the-bottom  competition  and  foster 
upward  social  convergence,  and  the  facilitation  of  cross-border  data  access  and  sharing  for 
effective rules-enforcement and better policy-making purposes.  

(b) Are there economies of scale? Can the objectives be met more efficiently at EU level 
(larger  benefits  per  unit  cost)?  Will  the  functioning  of  the  internal  market  be 
improved? 

(c)  What are the benefits in replacing different national policies and rules with a more 

homogenous policy approach? 

The  objectives  can  be  more  efficiently  met  at  EU  level  (see  Question  2.3).  A  more 
homogeneous  approach  would  have  the  advantage  of  increasing  legal  certainty  for  digital 
labour  platforms,  many  of  which  are  active  at  international  level.  This  would  allow  for 
economies  of  scale  and  scope  for  these  market  actors  through  improved  functioning  of  the 
internal market.  

(d) Do  the  benefits  of  EU-level  action  outweigh  the  loss  of  competence  of  the  Member 
States and the local and regional authorities (beyond the costs and benefits of acting 
at national, regional and local levels)? 

(e)  Will there be improved legal clarity for those having to implement the legislation? 

The benefits of EU-level action will outweigh the loss of competence of the Member States 
(see  Question  2.3),  including  through  improved  legal  clarity  for  those  having  to  implement 
the legislation (national and local authorities, national and local courts, platform companies 
and  the  worker  representatives)  and  improved  minimum  rights  for  people  working  through 
platforms. 

3.  Proportionality: How the EU should act 

3.1  Does the explanatory memorandum (and any impact assessment) accompanying the 
Commission’s  proposal  contain  an  adequate 
the 
proportionality of the proposal and a statement allowing appraisal of the compliance 
of the proposal with the principle of proportionality? 

justification  regarding 

Yes, the explanatory memorandum contains an adequate justification of why the proposal is 
conform with the principle of proportionality. The following is a relevant excerpt of it.  

The  proposed  Directive  provides  for  minimum  standards  thus  ensuring  that  the  degree  of 
intervention  will  be  kept  to  the  minimum  necessary  in  order  to  reach  the  objectives  of  the 
proposal. Member States which have already more favourable provisions in place than those 
put forward in the proposed Directive will not have to change or lower them. Member States 
may also decide to go beyond the minimum standards set out in the proposed Directive. 

The principle of proportionality is respected considering the size and nature of the identified 
problems.  For  instance,  the  rebuttable  presumption  proposed  to  address  the  problem  of 
misclassification  of  the  employment  status  will  only  apply  to  digital  labour  platforms  that 
exert some level of control over the performance of work. Other digital labour platforms will 
thus not be concerned by the presumption. Similarly the provisions on automated monitoring 

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and decision-making systems do not go beyond what is necessary to achieve the objectives of 
fairness, transparency and responsibility in algorithmic management. 

3.2 Based  on  the  answers  to  the  questions  below  and  information  available  from  any 
impact assessment, the explanatory memorandum or other sources, is the proposed 
action an appropriate way to achieve the intended objectives? 

The foreseen measures are an appropriate way of achieving the objectives of this EU action, 
in view of their adherence to both the proportionality and subsidiarity principles. 

(a) Is  the  initiative  limited  to  those  aspects  that  Member  States  cannot  achieve 

satisfactorily on their own, and where the Union can do better? 

Yes, it notably focuses on tackling the incentives to race-to-the-bottom competition in social 
standards  through  increased  legal  certainty  on  employment  and  algorithmic  management 
rules and addressing cross-border challenges (see Question 2.3).  

(b) Is  the  form  of  Union  action  (choice  of  instrument)  justified,  as  simple  as  possible, 
and coherent with the satisfactory achievement of, and ensuring compliance with the 
objectives  pursued  (e.g.  choice  between  regulation,  (framework)  directive, 
recommendation, or alternative regulatory methods such as co-legislation, etc.)? 

Yes. An EU directive is the most appropriate legal instrument to establish common minimum 
standards in platform work while allowing Member States and enforcing authorities sufficient 
flexibility in the transposition phase to cater rules to specific national, local and industry-level 
contexts and stakeholders. 

(c)  Does  the  Union  action  leave  as  much  scope  for  national  decision  as  possible  while 
achieving  satisfactorily  the  objectives  set?  (e.g.  is  it  possible  to  limit  the  European 
action  to  minimum  standards  or  use  a  less  stringent  policy  instrument  or 
approach?) 

Yes. Member States who wish to put forward more stringent rules may do so, provided they 
build on the common minimum standards established by this initiative.  

(d) Does  the  initiative  create  financial  or  administrative  cost  for  the  Union,  national 
governments, regional or local authorities, economic operators or citizens? Are these 
costs commensurate with the objective to be achieved? 

The initiative does should not create additional financial or administrative costs for the Union 
or other public authorities (including national, regional and local government), since the costs 
of processing misclassification claims would arguably fall under the already foreseen running 
costs of national courts and/or already existing administrative bodies. At the same time public 
budgets  would  see increased revenues  from  tax and social security contributions.  Platforms 
would face costs related to reclassification of employment status, with resulting benefits for 
people  working  through  them  (in  terms  of  better  working  conditions  and  access  to  social 
protection), consumers (in terms of better service quality and overall consumer welfare) and 
competing companies (in terms of better levelled playing field and legal certainty (see Impact 
Assessment report, Section 6 and Annex 3). Consumers may also be faced with some costs, 
in terms of higher service prices. These costs would be proportionate and commensurate to 
the pursuit of the initiative’s objectives.  

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(e)  While  respecting  the  Union  law,  have  special  circumstances  applying  in  individual 

Member States been taken into account? 

During  the  consultation  phase  of  the  preparation  of  the  initiative  (including  the  two-stage 
consultation of social partners and all fact-finding workshops and meetings held with relevant 
stakeholders,  see  Annex  2  of  the  IA  report)  national,  regional,  and  sectoral  views  and 
circumstances were thoroughly gathered and subsequently taken into account (see IA report, 
particularly Section 6, Annex 3.3 and Annex A4.2). 

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