Shutting Down Uber? Employment Status and the EU’s Proposed Platform Work Directive

On 20 September 2023, the Financial Times reported that Uber had ‘warned’ that the proposed EU Platform Work Directive, if adopted in its current form, could ‘force’ the transport company to shut down its ride-hailing service in hundreds of EU cities—and to ‘raise prices by as much as 40 per cent.’

At the same time, the company sought to reassure investors that the proposed law would not impact Uber’s profitability in Europe. ‘This isn’t about Uber’s profits,’ the head of Uber’s European mobility division insisted.

What lies behind these surprising—and seemingly contradictory—claims? In this post, we explain the background to the proposed Directive and the ‘rebuttable presumption’ of an employment relationship at its core. In a follow-up post this week, we will turn to an exploration of Uber’s concerns that it could lead to ‘a 50-70 per cent reduction in the number of work opportunities’ available to drivers through its app.

Improving working conditions in the platform economy

The last decade has seen explosive growth in gig work; regulators are starting to catch up. In December 2021, the European Commission proposed a new Directive in order to ‘improve working conditions in platform work’ and support ‘the conditions for the sustainable growth of digital labour platforms’ in the EU.

The Commission’s explanatory memorandum recognises that digital labour platforms ‘promote innovative services and new business models and create many opportunities for consumers and businesses.’ At the same time, however, it cites empirical research establishing that ‘many’ (nominally) self-employed persons performing platform work ‘experience subordination to and varying degrees of control by the digital labour platforms they operate through, for instance as regards pay levels or working conditions.’ Such practices raise serious questions about whether or not platform workers are genuinely self-employed (ie, truly independent ‘undertakings,’ in the language of EU competition law), or rather falsely self-employed.

The memorandum cites the Commission’s impact assessment, which estimates that:

Up to five and a half million people working through digital labour platforms [in the EU] could be at risk of employment status misclassification. Those people are especially likely to experience poor working conditions and inadequate access to social protection. As a result of the misclassification, they cannot enjoy the rights and protections to which they are entitled as workers. These rights include the right to a minimum wage, working time regulations, occupational safety and health protection, equal pay between men and women and the right to paid leave, as well as improved access to social protection against work accidents, unemployment, sickness and old age.

Against this backdrop, the Commission adopted three specific goals. First, to clarify the employment status of persons performing platform work. Second, to ensure ‘fairness, transparency, and accountability in algorithmic management’ in digital labour platforms. And third, to enhance the transparency and traceability of platform work, including improving enforcement of existing rules.

These measures would benefit platforms by improving legal certainty, especially with respect to ongoing legal challenges regarding misclassification across Europe. They are also designed to benefit other businesses competing with digital labour platforms by ensuring a ‘level playing field.’

Tackling bogus self-employment

Uber’s concerns in the Financial Times coverage appear focused on the proposed Directive’s provisions regarding employment status, set out in Chapter II. The basic concept of these provisions is to establish a ‘rebuttable presumption’ of an employment relationship (ie, as opposed to a self-employment relationship) for persons performing platform work, provided that the platform ‘controls the performance of work’ (Art. 4(1)). The platform, however, may ‘rebut’ the presumption by establishing in ‘legal or administrative proceedings’ that the contractual relationship between the platform and the persons performing platform work is truly ‘not an employment relationship as defined by the law, collective agreements or practice in force in the Member State in question’ (Art. 5).

It is important to note that these provisions do not establish any new criteria regarding employment status. Instead, they merely change the procedure for determining it. At present, if a platform worker wishes to argue they are falsely self-employed, the burden of proof rests with them. In marshaling the necessary evidence, workers will often face an uphill struggle, not least as the algorithmic systems platforms used to manage them are usually inscrutable.

To account for this evidentiary challenge, the Directive’s rebuttable presumption would move the burden of proof onto the platform. In the event of a misclassification dispute, the putative employee would no longer need to prove that they should be classified as an employee; rather, the platform would need to prove that the self-employment relationship is in fact genuine.

Pace Uber’s claims to the FT, then, the proposed Directive does not force platforms to ‘reclassify’ any persons performing platform work—it does not change the classification criteria. The emphasis is on procedural aspects in order to ensure the proper enforcement of existing rules, bringing clarity for workers and platforms alike.

M Six Silberman is a Postdoctoral Researcher at the Bonavero Institute of Human Rights of the University of Oxford.

Jeremias Adams-Prassl is Professor of Law at the University of Oxford and a Fellow of Magdalen College.

Halefom Abraha is a Postdoctoral Researcher at the Bonavero Institute of Human Rights of the University of Oxford.

Sangh Rakshita is a Researcher at the Bonavero Institute of Human Rights of the University of Oxford.