The EU Platform Work Directive: What HR leaders need to know

COVID-19 transformed the world of work forever – over the last few years there has been lots of discussion about where people work (whether that’s fully remote or hybrid), while there have also been a dramatic change in how people work.

For instance, gig work has become more commonplace, with European digital labor platform economy (aka people who provide services for websites or apps like Uber, JustEat, Deliveroo and TaskRabbit) growing almost 500% (from €3 billion to €14 billion) over the last five years.

That’s according to data from the European Union (EU), which also found that there are 500 digital labor platforms operating in the EU. Currently, 28 million people in the region work through these digital labor platforms, with the number expected to reach 43 million by 2025.

The issue is that many of these workers sit in a grey area when it comes to their employment status; they are often misclassified as self-employed, which limits their access to legal social protections like sick leave, pension contributions and annual leave.

Plus, many of these platform gig workers face poor working conditions and can be at the whim of algorithms (which assign their shifts, and sometimes supervise them).

Worker rights are a top priority for the EU – they have been since the Charter of Fundamental Rights was enshrined in 2000, as Employer of Record company Atlas’ Senior Director of Global Employment Law Sarelle Buckley tells UNLEASH in an exclusive interview.

Therefore, it is no surprise that the EU has moved to be the first legislator globally to regulate platform work.

The result is the EU Platform Work Directive, which was agreed by the EU Parliament and Council in February 2024. EU Member States now have two years to introduce its requirements into their national law, and then it will start impacting employers, and specifically HR teams.

Let’s dig in more to the new Directive, and what it means for HR leaders with Buckley from Atlas.

Inside the EU Platform Work Directive

To start this conversation, it is crucial to begin with definitions.

The EU defines platform work as “a form of employment in which organizations or individuals use an online platform to access other organizations or individuals to solve specific problems,​ or to provide specific services in exchange for payment”.

This means, according to Atlas’ Buckley, that the Directive doesn’t apply to “digital platforms which sell goods, such as Amazon”.

For the people who perform platform work, the EU Directive introduces into law a “presumption” of an employment relationship, “irrespective of the contractual designation of the relationship between the individual and the digital labor platform”, explains Buckley.

Essentially, it ensures that people who work for digital platforms have the correct employment status, and therefore have access to rights as employees under EU law.

Importantly, “the Directive doesn’t go so far as to create a European-wide classification of employees or independent contractors”, notes Buckley.

Instead, as reported by Reuters, national law, collective agreements and case law will dictate whether an employee is an employee.

The aim is “to correct the imbalance of power between the digital labor platform and the person performing platform work”, according to the European Parliament’s press release announcing the Directive.

Talking about the decision, EU Parliament member Elisabetta Gualmini said: “With this Directive, up to 40 million platform workers in the EU will have access to fair labor conditions.

“This historic deal will give them dignity, protection and rights. It will correct bogus self-employment and prevent unfair competition, protect true self-employment, and introduce ground-breaking rules on algorithm management.

This will become a real benchmark at global level. I am proud to say: Europe protects its workers, its social model and its economy.”

‘Algorithmic management’ and the EU Platform Work Directive

While correct classification of platform workers is a key part of the Directive, there is another important element.

Sarelle Buckley, Senior Director, Global Employment Law, Atlas.

The Directive, for the first time ever in the EU, regulates the use of algorithms in the workplace.

“Prior to the publication of the Directive – and also the EU AI Act earlier this year – algorithmic management has been relatively unregulated, apart from EU data protection rules”, notes Buckley.

She adds: “The second major objective of the Directive is in relation to ‘algorithmic management’, and the way that digital labor platforms use automated systems to match supply and demand for work, and monitor, evaluate and take decisions for the people working through them.”

The Directive, therefore, “introduces transparency requirements” – this means that “workers are informed about the use of automated monitoring and decision-making”.

Plus, the new regulation ensures that there’s “human oversight on important decisions taken by an algorithm, like suspending someone’s account or dismissing them, with individuals having the right to contest these decisions, and protection against dismissal for those required to undertake the human review process”, explains Buckley.

In addition, the EU’s Directive ensures that digital labor platforms cannot process personal data about the emotional or psychological state of workers, data related to private conversations, data to predict trade union activity or biometric data (other than for authentication purposes).

How HR should respond to the EU Platform Work Directive

Given the Platform Work Directive is now EU law – and there is a clear desire to enforce the issue – for employers, “there has never been a more critical time to act”, Buckley tells UNLEASH.

She calls for employers to start by conducting an audit of “anyone providing services to the organization”, and then check that everyone is correctly classified; “for anyone categorized as an independent contractor or freelancer, review the factual circumstances to confirm if this categorization is correct”.

If any issues are found, then organizations need to “review what options are available to address these”.

Buckley continues: “For example, if there are independent contractors who more closely resemble employees based on the nature of their engagement, then consideration should be given to converting these contractors to employees.

“If there are markets in which your organization does not have a legal entity to employ individuals, consider engaging an employer of record to be the employer for your people in that market.”

Of course, digital platforms can rebut and challenge the Directive, and its impact on them.

But “the burden of proof lies with the platform, meaning that it is up to the platform to prove that there is no employment relationship”, explained the EU in a press release.

However, as things stand, Buckley shares, “it remains to be seen how this will be managed at a national level”; this is because the Directive states that “it would be up to the member states to set out the rules” around employee classification in their national law.

Buckley continues: “Some member states already feature the presumption of employment status in their national law, but for others, this will be new in its national legislation.”

It may feel to HR leaders outside of the EU that this legislation doesn’t affect them, but that doesn’t mean they shouldn’t take action.

The regulatory approach of the EU will almost certainly be at least partially replicated in other jurisdictions”, notes Buckley.

“The US has already taken steps in respect of providing greater protection to misclassified workers through the Department of Labor’s Final Rule in relation to the Fair Labor Standards Act, which was published earlier this year.

“The US has also taken some steps around the regulation of AI through some executive orders issued by President Biden.

“There also appears to be bipartisan support in Congress to regulate AI at a federal level.”

Want to find out more about employment law? In a recent UNLEASH webinar, in partnership with Atlas, Buckley shared her expertise to help untangle worker classifications amid an ever-evolving global regulatory landscape. You can watch the webinar replay here.