The Cambridge Handbook of Technological Disruption in Labour and Employment Law 9781108840057, 9781108878647

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the cambridge handbook of technological disruption in labour and employment law Whether through gig work, remote work, or platforms such as Uber, new technologies are reshaping the very fabric of employment relations. This handbook offers a comprehensive, international overview of how institutions, countries, and legal systems are responding to the technological disruption of the work world. Chapters outline the reform agendas driven by the International Labour Organisation and the European Union and detail the public policy debates, litigation, and legal reforms that technological innovation has triggered around the world. This volume provides a post-pandemic assessment of how digitalisation is affecting employment and employment relations and contextualises current technological disruption with a long-term view of how labour and employment law could evolve further. marc de vos is a Professor of Law at Ghent University, an author, and a strategy consultant with executive experience in academia, professional services, and policy think-tanks in Europe and Australia. His areas of expertise, about which he has published, lectured, and advised widely, are the labour market and human resources, the welfare state, globalisation, and the European Union. gordon anderson is Emeritus Professor of Law at Victoria University of Wellington. He has published widely on the evolution of New Zealand labour law since the neo-liberal revolution of the 1990s and is currently Vice-President for Asia of the International Society for Labour and Social Security Law. He has provided legal advice on law reform to unions and governments. evert verhulp is Professor of Labour Law at the University of Amsterdam. Until 2022, he was an independent (appointed by the Crown) member of the Social Economic Council and a member of the advisory committee on reform of the labour market. He publishes on self-employment, platform labour, and fundamental rights.

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The Cambridge Handbook of Technological Disruption in Labour and Employment Law Edited by

MARC DE VOS University of Ghent

GORDON ANDERSON Victoria University of Wellington

EVERT VERHULP University of Amsterdam

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Shaftesbury Road, Cambridge cb2 8ea, United Kingdom One Liberty Plaza, 20th Floor, New York, ny 10006, USA 477 Williamstown Road, Port Melbourne, vic 3207, Australia 314–321, 3rd Floor, Plot 3, Splendor Forum, Jasola District Centre, New Delhi – 110025, India 103 Penang Road, #05–06/07, Visioncrest Commercial, Singapore 238467 Cambridge University Press is part of Cambridge University Press & Assessment, a department of the University of Cambridge. We share the University’s mission to contribute to society through the pursuit of education, learning and research at the highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9781108840057 doi: 10.1017/9781108878647 © Cambridge University Press & Assessment 2024 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press & Assessment. First published 2024 A catalogue record for this publication is available from the British Library Library of Congress Cataloging-in-Publication Data names: Vos, Marc de, 1970– editor. | Verhulp, Evert, editor. | Anderson, Gordon A., editor. title: The Cambridge handbook of technological disruption in labour and employment law / edited by Marc de Vos, Macquarie Law School, Sydney; Evert Verhulp, Victoria University of New Wellington; Gordon Anderson, University of Amsterdam. description: Cambridge, United Kingdom ; New York, NY : Cambridge University Press, 2023. | Series: Cambridge law handbooks | Includes bibliographical references and index. identifiers: lccn 2023024829 (print) | lccn 2023024830 (ebook) | isbn 9781108840057 (hardback) | isbn 9781108878647 (ebook) subjects: lcsh: Labor laws and legislation. | Labor laws and legislation – Databases. | Labor – Technological innovations – Law and legislation. | Labor laws and legislation – European Union countries. classification: lcc k1705 .c359 2023 (print) | lcc k1705 (ebook) | ddc 344.01–dc23/eng/20230601 LC record available at https://lccn.loc.gov/2023024829 LC ebook record available at https://lccn.loc.gov/2023024830 isbn 978-1-108-84005-7 Hardback Cambridge University Press & Assessment has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

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Contents

page x

List of Figures

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List of Tables

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List of Contributors 1

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Technology and Law for the Future of Work We Want Marc De Vos I Technology and the Future of Work, Again . . . II From Employment Law to Career Law III From Work Protection Law to Work Quality Law IV From Worker Law to Talent Law V From Social Protection to Human Protection VI From Disruption to Construction The International Labour Organisation and the Future of Work Valerio De Stefano and Mathias Wouters I Introduction II The Archetype III The Changing Nature of Work IV Quo Vadis? The Digitalisation of Work and the EU: Jurisprudential and Regulatory Responses in the Labour and Social Field Despoina Georgiou and Catherine Barnard I Introduction II Technological Disruptions to the European Social Acquis III The ECJ’s Stance IV Regulatory Developments V Conclusion The Impact of Technological Disruption on German Labour Law: Risks and Opportunities Claudia Schubert and Patrick Rieger I Introduction II The Archetype III The Changing Nature of Work v

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The Prototypes ‘Uberisation’ Quo Vadis?

Austria: The Corporatist Perspective on Technological Disruption Franz Marhold and Peter C. Scho¨ffmann I The Archetype II The Changing Nature of Work: Evasion of the Employment Relationship III The Prototypes IV Are Reforms Necessary? Gazing into the Crystal Ball of Labour Law Technological Disruption in Employment and Labour Law in the Netherlands Evert Verhulp I Introduction II The Archetype III The Changing Nature of Work: Subordination and Technical Innovation IV The Changing Nature of Work: New Jobs and New Organisations V Legal Status of Platform Labour: Working for the Platform VI Working Through the Platform VII What Next / Quo Vadis? The Digitalisation of Labour Law in France Sophie Robin-Olivier I Introduction II The Traditional Frontiers of Labour Law III Impact of ‘Digitalisation’ of Work IV Future Developments Italian Labour Law: Trends and Developments Put to the Test of Technological Disruption Emanuele Dagnino and Michele Tiraboschi I Introduction II Digitalisation of Work and Working ‘Smart’ in the Fourth Industrial Revolution III Regulating Work in the Platform Economy IV Concluding Remarks Spain: Towards a New Architecture for Labour Law Institutions Daniel Pe´rez del Prado I Introduction: Spain in a Changing World II The Archetype III The Changing Nature of Work IV The Prototypes V ‘Uberisation’ VI Quo Vadis?

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Technological Developments and Industrial Relations in Denmark Natalie Videbæk Munkholm I Introduction: The Danish Legal Framework for Labour and Employment Law II The Archetype III The Changing Nature of Work IV The Prototypes V ‘Uberisation’ VI Quo Vadis? Poland: Old and New Legal Concepts in the Changing World of Work Leszek Mitrus I The Archetype II The Changing Nature of Work III The Prototypes IV ‘Uberisation’ V Quo Vadis? Technological Disruption and the Evolution of Labour Law in Hungary Jo´zsef Hajdu´ I Introduction II The Archetype: The Traditional Employment Relationship III The Changing Nature of Work IV The Prototypes V ‘Uberisation’ VI Quo Vadis? Digitalisation and Disruption of Labour Relations in Estonia Gaabriel Tavits I Introduction II Digitalisation in Estonia: General Background III The Nature of Employment Relationships in Estonia IV Platform/Gig Work: Characteristics of Distinction V Working Time: Digitalisation and Flexibility VI Technology and Collective Reality VII Conclusions Israel: New Trends in Israeli Labour and Employment Law Lilach Lurie I Introduction II The Archetype III The Changing Nature of Work IV The Prototypes V ‘Uberisation’ VI Quo Vadis?

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156 158 162 163 173 174 182 182 185 188 189 191 194 194 195 197 203 210 211 214 214 214 216 218 223 226 230 231 231 232 234 238 240 241

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United Kingdom Labour Law and Technological Authoritarianism at Work: Past, Present, and Future Ioannis Katsaroumpas I Introduction II The Archetype: Labour Law and Technological Authoritarianism at Work during the Post-War Period III The Changing Nature of Work: Labour Law and the Enhanced Technological Authoritarianism at Work during the Neo-liberal Period IV Prototype: Labour Law and Technological Authoritarianism in the Age of Surveillance and Algorithmic Management V ‘Uberisation’: Labour Law, Technological Authoritarianism, and the Gig Economy VI Quo Vadis? The Future of Labour Law and Technological Authoritarianism VII Conclusion

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Old Problems and New Technologies in the American Workplace Jeffrey M. Hirsch I Introduction II The Traditional Employment Relationship in the United States III The Emergence of the Fissured Workplace IV The Impact of Technology on the Workplace V Reforming Gig Work VI New Approaches to New Models of Work

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Australia: Reimagining the Regulation of Work Troy Sarina I The Changing Nature of Work II The Archetype: How Has the Configuration of Work and Employment Evolved? III The Prototypes: Classifying Workers in Triangular Relationships IV ‘Uberisation’: The Challenges of Applying a Binary Approach to Classifying Work in the Gig Economy V Quo Vadis? The Response of Institutional Actors to the Emergence of Modern Work Relationships VI Conclusions and Challenges Ahead for Regulating the Future of Work

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Technological Disruption and the Future of Work in Aotearoa/New Zealand Gordon Anderson I Introduction II The Archetype III The Changing Nature of Work IV The Prototypes V ‘Uberisation’ VI Quo Vadis?

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Technological Disruptions in Labour and Employment Law: South Africa Debbie Collier and Lindani Mkhwanazi I Introduction II The Archetype III The (Changing) Nature of Work IV The Prototypes V ‘Uberisation’: A Multifaceted Regulatory Response VI Quo Vadis? VII Conclusion Japan: Labour Law and Policy in an Era of Technological Innovation Ryuichi Yamakawa I Introduction II The Basics of Employment Relationship and Its Legal Regulation in Japan III The Changing Nature of Work in Japan and Related Legal Issues IV Technological Innovation and Its Legal Ramifications in Japan V Policy Issues and Responses by Social Partners VI Conclusion The Republic of Korea: Old Regulations and New Challenges in the World of Work Keunju Kim and June Namgoong I Introduction II The Archetype of Labour Law in Korea III The Changing Nature of Work IV ‘Uberisation’ in Korea? The Korean Context V Initial Responses VI Quo Vadis? Technological Disruption and Labour Law: Between Utopia and Dystopia Marc De Vos

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Figures

9.1 9.2 20.1 20.2

Jobs at risk of automatisation in OECD countries Intensity and relevance of platform work: estimates combining information on income and hours worked Service provided by an individual Service provided by a platform provider

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page 142 144 341 341

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9.1 9.2 19.1 19.2 21.1

Types of professional relationship and legal coverage Spanish judgments on platforms’ legal relationship since 2018 The dominant impression test Fairwork platform ratings 2019–22 Workers who are vulnerable because of lack of employment protection: scale of the problem

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Contributors

Gordon Anderson is Emeritus Professor of Law at Victoria University of Wellington. Catherine Barnard is Professor of EU Law and Employment Law at the University of Cambridge and a Fellow of Trinity College. Debbie Collier is Professor of Law and Director of the Centre for Transformative Regulation of Work at the University of the Western Cape. Emanuele Dagnino is Researcher of Labour Law at the University of Modena and Reggio Emilia. Valerio De Stefano is a professor at Osgoode Hall Law School and holds the Canada Research Chair in Innovation Law and Society. Marc De Vos is a professor at the University of Ghent Faculty of Law and Criminology, an author, and a strategy consultant. Despoina Georgiou is an affiliated lecturer (PhD) at the University of Cambridge. Jo´zsef Hajdu´ is a professor in the Faculty of Law, Department of Labour Law and Social Security at the University of Szeged. Jeffrey M. Hirsch is the Geneva Yeargan Rand Distinguished Professor of Law at the University of North Carolina School of Law. Ioannis Katsaroumpas is a lecturer in employment law at the University of Sussex. Keunju Kim is a research fellow at the Korea Labor Institute. Lilach Lurie is a senior lecturer in the Department of Labor Studies at Tel-Aviv University. Franz Marhold is a professor at the Vienna University of Economics and Business and a member of the European Committee on Social Rights. Leszek Mitrus is a professor and Chair of Labour Law and Social Policy at Jagiellonian University. Lindani Mkhwanazi is a lecturer in labour and employment law in the Department of Commercial Law at the University of Cape Town. Natalie Videbæk Munkholm is an associate professor in labour and employment law at the University of Aarhus. xii Published online by Cambridge University Press

List of Contributors

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June Namgoong is a research fellow at the Korea Labor Institute. Daniel Pe´rez del Prado is Professor of Labour and Social Security Law at Carlos III University of Madrid. Patrick Rieger is a research associate in the Faculty of Law at the University of Hamburg and works for German Pension Insurance (Deutsche Rentenversicherung). Sophie Robin-Olivier is a professor of law at the Sorbonne School of Law, University Paris 1 Panthe´on Sorbonne and a member of the Sorbonne Research Institute for International and European Law (IREDIES). Peter C. Scho¨ffmann is a teaching and research associate at the Vienna University of Economics and Business. Claudia Schubert is Professor of Civil Law, Labour Law, Company Law, and Legal Comparison in the Faculty of Law at the University of Hamburg. Gaabriel Tavits is a professor in the School of Law, Department of Private Law at the University of Tartu. Michele Tiraboschi is Professor of Labour Law at the University of Modena and Reggio Emilia. Troy Sarina is a workplace consultant based in Sydney. Evert Verhulp is Professor of Labour Law at the University of Amsterdam. Mathias Wouters is an assistant at the KU Leuven Institute for Labour Law. Ryuichi Yamakawa is Professor of Labour Law at Meiji University.

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1 Technology and Law for the Future of Work We Want Marc De Vos

I TECHNOLOGY AND THE FUTURE OF WORK, AGAIN . . .

The nature of work, the substance of jobs, the types of party involved, their legal and operational relationships, the formation of those working relationships: there is very little in the world of work that is not subject to some form of technology-driven transformation. This, perhaps, is nothing new. After all, modern labour and employment law emerged as a response to a technologically induced industrial revolution that triggered wholesale societal transformation. As some observers predict the most radical change in the labour market since the first industrial revolution, this begs the question: if the future of work is set to change, what will the future of labour law be? If technology is disrupting employment, how is it causing a disruption in labour and employment law? This book provides a collection of country and institutional chapters that trace emerging responses of domestic and transnational labour and employment law to the new technologies that are gradually reshaping the world of work into what has been dubbed Work 4.0: a new future of work reflecting transformational technological shifts. The wheels of justice and lawmaking churn slowly. Our team of academic observers sketches what likely constitutes the avant-garde of more profound, if gradual, developments. The future of labour and employment law – I use the terminology to refer to both the collective and the contractual dimension of work – will reflect the future of work as it is perceivable or predictable from current underlying trends that are themselves changing the world of work. There is a general consensus on these long-lasting and wide-ranging megatrends.1 Adopting a widescreen perspective allows us to see three simultaneous tectonic shifts: - a talent shift, driven by overall demographic ‘greying’ (ageing) combined with demographic ‘greening’ (rejuvenating) in sub-groups, by generation diversity, mass immigration, ethnic and cultural hyper-diversity, and by changing values with respect to work–life balance; - an economic and industrial shift, driven by globalisation and de-globalisation at the same time, by market changes and changes in value chains, by new company structures and shifting human resources (HR), and by a transversal energy transition; - a technological shift, driven by the Internet, internet platforms, robotics, artificial intelligence (AI), HR-tech, big data, 3D-printing, nanotechnology, genetics, biotechnology, climate change, and energy technology. 1

For an overview see, e.g., Federal Ministry of Labour and Social Affairs, White Paper Work 4.0 (2017); National Academies of Sciences, Engineering, and Medicine, Information Technology and the U.S. Workforce: Where Are We and Where Do We Go from Here? (Washington, DC: National Academies Press, 2017); World Economic Forum, The Future of Jobs (2016).

1 https://doi.org/10.1017/9781108878647.001 Published online by Cambridge University Press

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Marc De Vos

As a discipline that works mostly reactively in relation to shifting trends, the labour and employment law of the future will be shaped by what our societies consider appropriate and feasible responses to agreed new reform challenges. This responsive and corrective mode permeates the national stories collected in this volume. It is understandable. It is necessary. But it is also insufficient. In the background loom the bigger questions, perhaps more easily embraced at the technocratic multilateral level than at the democratic state level: what is the future of work that we aspire to? Can we use the law not only to restrict technological innovation but also to mobilise it for a greater purpose? Can technology be a solution, rather than a problem in need of correction? In this introductory chapter I build upon policy research to pitch the case that new technology can and indeed should enable a future of work that puts the human at its heart. I zoom out to offer a bigger picture that can help contextualise and frame emerging legal innovation to become not merely responsive and reactive but formative and creative: stepping stones towards the future of work we aspire to and desire. This is not a pipe dream. Technology has never been our enemy. It is an inherently neutral force that can be leveraged for human progress, provided we mould it accordingly. Indeed, such has been the bottom line, no matter how accidental and haphazard the actual trajectory, of 400 years of technological innovation and labour. Old technologies become redundant; eventually new technologies themselves become outdated; and the cycle starts again. The impact on labour is the same with every cycle, every turn of the technological wheel. Jobs in old technologies become scarcer and eventually disappear altogether. That is the minus side. The plus side relates to technological innovation itself, which requires and creates new jobs. The weavers have gone, but the weaving looms that have replaced them require raw materials, assembly, electricity, design, production, operation, and maintenance. Similarly, there are no coach builders or coachmen anymore, but there are mega automotive assembly plants, networks of suppliers, studios crammed with designers, gigantic steel producers, paint factories, specialist machine builders, car dealers, etc. The best innovations develop into entirely new economic sectors with completely new value chains. Thanks to technology and the capital behind it, new jobs are usually more productive than the old ones: they generate greater economic value and output per input. This margin has beneficial effects: on the profitability of the businesses, on the income of the workers, on the effort needed to earn a decent living, and on society in general. Technological innovation is nothing less than the beating heart of the unique ‘capitalist’ human progress machine, the basis of mankind’s spectacular prosperity growth through the recent centuries. Despite occasional profound and disturbing adjustments, its impact on labour is without doubt impressively positive: the number of working people in relation to the total population and the average quality of work has continued to improve.2 A structural sea change in this global quantitative and qualitative progress is not immediately upon us. On the contrary, also driven by the demographic transition of the retiring baby boomers, much of the developed world is facing an acute talent shortage rather than a work shortage. Nevertheless, there is a growing fear or conviction that technology may finally become an existential threat to labour and the working human. The assumption that ‘this time is different’ is fostered by various findings or expectations. New technology profoundly affects the service economy that is the backbone of modern society, whereas earlier technologies 2

For an overview, see M. De Vos, Les vertus de l’ine´galite´ (Paris: Saint-Simon, 2017); J. Appleby, The Relentless Revolution: A History of Capitalism (New York: W. W. Norton, 2010). For data on progress, see, e.g., S. Pinker, Enlightenment Now (London: Allen Lane, 2018).

https://doi.org/10.1017/9781108878647.001 Published online by Cambridge University Press

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tended to impact agriculture and the industrial economy. The Internet and internet platforms digitalise and fragment work relationships into an automated flow of fleeting tasks. The processing power of computers, combined with breakthroughs in sensors, mobile communication, connectivity, and so-called blockchain technology, is making such leaps that AI could increasingly replace human intelligence in jobs that have until now remained outside the remit of technology. Robots, for a long time merely valets for simple but arduous work, are said to be on the verge of what would exponentially increase their circulation: imitating human actions. Add all this together and technological innovation might, for the first time in history, generate a negative rather than a positive job balance. Estimates and opinions differ, however.3 Optimists merely expect more creative destruction, a combination of job losses and job gains, but still with a positive bottom line, even potentially a productivity leap. Pessimists think that certain professional groups and sectors are threatened with extinction. Doomsayers predict that most humans are doomed to become like horses: once a productive economic entity, then superfluous except for the pursuit of leisure. Only in this total apocalypse, which many consider highly unlikely but which has achieved renewed attention with the recent breakthrough of generative AI such as ChatGPT,4 will labour and employment law eventually become devoid of purpose. In all other scenarios, labour and employment law instead becomes increasingly important as we face fundamental economic convulsion. What unites all these varying visions is the expectation that the normal cycle of job destruction, job creation, job change, and job transition, typical of each technological innovation, will structurally and fundamentally accelerate, deepen and widen to include virtually all sectors, professions/jobs, and educational levels. According to a well-known estimate that predates the recent AI surge, between 75 million and 375 million workers worldwide could change jobs as a result of technological shifts by 2030.5 Furthermore, the content of many jobs that do not disappear is likely to evolve profoundly, consequently requiring major adjustments.6 The recent spectacular breakthrough of generative AI potentially signifies a quantum leap where technology could gradually penetrate and potentially displace new geographies, sectors, and occupations hitherto mostly enabled by technology in human productivity, particularly in the higher-skilled services industries.7 With those stark realities in mind, I offer four paradigm shifts to help steer and leverage technological innovation towards a desirable future of work, a future reflecting shifting generational, sociological, and cultural norms that want work to be more human, not less.8 3

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For a summary of the various studies and their diverse assessments, see European Parliamentary Research Service, The Impact of New Technologies on the Labour Market and the Social Economy (Strasbourg: European Parliament, 2018); C. Josten and G. Lordan, Robots at Work: Automatable and Non Automatable Jobs, IZA Discussion Paper No. 12520 (Bonn: IZA [Institute of Labor Economics], 2019); E. Winick, ‘Every study we could find on what automation will do to jobs, in one chart’, MIT Technology Review (2018). See and compare, e.g., McKinsey, The State of AI in 2023: Generative AI’s Breakout Year (2023). McKinsey Global Institute, Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation (2017). See McKinsey Global Institute, The Future of Work in Europe: Automation, Workforce Transitions, and the Shifting Geography of Employment (2020); L. Nedelkoska and G. Quintini, Automation, Skills Use and Training, OECD Social, Employment and Migration Working Papers (Paris: OECD Publishing, 2018). See, e.g., L. Nurski and M. Hoffmann, The Impact of Artificial Intelligence on the Nature and Quality of Jobs, Working Paper 14/2022 (Brussels: Bruegel, 2022); E. W. Felten, M. Raj, and R. Seamans, ‘How will language modelers like ChatGPT affect occupations and industries?’ (1 March 2023), https://ssrn.com/abstract=4375268; M. Muro, J. Whiton, and R. Maxim, What Jobs Are Affected by AI? (Washington, DC: Brookings Institute, 2019). Bain & Company, The Working Future: More Human, Not Less (2022).

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Marc De Vos II FROM EMPLOYMENT LAW TO CAREER LAW

In the face of systemic and accelerating employment change, the career rather than the job should increasingly become the dominant perspective in employment regulation. This perspective is already appropriate today. Our global labour market with generally impressive job creation and participation hides an increasing diversity of flexible and temporary contracts, second jobs, self-employed workers, freelancers, and part-timers. This trend is not equally prominent everywhere. In some countries it can be a temporary crisis phenomenon. It is not always a permanent reality for those involved. But what is commonly referred to as ‘flexible labour’, which is atypical vis-a`-vis the historical model of permanent full-time employment, is gaining ground. Estimates vary, but in Europe and the United States up to a quarter of the working population, in total approximately 160 million people, can be associated with one or another type of flexible labour.9 While standard employment remains dominant in Europe, an increasing diversity of employment forms is capturing an increasing amount of societal attention.10 The trend towards diversification in working relationships will be reinforced by the megatrends behind Work 4.0. Both on the supply side – that is, in relation to talent – and on the demand side – that is, in relation to the economy – Work 4.0 represents variation and diversity, with a good dose of globalisation and technology that injects flexibility right into the DNA of labour. The traditional differences between permanent and atypical labour will continue to fade away. Work relationships will increasingly be based on tasks, orders, peaks, and periods. The atypical may gradually become the new typical, which has both positive and negative connotations. Positive connotations are better access to the labour market and a more seamless and personalised work–life balance. Where knowledge economy and technology meet, amongst highly trained mobile knowledge workers and independent professionals, flexible or independent working could even become a lifestyle. In this group, the emergence of freelance work is a dream of career variation, freedom of choice, and continual personal development, while also generally serving the economy well.11 Young people in particular are attracted by the opportunity of being able to maintain control over their own job and career.12 The rise of remote work, accelerated through the Covid-19 pandemic, is increasingly using modern communication technology to break down the barriers between working and living. Negative connotations are the risk of segmentation in the labour market and job polarisation. With labour market segmentation, a part of the working population has to be satisfied with insecure and lower-paid jobs with fewer career prospects. Persistent marginalisation of subgroups is a painful reality in today’s labour market, partly overlapping with the increase in atypical labour. Job polarisation, through a combination of unattractive low-paid jobs, disappearing routine jobs in the middle, and attractive highly paid jobs higher up, is already a reality today. It will predictably increase if hyper-segmentation and the technologisation of work continue without an appropriate policy framework.13 In the same vein, blending working 9 10

11 12 13

According to McKinsey Global Institute, Independent Work: Choice, Necessity, and the Gig Economy (2016). Eurofound, New Forms of Employment: 2020 Update (Luxembourg: Publications Office of the European Union, 2020). See Adecco Group and LinkedIn, Flexible Working: A Career and Lifestyle Pathway (2018). See ManpowerGroup, Gig Responsibly: The Rise of NextGen Work (2018). See European Parliamentary Research Service, The Impact of New Technologies; M. Lawrence, C. Roberts, and L. King, Managing Automation: Employment, Inequality and Ethics in the Digital Age (London: Institute for Public Policy Research, 2017).

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and living through remote work technology, while potentially empowering and emancipating, can also threaten to enslave workers in a permanent ‘surveillance economy’, without respite. The paradox of present-day labour law is that it tends to exacerbate rather than diminish labour segmentation. Under pressure from the already mentioned megatrends, continental European countries have opted for asymmetric liberalisation, increasing the opportunity for atypical work alongside the traditional ‘typical’ work, the legal status of which has remained largely unchanged. The proliferation of alternative contract formulas is a pull factor, increasing the polarisation between successful insiders and disadvantaged outsiders in the labour market. The switch from labour law to career law could help to reverse this incongruous effect. To maintain the choice and the diversity that give people autonomy, to facilitate the dynamics and the variation that the economy needs, and, at the same time, to prevent people from being ‘subjected to’ flexibility and caught in fragmented work relationships without basic rights: that is the central triangle hypothesis of career law. As Work 4.0 will continue to boost the biodiversity in jobs and work organisation in the economy, the focus needs to shift from the job to the career. Generally speaking, labour law will then lower the barriers to flexible work relationships, enhance secure rights across those barriers, and focus more on the employability of workers in the wider labour market. This is not without precedent. The regulation of agency work illustrates the practice of labour law as career law. It facilitates and limits flexibility at the same time, creates a level playing field of minimal rights, and guarantees the transferability of those rights when changing clients. It also implies a third party who is responsible for the continuity of protection in the discontinuity of employment. In order to evolve further in the direction of career law, the continuity and the transferability of employment protection must also become feasible when switching between social security statuses. In essence, it should be possible, irrespective of the status and duration of work or the identity of the parties, to link economic activity to benefits that meet the following three requirements: the employee or otherwise economically active person must own and take their benefits with them; the other economic party must contribute to these benefits on a pro rata basis in line with the extent to which the parties collaborate; and the benefits must at least be partly independent from the legal qualification of that cooperation. Rather than fundamentally fragmenting basic labour protection between, for example, employees, the self-employed, freelancers, and civil servants, employment status should be transcended by shared rights that seamlessly shadow and serve career variation. Such a change would provide a systemic answer to much of the ad hoc discussions described in this volume: the legal reaction to the development of platform work. Moreover, substantively, protection should focus more on career development and wide-ranging employability, ensuring that ‘flexible work’ signifies more than just working differently. Here again, labour law evolution is already underway. Various European countries are experimenting with early variations of fully fledged career accounts.14 A career account is a multifunctional career instrument that offers a financial lever with which to manage and support career development tailored to the individual. The career account can be used for training and education, leave and reduced working hours, bespoke work formulas, in the event of redundancy or retirement, and so on. It replaces or reinforces collective systems that work solely with generalised target groups. By replacing a generalised approach with personal choice, a career account optimises results in terms of individual career needs while avoiding the artificial 14

See M. De Vos, ‘Naar een betere arbeidsmarkt [Towards a better labour market]’ in Roadmap 2014–18 (Brussels: Itinera Institute, 2014).

https://doi.org/10.1017/9781108878647.001 Published online by Cambridge University Press

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career effects that standardised measures may generate. The overall result will also be more positive for the use of human resources at the aggregate level of the labour market. A well-structured career account puts the career at the heart of future labour law. Career competencies, development, planning, management, termination, and transitions: everything can be facilitated. A career then becomes a shared responsibility that transcends the individual work relationship, which is why the career account is established within a three-way relationship among the employee, the employer, and the government. It may also involve other parties such as insurers or HR providers. The employee will personally contribute to the career account, financially and by working, as it is through employment that the career account is built up by the employer and/or the government. Employee involvement illustrates how the evolution from labour law to career law entails not only new rights but also new responsibilities. When the employee shares responsibility for the accumulation and disbursement of career account resources, this provides the best possible guarantee of effectiveness in line with his/her personal situation. This is the major difference compared with collective systems supported exclusively by third parties, in particular taxpayers. Financial contributions from employees may consist of a percentage of their wages and/or the exchange of time for money. In other words, a career account could also permit the more familiar ‘time saving’ where the employee voluntarily exchanges holidays, leave, or other periods for capital that they can later use to work less or not at all. Depending on the actual career objective, financing in such a three-way relationship may vary and existing collective systems may be reduced, converted, or stopped altogether. The maze of work suspensions, leave periods, vocational training, and reduced working hours that makes modern labour law so complex and often needlessly encumbers the labour market can be comprehensively simplified via career accounts. This would again improve the transferability and fluidity of social protection through the job-changing process and job status diversity. For the worker, a career account represents a supported cultural shift towards different and sustainable working practices, better talent management, more voluntary change, and fewer compulsory transitions. For the government, a career account is a flexible catalyst for policies that aim to promote employability, reward longer working lives, and discourage early retirement. The government can contribute to ‘earmarked’ account expenditure in order to support activating career objectives. It can provide additional contribution into the account in the event of extraordinary career events or use it as ‘wage insurance’ or ‘adaptation insurance’ during labour market upheavals. It can extend the account into other areas such as family policy, or use it as a quasi-universal instrument for personalised social protection. Because it can be linked to any type of employment, a career account can also maintain career development for ‘atypical’ temporary labour or other employment variations. This does away with the familiar disadvantage that employers are less inclined to invest in the future of temporary personnel. For the employer, the career account is an instrument through which to put talent management at the centre of HR. When labour diversifies, organisations and companies evolve towards talent ecosystems with levels and gradations of collaboration that require integration and coordination. Again, a career account can play a facilitating role. Career law will support both involuntary and voluntary labour mobility. The changes associated with Work 4.0 will also create many opportunities. It should be made easy for employees to seize these. Traditional labour law is too strict for employees who are interested in more than just their employment contract. Competition rules often prevent employees from using their talents elsewhere, either simultaneously with, or upon termination of, an existing employment agreement. Intellectual property law and the confidentiality of professional information as company

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information can disconnect employees from career tools that are also their personal merit. Resigning often has unfortunate consequences in terms of both accrued rights and protection from unemployment. Combining and circulating between jobs requires a complete understanding among the parties. In a nutshell: the legal equilibrium between the parties of an employment contract is one-sided and does not facilitate a career approach. Modernisation is required. A career account can offer both financial and organisational empowerment to employees who want to venture out. Compared to the standardised, collective protection associated with a particular job, a personalised individual account linked to an overall career entails greater management and organisational complexity. This disadvantage can also be managed, however. We are already familiar with third-party service providers that take on and manage the organisational complexities of employment relationships. Career law will undoubtedly facilitate incorporation of a new biotope of career services. In this evolution, the organisational potential of technology will be a critical factor. The data and communication technology that is changing the way we work could also transform and facilitate the organisation of work. Technology is the stepping stone to improved quality in labour organisation and labour management. To this we now turn.

III FROM WORK PROTECTION LAW TO WORK QUALITY LAW

When we consider a career and consequently a long-term approach as the benchmark, the quality of work is, or should be, a key consideration. The human factor is the crucial success factor in the world of Work 4.0. Technological transformation, AI, and robotisation can be seen as reinvestment and reinvention rather than automation and replacement. They do not merely pose a threat to certain human jobs; they also and even more so represent a reinvention of human roles and functions. As machines continue to liberate and complement us, specific human characteristics, capacities, and roles will come to the fore that machines cannot handle and are dependent upon.15 Technology can be embraced as an opportunity to enable people to work more effectively, improving quality and efficiency.16 If the future of work lies in technology, each business strategy will identify tasks that have to be executed by technology and simultaneously develop processes to synchronise these tasks with the human activities that utilise them. Robots can be seen as co-bots, algorithms as e-colleagues. The success of a company is dependent upon the well-being of its employees when talent, effort, creativity, cooperation, and conduct are the defining factors. We can therefore expect organisations to embrace technology in order to humanise and optimise personnel policy.17 If HR was forced to make people work like machines whenever possible in the past, it will enable them to work as little as possible like machines in the future we want. More and better data imply greater productivity and less waste. Technology will make business processes and decisions smarter and faster. Technology can personalise personnel policy. Whether in recruitment, training, education, guidance, or evaluation: technology can stand to benefit the individual and the organisation alike. Behaviour, commitment, and satisfaction can be measured and stimulated via communication technology and metadata. Technology is part of the cause and could be integral to solving the contemporary epidemic of mental illnesses and burnouts.

15

16 17

See H. J. Wilson, P. R. Daugherty, and N. Morini-Bianzino, ‘The jobs that artificial intelligence will create’, MIT Sloan Management Review (2017). Also refer to McKinsey Global Institute, A Future That Works: Automation, Employment, and Productivity (2017). See Gartner, Predicts 2018: AI and the Future of Work (2018).

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The history of centuries of technological innovation has always resulted in more, better, and more productive labour. There is no reason to suspect that it should be any different in the future, provided this is the aspiration we share and value economically. Work 4.0 presents a huge opportunity, not to replace working people but to help them in both the productivity and the quality of their labour. Greater productivity means higher income and more time. In people’s private lives, technology will, as in the past, liberate them from, or assist them with, tasks and jobs. More private time will also facilitate their professional life. Medical technology and care robots will become crucial to accommodating our ageing population, as the wave of wearables and health apps is already demonstrating. As a society, we just have to make sure we develop and seize these quality opportunities. Removing obstacles, enabling markets, and providing incentives can be as important as, if not more important than, restricting and regulating. In fact, both are needed. Progress will not be without its ‘progress diseases’. We are familiar with stress, burnout, and bore-out as the peripheral phenomena of an evolution that has shifted the workload problem from the physical to the mental. The quality perspective of Work 4.0 requires boundaries: for employee availability and accessibility, for data control and communication within an organisation, for interaction with new technology that entails well-being risks. The anchor points of labour organisation are shifting: work location, working hours, authority, and control are changing and making employment more personal. Labour is becoming a porous process: the lines between mandatory and voluntary work, between work and leisure time, between autonomy and control are fading. This demands a new balance, connecting work diversity to work quality. Some of the countries reported upon in this volume have taken the front seat in ensuring boundaries between humans and technology. The same technology that gives people more autonomy also subjects them to greater controls and greater corresponding psychological pressure, a phenomenon that is already manifesting itself in the platform economy that permanently shadows app users, as detailed in several of this volume’s chapters. We can expect other phenomena to emerge and we will have to cope with them, from a preventive and curative as well as a regulatory and HR point of view. When interaction between humans and machines becomes systemic, a regulatory framework is needed in which the conditions and ethical limits of the interaction are defined. Labour is and remains a social reality. The emergence of intelligent machines into this reality will definitely engender social questions. The Work 4.0 era doesn’t just promise quality innovation for individuals and businesses. Legislators, governments, and administrations will be able to employ technology to improve the regulation and organisation of labour as well. We can already see this in countries that manage the platform economy through registration processes that imply the automatic electronic payment of taxes related to platform transactions. The insurance requirements, contribution obligations, and administrative overheads associated with employment, for which companies currently often rely on subcontracted HR services, can also be digitalised. Quality careers require quality regulation and management that can rely on the opportunities offered by the new technological work era. In other words, work relationships going digital offers a major policy opportunity. It could eliminate the black economy and persistent benefit fraud, while guaranteeing complete transparency in working hours and remuneration. Taxes and social security contributions could be paid instantly with zero bureaucracy. Platforms could organise the entire process of an employment relationship seamlessly and automatically. Employment mediation, activation, and support policies could be taken to another dimension of sophistication and

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performance. Longer and better careers, varied careers with more job changes, careers that facilitate training and education at every stage, careers with social protections tied to the individual: these could all be organised and supported. Technology could enable us to work longer and better.

IV FROM WORKER LAW TO TALENT LAW

Our highly technological, internationalised knowledge economy forges an intimate link between human talent and economic outcomes, a structural evolution I have elsewhere referred to as human capitalism.18 Talent is the fuel of today’s economy, the forecaster of career trajectories, and the driving force for a mass mobilisation towards education and training in ‘the race between education and technology’.19 And that is just the beginning. The combination of demographic ageing and retiring baby boomers, hyper-diversity, intense labour market marginalisation, and segmentation amongst young people makes talent the key priority for policy in both the present and the future. Add to this the mass job transition and innovation that the technological revolution can entail, and it seems logical that future labour and employment law will fundamentally become talent law. The development, maintenance, and renewal of economically useful human talent that widely supports people’s participation in the labour market will penetrate into the DNA of labour regulation. The advance of talent law can be glimpsed in the countries, described in this volume, that are responding to the emergence of platform work by bridging the old divide between independent and subordinate work. But that is only the first step. The perspective of talent law has several deeper dimensions. Conceptually, it intertwines labour and education. Our current understanding of life and work is chronological: school, diploma, work, training, education, holidays, upskilling, and so on. Our view of talent development is pillarised and fragmented. The evolution from labour law to talent law will end the compartmentalisation of talent development and blend it transversally through lives and careers. Employment relationships will then become part of a continual process of education and training, involving other and new parties, new roles, new financing, and new learning formulas. Training and education will become part not only of the job but of career development on the basis of shared responsibility. As talent law, labour law will combine with an education system that will focus more on learning ability, cognitive capacity, creativity, analytical thinking, and resilience. Beyond fundamentals, education faces the dilemma that existing knowledge will become outdated but future knowledge cannot be predicted. Work 4.0 will increase the turnover rate of knowledge. Not so much technical know-how but a capacity for change, critical and creative thinking, collaboration, and dealing with complexity will be prerequisites. Being able to continually develop and adapt talent, under the motto of lifelong learning, will be the only successful strategy. That is why education will focus not only on the transfer of knowledge and skills but also on so-called meta skills for future-proof learning that will make future adults selfreliant.20 This will require hybrid skills: skills that mix basic technical knowledge, cognitive

18 19 20

See De Vos, Les vertus de l’ine´galite´. See C. Golding and L. Katz, The Race between Education and Technology (Cambridge, MA: Belknap Press, 2010). See, e.g., P. A. Kirschner, Het voorbereiden van leerlingen op (nog) niet bestaande banen [Preparing for not yet existing jobs] (Heerlen: Open Universiteit, 2017).

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skills, and personal attitudes, to enable us to manage technology, and evolve with it, all our lives.21 In training and education, technology will promote quantity, quality, and accessibility, as is already the case with online courses and universities. Virtual reality, AI, and the metaverse will enable even more people to benefit from education, cheaply and from the best institutions, in an easier and more effective way. Technology will enable traditional diploma-based education to evolve into teaching modules that can be taken advantage of at any stage of life. This way education will continuously underpin the labour market. Companies and organisations will have to select more on the basis of ability instead of knowledge, on skills rather than diplomas. The regulation of professional qualifications should assist in this process. Technologically personalised HR policy will make it possible to monitor employee requirements in more detail. This will optimise the timing and tailoring of talent management and development, which in turn will promote commitment, motivation, and well-being. For companies, talent law illustrates how talent management becomes a key strategic business priority.22 The combination of quantitative talent shortage and qualitative skills transformation means that companies will never be able to make the transition to Work 4.0 without investing in retraining and upskilling. Employing technology to increase productivity and profitability, eliminating repetitive and routine tasks, and deploying people for more worthwhile activities doesn’t just happen. Companies will have to invest in both hardware and software, in relation not just to technology and machines but also to people and their organisation. Technological innovation will succeed only if it used for innovation in work, people, and labour organisation, which requires a business strategy linking technology to talent.23 For society, talent law is a vital component for inclusion and upward mobility. Work 4.0 represents a gigantic opportunity for greater talent inclusion through lower barriers, more choice, and more diversity. There is, however, also a risk of talent erosion. There will be losers. At the top, winners will be able to gain even more because their talent and skills can be deployed even more productively and on an even larger scale than before. Elsewhere, the risks are real. In the middle, cognitive AI could take over routine intellectual tasks such as writing, communication, transport, purchasing, accounting, contract management, medical diagnoses, office administration, and, increasingly, even services based on information or data analysis. At the bottom, people would be either bypassed by productivity-enhancing technology support or totally replaced if and when robots become able to fulfil human actions and interactions in lowproductivity jobs, production, distribution, care, and personal services. Technology is consequently not talent neutral and it seems logical that the megatrends behind Work 4.0 could amplify labour polarisation – the combination of a fast-moving top, a disappearing middle, and a stagnating bottom. There is considerable inequality in the acquisition, early in life and later in education, of the hybrid skills that can forge the connection between man and technology. If we don’t reduce this talent inequality, changing job structures will likely increase labour and income inequality.24 We will have to promote a talent shift across society in order to turn losers into winners. This can be done by mainstreaming talent development as a core value of social policy, using techniques such as training cheques, skills 21

22 23 24

See also L. Rainie and J. Anderson, The Future of Jobs and Jobs Training (Washington, DC: Pew Research Center, 2017). See data and trends described in World Economic Forum, The Future of Jobs. See, e.g., E. Shook and M. Knickrehm, Reworking the Revolution (Accenture Strategy, 2018). See European Parliamentary Research Service, The Impact of New Technologies; Lawrence et al., Managing Automation.

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guarantees, individual learning accounts, subsidies, and tax benefits.25 Labour law will play a central and unifying role in this process. The distant future of human talent in a technology-heavy world may well be a question mark, but data models can predict the job transitions and talent requirements of Work 4.0 in the medium term. These models anticipate waves of job destruction and renewal that will have a varying impact on different sectors and professional groups at different times.26 Using this as a basis, policymakers should be able to define priorities and prepare pathways for future job transitions with a sufficient degree of certainty. This could be referred to as preventive target group policy in talent development. The motto of talent law consequently does not have to be a meaningless slogan. We can organise both broad talent development for the long term and specific talent transition in the short term. This way, the switch to talent law can prevent labour market problems in the future. However, we have to find the courage to opt for prevention, rather than wait until transition issues become a reality in the labour market.

V FROM SOCIAL PROTECTION TO HUMAN PROTECTION

Work 4.0 stands for the variation, fluidity, and diversity of work, as exemplified in the (in)famous gig economy or platform economy that is inescapable in every chapter of this volume. The traditional boundaries of legal status, such as employee, self-employed, independent contractor, temporary worker, part-time or full-time worker, are blurred beyond recognition. The necessity of transversally prioritising the career rather than the individual employment relationship forces us in the direction of a legal framework of shared career rights irrespective of the individual employment relationship. The career perspective requires personal and transferable rights that can be nourished by any and all variations of job, career, and/or contracting party. If job variation increases without a decrease in legal status variation, the development of careers and the productive use of human talent will be undermined on a grand scale. We must evolve towards a shared base of personal rights, irrespective of underlying work status. Again, the initial responses to the challenge of platform work in several of the countries described in this volume are inching in that direction. Elsewhere, there are older mechanisms in place that allow actors and artists to build up social benefits across all ups and downs of what is intrinsically a perennially changing project existence.27 If we are all to become project workers, the course seems quite clear. The same internet technology that divides work into project elements can seamlessly attach social rights to personal projects, without excessive overheads or transactions costs for the stakeholders. Platform players and the insurance sector are already experimenting with formulas that supply on-the-spot insurance for ad hoc services and deliveries.28 Also, HR service providers and partnerships already offer digital tools that enable freelancers to manage their own careers, including ad hoc social protection with each

25 26

27

28

See, e.g., ILO Global Commission on the Future of Work, Skills Policies and Systems for a Future Workforce (2018). See, e.g., H. Bakhshi et al., The Future of Skills: Employment in 2030 (London: Pearson and Nesta, 2017); McKinsey & Company, Shaping the Future of Work in Europe’s 9 Digital Front-Runner Countries (2017); PwC, Will Robots Really Steal Our Jobs? (2018); World Economic Forum, Towards a Reskilling Revolution: A Future of Jobs for All (2018.). See, e.g., D. Rolf, S. Clark, and C. Watterson Bryant, Portable Benefits in the 21st Century (Washington, DC: Aspen Institute, 2016). See, e.g., The Economist, ‘How insurance policies are being adapted to freelance working’, 7 April 2018.

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impromptu contract.29 As some of the contributions to this volume demonstrate, unions and collective action have successfully gone digital and employment-status-neutral in response to digital work platforms. We are already seeing the future of labour law evolving into a law on persons, providing tailor-made follow-up and support for the activities of economically active individuals. As a law on persons, the future of labour law symbolises a uniform framework for personal economic activity, irrespective of the parties and demarcation lines between social/legal statuses. The content of that framework is a political choice and can evolve. The demarcation lines will fade as the content of the framework grows. In addition to activation, careers, talent development, and work quality, labour conditions will predictably feature. From a law-on-persons perspective, such topics coincide with the labour position of the working person, in which their regulation finds political legitimacy. The platform economy today is already subject to insurance rules and open to discussion on pricing structures, collective bargaining included – as this volume testifies. In essence, this is about social security and minimum wages, but for a different category of people than employees. Take this to its logical conclusion and we realise that personal law ultimately does not have to differ much from labour law. In other words: the blurring of work statuses implies a convergence between the worker and the company as a source of economic activity, raising new identification issues in economic law. Add to this the digital deconstruction of the contract as a legal vehicle for cooperation and Work 4.0 becomes the proverbial tail wagging the entire legal dog towards a regulatory framework where it’s all about the economically active human being.30 A law on persons shifts the focus onto the person, personal choice, talent, and career. Personal law stands for an equal framework of rights and obligations, but for the unequal, personal implementation thereof. It lets labour law evolve towards regulation that can organise and facilitate a wide range of activities, supported by personal choice, responsibility, and diversity, as well as a shared base of minimal protection. A law on persons stands for labour law that is more than just the law regarding human interaction in a work environment. It will also regulate the interaction between people and machines and between machines and people. The intimate symbiosis of people and machines will be a key theme under Work 4.0. Focussing on the person as the core value in the relationship, labour law will be able to set out ethical, legal, organisational, quantitative, and qualitative parameters – the first of which are the right to disconnection and the right to be forgotten, both featuring in this volume. A law-on-persons approach puts people at the heart of Work 4.0. In that sense it tends towards a human rights approach, but with a crucial conceptual switch. Existing social human rights want to turn traditional labour protections into fundamental rights. They ossify the static labour law of yore, with its protective focus on the job and its obligations for employers. A law on persons symbolises the reform of labour law and labour organisation towards promoting activating investment, career development, talent management, and labour quality. A law on persons stands for a dynamic career approach, with different rights 29

30

See, e.g., YOSS of Adecco Group: ‘The Adecco Group spearheads the age of the freelancer with a new digital brand: YOSS’, press release (24 October 2017), https://bit.ly/47WMp3V; and the Smart.be coop, which is available in several countries, e.g. https://smartbe.be/en/. See and compare, e.g., F. Seghezzi and M. Tiraboschi, ‘Italy’s Industry 4.0 plan: An analysis from a labour law perspective’, E-Journal of International and Comparative Labour Studies, 7(1) (2018).

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and obligations, greater personal responsibility, and a diversity of parties and players with complementary responsibilities. As a law on persons, labour law structurally and fundamentally connects with other areas of the law and policy that focus specifically on the individual and on human development, including education, vocational training, housing, benefits, and family and youth policy. It incorporates labour law in a holistic continuum of policies that invest in the development of human potential. Talent policy is no longer fragmented into life phases and institutional complexities. Actors, rights, and obligations not traditionally included will enter the labour law domain, with an allembracing talent mission. This requires the coordination of policy competences, at least operationally, for instance via a central point of contact for public services that combines a shared policy objective between relevant authorities and authority levels.

VI FROM DISRUPTION TO CONSTRUCTION

Reaction to technologically driven disruption is the common denominator of this book. Societies, organisations, companies, and individuals are not passive onlookers subjected to the impact of Work 4.0 but proactive players who will make it a success or a failure through choice. The investment decisions made by countries and companies, the regulations on safety, privacy, and interaction between humans and machines, the integration of technology into HR and the organisation of work, our priorities and decisions as citizens and consumers: they are all in our hands. This volume identifies and traces the first steps in what will be a long journey the ultimate destination of which is ours to decide, if we want. The most fundamental choice relates to the role of work in the economy and in society. It is only because productive economic labour is the basis of prosperity and well-being that our analysis is required. A revolutionary alternative for the future of work and labour law would consequently be to cut the umbilical cord between the economy, personal income, and social protection on the one hand and work on the other hand. That is essentially the utopian agenda of a universal basic income. I have rejected it as rather dystopian elsewhere,31 but I share its underlying concern about the role of work in our modern societies and welfare states. If rights to health care, training, education, support, activation, and so on are acquired only through regular employment, Work 4.0 represents a large-scale threat to economic activity, prosperity, and well-being. Hence this plea for general, personalised, and transferable activation, career, and talent rights that bridge all peripeteia of work and life. The personalisation of labour rights is an instrument for social inclusion in times of economic turbulence.32 I follow and extend this insight to predict that labour protection will gradually move beyond labour. It will be incorporated into, and combined with, a transversal policy focus on personal talent development for, and throughout, a career. In essence, the social contract regarding the role of work and employment in our society needs to evolve. More job variation and job change means that social policy serves not only those without a job but also those with a job. The traditional welfare state, which fills in the gaps after and between jobs, must evolve into an investment state that offers ongoing, anticipatory, and preventive protection. Hence the catchphrases of career law and talent law. The archetypal idea of ‘a job’ being a functional role within an organisation, with a set of responsibilities, functional competencies, a title, a rank, and a career path, is disappearing. It is 31 32

See M. De Vos and S. Ghiotto, L’allocation universelle entre reˆve et re´alite´ (Ghent: Skribis, 2017). See and compare, e.g., A. Supiot with P. Meadows, Beyond Employment: Changes in Work and the Future of Labour Law in Europe (Oxford: Oxford University Press, 2001).

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being replaced by tasks, projects, targets, teams, and results, all of which offer more variation, greater choice, and increased options. Working on a human scale makes work both easier and more difficult. We will have greater control over work, but also more responsibility as a result. The future of work is therefore tied to so much more than the regulation and organisation of labour and employment. As a society we will have to adopt a more holistic approach to technological transformation: in the economy, in the environment, in politics and ethics, from a cultural, a social, and a legal point of view. As human beings, we will have to learn to consider and manage work and careers as a continuum throughout all phases of our lives.33 In the final analysis, the technological future of work may well end up making the worker more important than ever. May this be the silver lining as the following chapters peer through the thick clouds of new and sudden technological disruption.

33

See G. Petriglieri, S. Ashford, and A. Wrzesniewski, ‘Agony and ecstasy in the gig economy: Cultivating holding environments for precarious and personalized work identities’, Administrative Science Quarterly, 64(1) (2018), 124–70.

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2 The International Labour Organisation and the Future of Work Valerio De Stefano and Mathias Wouters*

I INTRODUCTION

In 1969, David A. Morse received the Nobel Peace Prize on behalf of the International Labour Organization (ILO). In his Nobel Lecture, the then Director-General (DG) explained how the organization contributes to ‘an infrastructure of peace’ by providing Member States with ‘a meeting ground’ for cooperation and dialogue. This meeting ground is characterized by tripartism and universalism, two qualities that make the ILO stand out. Tripartism, in which governments and workers’ and employers’ representatives discuss and decide on all ILO action, ‘was both the most daring and the most valuable innovation of the Peace Conference’. By setting up the ILO in tripartite fashion, the social dialogue between trade unions, employers’ organizations, and governments was presented as a viable approach to resolving social conflict. As Morse suggested, if tripartism ‘could be accepted and applied in Geneva, why not at home?’.1 In addition to praising tripartism, Morse went on to highlight a ‘second aspect’ of the organization, its universality. With its 121 Member States in 1969, the ILO was in close pursuit of the United Nations’ 126 members. Furthermore, even if some considered tripartism to be irreconcilable with socialist countries’ systems of government, and not ideal for developing countries, Morse nevertheless remained convinced that the ILO had to be both tripartite and universal: ‘Experience during the past few years has shown that it can; not only that it can, but also that it must if it is to make a major contribution to peaceful cooperation and mutual understanding among all the nations of the world.’2 To this day, tripartism and universalism define the organization’s position in the international order. The ILO is a tripartite organization for global discussions on social justice, decent work, and the future of work. This tripartism is, according to some, an integral part of why the ILO still exists and continues to remain relevant.3 Former ILO Legal Adviser Francis Maupain has even argued that ‘[i]t is tripartism alone which gives gravitas and clout to the organisation’s presence and advice, not least at forums like the G20’.4 Other advantages of the organization in comparison with other international and regional bodies are, arguably, the ILO’s decades-long

* 1

2 3

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This chapter was written in 2021 and only marginally updated in 2023. D. A. Morse, ‘ILO and the social infrastructure of peace’, International Labour Organization Nobel Lecture, 11 December 1969, www.nobelprize.org/prizes/peace/1969/labour/lecture/. Ibid. J. R. Bellace, ‘The ILO and tripartism: The challenge of balancing the three-legged stool’ in G. P. Politakis, T. Kohiyama, and T. Lieby (eds.), ILO100: Law for Social Justice, 289–310 (Geneva: ILO, 2019), 289. F. Maupain, The Future of the International Labour Organization in the Global Economy (Oxford: Hart, 2013), 248.

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experience with technical cooperation and its competences to set international labour standards.5 This chapter will primarily focus on the latter. The Peace Treaty of Versailles has deliberately provided the ILO with the ‘permanent machinery’ necessary to adopt ILO Conventions and Recommendations. The chapter will discuss how the ILO has used its standard-setting competences in relation to the employment relationship, non-standard forms of employment, and atypical forms of work. Section IV presents a picture of where the ILO is headed. It is in this respect important not to indulge in wishful thinking. Although, for instance, the International Labour Office, which is the International Labour Organization’s (ILO) permanent secretariat, has been an important agent for change in the past, it has become ‘very cautious, or more passive, in recent years’,6 not always taking up its ‘key driving role’.7 Therefore, perhaps more than in the past, the ILO constituents will decide what future of work the ILO pursues.

II THE ARCHETYPE

A From a Focus on Manual Wage Labour to Decent Work for All The current ILO Constitution is based on the Labour Charter of the Peace Treaty of Versailles and the Declaration concerning the aims and purposes of the International Labour Organization adopted at Philadelphia on 10 May 1944 (Philadelphia Declaration). According to Article 427 of the Peace Treaty of Versailles, ‘[t]he High Contracting Parties, recognising that the well-being, physical, moral and intellectual, of industrial wage-earners is of supreme international importance, have framed, in order to further this great end, the permanent machinery’ of the ILO.8 Because of this language, the Permanent Court of International Justice was asked to provide an advisory opinion on the question of whether the ILO’s standards could, for instance, govern workers employed in agriculture.9 The Court answered affirmatively. Furthermore, in 1932, the Permanent Court was asked if the Night Work (Women) Convention, 1919 (No. 4) applied to women in industrial undertakings who hold positions of supervision or management and are not ordinarily engaged in manual work. Notwithstanding a Dissenting Opinion by M. Anzilotti, the Court itself was ‘not disposed to regard the sphere of activity of the International Labour Organization as circumscribed so closely, in respect of the persons with which it was to concern itself, as to raise any presumption that a Labour convention must be interpreted as being restricted in its operation to manual workers, unless a contrary intention appears’.10 These key moments in ILO history are often overlooked. However, they are indispensable in framing the ILO’s trajectory. The ILO has concerned itself with the protection of various categories of workers throughout its history. Its initial concern for industrial wage-earners would gradually shift, in particular, once the International Labour Conference (ILC) had 5

6

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8 9 10

H. Ruiz Fabri and A. Nunes Chaib, ‘“Private faces in public places”: Resolving actors’ interests in international organizations’ in G. P. Politakis, T. Kohiyama, and T. Lieby (eds.), ILO100: Law for Social Justice, 661–76 (Geneva: ILO, 2019), 667. C. La Hovary, ‘The ILO’s mandate and capacity: Creating, proliferating and supervising labour standards for a globalized economy’ in H. Go¨tt (ed.), Labour Standards in International Economic Law, 37–55 (Cham: Springer, 2018), 42. F. Maupain, ‘A second century for what? The ILO at a regulatory crossroad’, International Organizations Law Review, 17(1) (2020), 291–343, at 318. See Art. 427, ‘The Versailles Treaty June 28, 1919: Part XIII’, https://avalon.law.yale.edu/imt/partxiii.asp. Permanent Court of International Justice, 12 August 1922, Advisory Opinion No. 2. Permanent Court of International Justice, 15 November 1932, Advisory Opinion No. 25.

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affirmed in the Philadelphia Declaration that ‘all human beings, irrespective of race, creed or sex, have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity’.11 The Declaration extended the ILO’s original mandate, putting a strong emphasis on human rights and human dignity.12 This somewhat liberated the organization: ILO constituents could now more freely focus on whatever subset of workers they felt were most in need of protection. In the 1970s, the ILO became notably concerned with topics such as employment in the ‘informal sector’. In particular, the DG’s report from 1991, titled The Dilemma of the Informal Sector, clearly indicated that the organization was moving in new directions.13 For instance, the ILO’s actions against child labour in the 1990s were in part a response to the critique that the organization did not pay enough attention to the informal economy.14 Furthermore, the 1998 Declaration on Fundamental Principles and Rights at Work entitled all workers to certain ‘fundamental social rights’, irrespective of the Member State having ratified the corresponding Fundamental Conventions. This too served to grant certain protections to workers at the margins, such as informal workers.15 As such, when Juan Somavı´a kick-started his tenure as DG by launching the Decent Work Agenda in 1999,16 the ILO definitively oriented its focus towards ‘people at the periphery of formal systems of labour and social protection’.17 ‘Decent work for all’ became the ILO’s credo, as well as a catchphrase that caught on both inside and outside the organization. Before the ILO Social Justice Declaration of 2008 had even formally institutionalized the Decent Work Agenda, a new target 1.B. was added to Millennium Development Goal 1 to ‘achieve full and productive employment and decent work for all, including women and young people’. Therefore, ‘decent work for all’ was included in the United Nations’ (UN) development strategies, even before it had become institutionalized at the ILO’s highest level. The 2019 ILO Centenary Declaration now calls upon Member States to promote ‘sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’. The wording used in the 2015 United Nations’ Sustainable Development Goal 8 has, therefore, found its way into ILO key instruments. This alignment between the UN’s development policies and the ILO’s actions surely has its benefits. However, some scholars observe that this also means that the ILO no longer has sole discretion to determine the meaning of ‘decent work for all’.18 This ‘risk’ should not be exaggerated, either. The Decent Work Agenda has been summarized in the Social Justice Declaration along four strategic objectives: (i) promoting employment; (ii) ‘developing and enhancing measures of social protection’, including social security and labour protections; (iii) promoting social dialogue and tripartism; and (iv) ‘respecting, promoting and

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See Annex to the ILO Constitution, www.ilo.ch/dyn/normlex/en/f?p=1000:62:0::NO:62:P62_LIST_ENTRIE_ ID:2453907:NO. A. Supiot, L’esprit de Philadelphie: la justice sociale face au marche´ total (Paris: Seuil, 2010), 21–4. ILO Director-General, The Dilemma of the Informal Sector (Geneva: ILO, 1991). K. Tapiola, The Teeth of the ILO: The Impact of the 1998 ILO Declaration on Fundamental Principles and Rights at Work (Geneva: ILO, 2018), 18. A. Trebilcock, ‘International labour standards and the informal economy’ in R.-J. Dupuy (ed.), Me´langes en l’honneur de Nicolas Valticos: Droit et justice, 585–613 (Paris: Pedone, 1999), 603. ILO Director-General, Decent Work (Geneva: ILO, 1999). J. Fudge, ‘Regulating for decent work in a global economy’, New Zealand Journal of Employment Relations, 43(2) (2018), 10–23, at 12. Maupain, ‘A second century for what?’, 312–26.

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realizing the fundamental principles and rights at work’.19 Notwithstanding these four strategic objectives, according to some, decent work remains notoriously undefined.20 Arguably, this was done deliberately. Quite similar to ‘social justice’, which did not receive a specific description in the ILO Constitution in order for the concept to retain lasting appeal,21 decent work was in need of a certain degree of ambiguity to make it long-lasting and universally appealing. One decisive aspect, however, stands out in stark contrast to this ambiguity. As observed by Bob Hepple, ‘[t]he most innovative feature of the ILO’s definition of Decent Work, as Amaryta Sen pointed out in his address to the 1999 ILC, is that it encompasses all kinds of productive work’.22 B The ‘Worker’ in the International Labour Code At the outset, it is important to stress that, contrary to what is the case in the European Union, in the ILO’s terminology the word ‘worker’ normally refers to any person who performs (remunerated) work.23 A worker who is legally subordinated to an employer is sometimes called an employee, an employed person, a subordinated worker, and such like. Regardless of the contemporary understanding among ILO stakeholders that, in principle, the word ‘worker’ has a broad meaning, Section II.A partly explains why there is nevertheless no unified worker’s concept at the ILO level. Both older instruments, such as the Fee-Charging Employment Agencies Convention, 1933 (No. 34), and more recent instruments, such as the Workers with Family Responsibilities Convention, 1981 (No. 156), apply to ‘workers’. However, in between the adoption of both instruments, the ILO constituents’ perception of the world of work changed, and even the ordinary meaning of certain words might have changed. Therefore, although some of the older instruments claim to apply to workers, instead of employees, it is not always self-evident what the ILO constituents who adopted the instrument at the time exactly meant when using the term ‘worker’ to delineate the scope of the instrument. Nicola Countouris remarks in this respect that ‘[i]t is impossible to say if, right from the beginning, the use of the term “worker” has been a conscious choice or a lucky coincidence’.24 This is all the more so because the International Labour Code does contain some definitional inconsistencies.25 For reasons like these, ILO Conventions are best interpreted as stand-alone treaties, without excessively relying on comparisons to the language used in other international labour standards.26 That is not to say that a comparison of the language to that of other international labour standards can never be helpful to clarify the language used in the instrument under interpretation. Yet, as a starting point, in order to do justice to the purpose of the instrument

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ILO Declaration on Social Justice for a Fair Globalization, www.ilo.org/global/about-the-ilo/mission-and-objectives /WCMS_099766/lang--en/index.htm. S. Routh, Informal Workers in India: Reconceptualizing Labour Law to Promote Capabilities (Victoria: University of Victoria, 2013), 160. Bureau International du Travail, Dix ans d’organisation internationale du travail (Geneva: ILO, 1931), 106. B. Hepple, Labour Laws and Global Trade (Oxford: Hart, 2005), 64. See also A. Sen, ‘Work and rights’, International Labour Review, 139(2) (2000), 119–28, at 120. Office of the Legal Adviser, Manual for Drafting ILO Instruments (Geneva: ILO, 2006), 43. N. Countouris, The Changing Law of the Employment Relationship: Comparative Analyses in the European Context (Aldershot: Ashgate, 2007), 168. B. Creighton and S. McCrystal, ‘Who is a “worker” in international law?’, Comparative Labor Law & Policy Journal, 37(3) (2016), 691–726. V. De Stefano, ‘Not as simple as it seems: The ILO and the personal scope of international labour standards’, International Labour Review, 160(3) (2021), 387–406.

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under interpretation and the ‘will of the Conference’,27 an ILO Convention should arguably be interpreted on its own account. Fundamentally, ILO Conventions do not truly deviate from a ‘fundamental assumption concerning treaties . . . which is that they are a “thing between the parties”’.28 Therefore, when ILO constituents use certain phrasing, it is meant to have the meaning they envisaged, irrespective of why other Drafting Committees used certain terms. Moreover, also in relation to ILO instruments, ‘there is nothing to authorize, except an express indication, anyone to go beyond the law governing classic treaties’.29 In other words, in principle, the general rules of interpretation under the Vienna Convention on the Law of Treaties (VCLT) govern the interpretation of an ILO Convention. Comparisons to other international treaties can hardly be considered standard practice under the VCLT’s general rule of interpretation. Therefore, although these kinds of comparisons may receive more importance at the ILO on the basis of article 5 of the VCLT, which allows international organizations to set their own ‘relevant rules’ in relation to treaty interpretation,30 the starting point should nevertheless remain that the interpretation of each treaty stands on its own. C Employment Relationships Recommendation, 2006 (No. 198) This conclusion is important. For instance, some might expect the Employment Relationships Recommendation, 2006 (No. 198) to establish the meaning of an ‘employment relationship’ at the ILO level. However, although the instrument does sketch a picture of what ILO constituents understand to be an employment relationship, Section II.B illustrates why this Recommendation does not advance a unified concept of the ‘employment relationship’. Recommendation No. 198 calls on Member States to formulate and implement a national policy on the employment relationship, in consultation with the most representative organizations of employers and workers, and to review this policy at appropriate intervals so as to guarantee effective protection for workers. To this end, paragraph 12 highlights two ‘criteria’ for determining the existence of an employment relationship: subordination and dependence. Paragraph 13 subsequently advances a list of specific indicators for employment, such as ‘the integration of the worker in the organization of the enterprise’. This indicator illustrates how the employment relationships under consideration in Recommendation No. 198 are those related to employment in commerce, industry, agriculture, and so on. This is worth contrasting with the Domestic Workers Convention, 2011 (No. 189), which regulates any person engaged in ‘work performed in or for a household or households’ within ‘an employment relationship’. The preamble of Convention No. 189 mentions the relevance for domestic workers of, among other instruments, Recommendation No. 198. At the same time, its preamble also recognizes ‘the special conditions under which domestic work is carried out that make it desirable to supplement the general standards with standards specific to domestic workers so as to enable them to enjoy their rights fully’. This leads to an important question. Should the ‘employment relationship’ in 2011’s Convention No. 189 be understood on the basis of the conditions and

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ILO Committee on Standing Orders and the Application of Conventions and Recommendations, Article 37, Paragraph 2, of the Constitution and the Interpretation of International Labour Conventions (Geneva: ILO, 1993), 14–15. J. Klabbers, ‘International organizations and the problem of privity: Towards a supra-functionalist approach’ in G. P. Politakis, T. Kohiyama, and T. Lieby (eds.), ILO100: Law for Social Justice, 629–46 (Geneva: ILO, 2019), 630. J.-M. Servais, International Labour Law (Alphen on the Rhine: Kluwer, 2017), 74. A. Trebilcock, ‘The International Labour Organization’ in M. J. Bowman and D. Kritsiotis (eds.), Conceptual and Contextual Perspectives on the Modern Law of Treaties, 848–80 (Cambridge: Cambridge University Press, 2018).

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indicators proposed in 2006’s Employment Relationships Recommendation, taking into account the reference to this Recommendation in the Convention’s preamble? At least the ILO Committee of Experts seems to consider this inappropriate. The Committee has recalled twice how, ‘regardless of the type of contract held by workers providing domestic services, the definition of domestic worker laid down in Article 1 of the Convention excludes only persons who perform domestic work occasionally or sporadically and not on an occupational basis’.31 If the concept of the ‘employment relationship’ in Convention No. 189 had been interpreted pursuant to the guidelines of the Employment Relationships Recommendation, the Committee of Experts would probably not have been able to reach this conclusion. Instead, the Committee of Experts relies on the purpose of Convention No. 189 and the ‘will of the Conference’ to provide the ‘employment relationship’ with its own intricate meaning. The Committee seems to appreciate that the ILO constituents approached domestic work as both ‘work like any other’ and ‘work like no other’, that is, work that is still largely undertaken in the informal economy.32 By adopting Convention No. 189, the ILC also wanted to send a message that remains very relevant for the future, since care work is expected to skyrocket in industrialized countries. Despite its particularities, domestic work is ‘work like any other’. The reference to an ‘employment relationship’ in Convention No. 189’s definitions is, in other words, also meant to affirm that domestic workers should be covered by an employment relationship if their work is performed on an occupational basis. As illustrated by this example, even though Recommendation No. 198 paints a general picture of what constitutes an employment relationship under ILO standards, this does not limit ILO constituents in their ability to provide every international labour standard with a unique scope of application. This is a relevant observation, in light of the critique that the ILO might have excessively focused its efforts on reviving the standard employment relationship, providing parttime workers, disguised self-employed workers, and so forth with similar entitlements as standard employees in a full-time, open-ended, and bilateral employment contract.33 Arguably, the ILO’s International Labour Code presents a complex tapestry of intersecting international labour standards, many of which have their own purpose and unique scope of application. This is a crucial element for the future of work as it allows expanding the scope of ILO standards to new forms of work without fundamental obstacles stemming from past drafting of instruments. III THE CHANGING NATURE OF WORK

A Non-standard Forms of Employment and Atypical Forms of Work The ILO generally identifies four non-standard forms of employment: fixed-term, part-time, multiparty, and disguised employment. A first dimension concerns the duration of the employment contract: in contrast with open-ended employment, temporary work is considered non-standard. Also, part-time and on-demand work are considered non-standard as opposed to full-time employment. Another dimension of non-standard employment has to do with multi-party employment relationships in which workers have no direct, bilateral relationship with the end-user, for example 31

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Direct Request (CEACR) – adopted 2017, published 107th ILC session (2018), Domestic Workers Convention, 2011 (No. 189) – Ireland (Ratification: 2014). Also see Direct Request (CEACR) – adopted 2015, published 105th ILC session (2016), Domestic Workers Convention, 2011 (No. 189) – Ecuador (Ratification: 2013). More recently, however, the CEACR seems to have significantly weakened its stance on this issue. See ILO, Securing decent work for nursing personnel and domestic workers, key actors in the care economy (Geneva, ILO 2022), p. 224. ILO, Report IV(1): Decent Work for Domestic Workers (Geneva: ILO, 2010), https://labordoc.ilo.org/permalink/ 41ILO_INST/j3q9on/alma994332783402676. L. F. Vosko, Managing the Margins: Gender, Citizenship, and the International Regulation of Precarious Employment (Oxford: Oxford University Press, 2011), 212–13.

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temporary agency workers. Lastly, disguised employment and dependent self-employment are considered to blur the boundaries between standard employment and self-employment.34 One specific work arrangement, such as, for instance, that of a platform worker, can be considered nonstandard along multiple dimensions, resulting in what Eurofound calls ‘compound non-standard employment’.35 The ILC has so far adopted international labour standards that (partially) address singular dimensions of non-standard employment. For instance, article 2 of the Termination of Employment Convention, 1982 (No. 158), calls on ratifying Member States to provide ‘[a]dequate safeguards . . . against recourse to contracts of employment for a specified period of time the aim of which is to avoid the protection resulting from this Convention’. This mandate is further specified by the associated ILO Recommendation.36 The sole aim of these ILO instruments is to limit the use of fixed-term contracts, unless there are good reasons for using them. This differs from part-time work, which has received much more attention at the ILO level. The ILO published a Conditions of Work Digest on part-time work in 1989. The opening sentence of this report reads as follows: ‘Part-time work is widely condemned as a threat to full-time jobs, a precarious form of employment and a source of unequal treatment of women workers’.37 Therefore, one of the achievements of the Part-Time Work Convention, 1994 (No. 175) and its Recommendation was that they destigmatized this form of work. They did so whilst, in principle, granting part-time workers the same protection as that of ‘comparable full-time workers’. However, the instrument and its approach have received criticism. For instance, Jill Murray is convinced that Convention No. 175 was envisaged primarily to create employment and neglected to protect the often-female workers engaged in part-time work.38 Moreover, the approach would primarily benefit permanent part-time workers, without addressing the problems experienced by casual part-time workers.39 After the adoption of Convention No. 175, the ILO set out to revise the Fee-Charging Employment Agencies Convention (Revised), 1949 (No. 96). Throughout the 1970s and 1980s, ILO actors had suggested putting the issue of temporary agency work on the agenda of the ILC. However, all proposals to develop a separate standard on this topic failed.40 This led the organization to eventually tackle the issue of triangular employment relationships at 1994’s Committee on Private Employment Agencies and 1997’s Committee on the Revision of Convention No. 96. These Committee proceedings resulted in the Private Employment Agencies Convention, 1997 (No. 181). Convention No. 181 rejected the approach of its predecessor, which regarded profit-seeking private employment agencies with suspicion and remained in favour of public employment services. This turnabout was controversial.41 Convention No. 181’s 34

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ILO, Non-standard Employment Around the World: Understanding Challenges, Shaping Prospects (Geneva: ILO, 2016), xxii. Eurofound, Labour Market Change: Trends and Policy Approaches Towards Flexibilisation, Challenges and Prospects in the EU series (Luxembourg: Publications Office of the European Union, 2020), 16. See also V. De Stefano, ‘The rise of the “just-in-time workforce”: On-demand work, crowdwork, and labor protection in the “gigeconomy”’, Comparative Labor Law & Policy Journal, 37(3) (2016), 471–504. Paragraph 3 Termination of Employment Recommendation, 1982 (No. 166). J. E. Thurman and G. Trah, ‘Part-time work in international perspective’, Conditions of Work Digest, 8(1) (1989), 3–28, at 3. J. Murray, ‘Social justice for women? The ILO’s Convention on Part-Time Work’, International Journal of Comparative Labour Law and Industrial Relations, 15(1) (1999), 3–19. L. F. Vosko, ‘Precarious part-time work in Australia and in transnational labour regulation: The gendered limits of SER-centrism’, Labour & Industry, 17(3) (2007), 45–70. ILO, Report VI: The Role of Private Employment Agencies in the Functioning of Labour Markets (Geneva: ILO, 1994), 2. G. Standing, ‘The ILO: An agency for globalization?’, Development and Change, 39(3) (2008), 355–84, at 366.

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preamble recognizes that private employment agencies may play a role in a well-functioning labour market. The Convention regulates both employment mediators that provide jobmatching services and agencies that employ ‘workers in order to make them available to a third party (the “user enterprise”)’.42 Convention No. 181, thus, covers any ‘agency’ that employs a jobseeker with a view to making this worker available to a third party with an entrepreneurial economic activity that assigns the worker’s tasks and supervises the execution of these tasks. As such, the Convention binds ratifying Member States to ensure adequate protection for workers employed by these kinds of agencies in relation to occupational safety and health (OSH), working time, minimum wages, and so forth. Member States also need to decide how responsibilities are allocated between agencies and user enterprises. The Private Employment Agencies Recommendation, 1997 (No. 188) adds that these workers should have a written contract of employment, should be informed about their conditions of employment before starting the job, and should not be prevented from disintermediating the agency. Arguably, the main purpose of the Convention and Recommendation ‘is to strike a balance between the operation of TWA [temporary work agencies] and the protection of temporary agency workers’.43 However, one important issue the Convention has is its complex scope of application,44 which is a crucial issue when it comes to governing novel forms of work such as digitally mediated crowd work. Although this remains debatable,45 scholars have generally considered the Convention inapplicable when neither the agency nor the user enterprise voluntarily accepts the status as the legal employer of the jobseeker.46 The Convention does not contain mechanisms to force labour market intermediaries, such as platforms, to abide by its rules, if these intermediaries purposively rely on contracts for services. This unequal playing field between private employment agencies of old and newer incumbents, who do not acknowledge their services to be similar to those of TWAs, is something the World Employment Confederation has taken issue with.47 The problem is partly owing to the failed attempt to develop an international labour standard on contract labour. Around the time that Convention No. 181 was adopted, another Drafting Committee, the Committee on Contract Labour, oversaw discussions on how to extend certain labour and social protections to ‘all situations in which work is performed for a person who is not the worker’s employer under labour law as it now stands, but in conditions of subordination or dependency that are close to an employment relationship under that law’.48 This standardsetting initiative broke down, amongst other reasons, because of the complexity and scale of this endeavour, as well as the opposition of the Employers’ Group within the ILO, which to a large 42

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ILO Committee of Experts on the Application of Conventions and Recommendations, Report III (Part 1B): General Survey Concerning Employment Instruments in Light of the 2008 Declaration on Social Justice for a Fair Globalization (Geneva: ILO, 2010), 74. N. Countouris, S. Deakin, M. Freedland, A. Koukiadaki, and J. Prassl, Report on Temporary Employment Agencies and Temporary Agency Work (Geneva: ILO, 2016), 35. A. C. L. Davies, ‘ILO Convention 181: Private Employment Agencies Convention, 1997 (No. 181)’ in E. Ales, M. Bell, O. Deinert, and S. Robin-Olivier (eds.), International and European Labour Law: Article-by-Article Commentary, 911–16 (Baden-Baden: Nomos, 2018), 912. V. De Stefano and M. Wouters, ‘Embedding platforms in contemporary labour law’ in J. Drahokoupil and K. Vandaele (eds.), A Modern Guide to Labour and the Platform Economy, 129–44 (Cheltenham: Edward Elgar, 2021). Countouris, The Changing Law of the Employment Relationship, 158. World Employment Confederation, A Decent Level Playing Field for Platform Work (Brussels: WEC, 2020), https:// wecglobal.org/uploads/2020/10/A-Decent-Level-Playing-Field-for-Platform-Work-WEC-Position-Paper-FINAL.pdf. ILO, Report V (2B) Add (Geneva: ILO, 1998), 2.

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extent comprises representatives of national employers’ associations such as the Confederation of British Industry.49 The breakdown of these discussions was not without its consequences. For one, the instrument on contract labour had the potential to raise the protection enjoyed by temporary agency workers under Convention No. 181 and to paper over the loopholes in this Convention’s scope.50 Furthermore, from the ashes of the draft instrument on contract labour, the Employment Relationships Recommendation, 2006 (No. 198) was born.51 Contrary to the draft instrument on contract labour, which, if adopted, would have introduced an intermediate category of workers between employees and genuine self-employed workers, Recommendation No. 198 stuck to a more binary distinction between employment and selfemployment, something that also has significant bearing when it comes to regulating modern labour markets. Member States should establish a national policy on the employment relationship, under which determination of the existence of such a relationship is guided by the facts and not the characterization of the relationship in the (contractual) agreement. This national policy should be periodically reviewed to ensure, among other things, that all forms of contractual arrangements are covered by labour standards and that disguised employment relationships are eliminated. Paragraph 8 clarifies that this national policy ‘should not interfere with true civil and commercial relationships’. B Broadening the Scope of International Labour Standards Based on Recommendation No. 198 and the Centenary Declaration’s recent affirmation that the employment relationship continues to be relevant ‘as a means of providing certainty and legal protection to workers’, one can conclude that ILO constituents still consider the employment relationship a crucial building block to grant labour and social protections to workers. At the same time, also at the ILO, there have been many attempts to push labour law’s coverage beyond traditionally employed workers. Notwithstanding 1998’s failure to launch the concept of contract labour, the Home Work Convention, 1996 (No. 177) had already advanced a unique definition for ‘homeworkers’. As a result of this definition, any person who performs ‘home work’ is presumably entitled to protections similar to those of employees, unless this homeworker has the degree of autonomy and the degree of economic independence necessary to be considered an independent homebased worker.52 Therefore, in the sphere of work performed elsewhere than at the employer’s workplace, there does exist an intermediate category of ‘homeworkers’ in between independent home-based workers, such as genuine freelance-consultants, and, for instance, employed teleworkers. As noted in Section II.C, the Domestic Workers Convention, 2011 (No. 189) has also aimed to extend labour and social protections to workers who perform work in or for the households of others, and who have historically been excluded from such protections.53 In part because of the broad and unusual scope of Convention No. 177 and Convention No. 189, 49

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T. Royle, ‘The ILO’s shift to promotional principles and the “privatization” of labour rights: An analysis of labour standards, voluntary self-regulation and social clauses’, International Journal of Comparative Labour Law and Industrial Relations, 26(3) (2010), 249–271, at 256. L. F. Vosko, ‘Legitimizing the triangular employment relationship: Emerging international labour standards from a comparative perspective’, Comparative Labor Law & Policy Journal, 19(1) (1997), 43–78; F. Raday, ‘The insider– outsider politics of labor-only contracting’, Comparative Labor Law & Policy Journal, 20(3) (1999), 413–45. V. De Stefano, I. Durri, C. Stylogiannis, and M. Wouters, Platform Work and the Employment Relationship, ILO Working Paper 27 (Geneva: ILO, 2021). Vosko, Managing the Margins, 173. A. Blackett, Everyday Transgressions: Domestic Workers’ Transnational Challenge to International Labor Law (Ithaca, NY: Cornell University Press, 2019).

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the Transition from the Informal to the Formal Economy Recommendation, 2015 (No. 204) mentions both as instruments that are relevant to facilitating a transition from the informal to the formal economy. In addition to these two Conventions, other more recent Conventions have extended their scopes of application. For instance, the Maternity Protection Convention (Revised), 1952 (No. 103) applies to employed women and ‘wage earners working at home’, whereas the more recent Maternity Protection Convention, 2000 (No. 183) applies to ‘all employed women, including those in atypical forms of dependent work’. This intends to cover workers in disguised employment relationships, such as homeworkers and domestic workers.54 Another example of an ambitious instrument in this respect is the Promotional Framework for Occupational Safety and Health Convention, 2006 (No. 187). The Occupational Safety and Health Convention, 1981 (No. 155) defines ‘workers’ as ‘all employed persons, including public employees’. Only the Recommendation that accompanies this Convention calls on Member States to take measures ‘as may be necessary and practicable to give self-employed persons protection analogous to that provided for in the Convention and in this Recommendation’.55 Convention No. 187, on the other hand, does not contain any definition of ‘workers’. It primarily calls on Member States to take steps to progressively achieve ‘a safe and healthy working environment’ and to periodically review its national system for occupational health and safety. The Committee of Experts thereby ‘encourages governments to continue to undertake consultations with the social partners on OSH [occupational safety and health] legislation and regulations, with a view to addressing any exclusions or gaps in coverage identified in the legislative framework’.56 Self-employed workers should also be covered by this national system. During the following decade, the Social Protection Floors Recommendation, 2012 (No. 202) came out in favour of progressively ensuring higher levels of social security to as many people as possible. The instrument is underpinned by the principles of ‘universality of protection’ and ‘social inclusion’, therefore also covering persons in the informal economy. Contrary to the popular imagery of ‘social safety nets’, a Member State’s social protection floor should not have holes and, at the least, should provide adequate social protection to all residents and all children.57 Most recently, the Violence and Harassment Convention, 2019 (No. 190) has similarly subscribed to the ILO’s comprehensive ‘decent work for all’ approach. It combats violence and harassment towards all workers, including the self-employed, as well as others engaged in the ‘world of work’.58 Former ILO Legal Adviser Anne Trebilcock has called the ILO’s latest Convention ‘[a] reminder that ILO standards are firmly anchored in and create human rights law’.59 The same could be said for Recommendation No. 202. Indeed, this is a key point that continues to characterize the ILO’s activities and will be ever more relevant in the future. The ILO has been very invested in human rights law since the adoption of 1944’s Declaration of Philadelphia. More recently, however, in an effort ‘to position 54

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Report of the Committee on Maternity Protection, Eighty-Eighth Session of the International Labour Conference (Geneva: ILO, 2000), 20–3. Paragraph 1 Occupational Safety and Health Recommendation, 1981 (No. 164). ILO Committee of Experts on the Application of Conventions and Recommendations, Working Together to Promote a Safe and Healthy Working Environment (Geneva: ILO, 2017), 45. T. Dijkhoff, ‘The ILO Social Protection Floors Recommendation and its relevance in the European context’, European Journal of Social Security, 21(4) (2019), 351–69. V. De Stefano, I. Durri, C. Stylogiannis, and M. Wouters, ‘System Needs Update’: Upgrading Protection against Cyberbullying and ICT-Enabled Violence and Harassment in the World of Work, ILO Working Paper 1 (Geneva: ILO, 2020). A. Trebilcock, ‘What the new convention on violence and harassment tells us about human rights and the ILO’ in G. P. Politakis, T. Kohiyama, and T. Lieby (eds.), ILO100: Law for Social Justice, 1031–56 (Geneva: ILO, 2019), 1041.

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the ILO as a “social voice” within the post–Cold War world’, 1998’s ILO Declaration on Fundamental Principles and Rights at Work has defined a minimum set of fundamental principles and rights that all ILO Member States should adhere to and promote in relation to all workers.60 It covers freedom of association, effective recognition of the right to collective bargaining, elimination of forced, compulsory, and child labour, elimination of discrimination in employment or occupation, and, since 2022, a safe and healthy working environment. In the words of the Social Justice Declaration, these fundamental principles and rights ‘are of particular significance, as both rights and enabling conditions that are necessary for the full realization of all of the [ILO’s] strategic objectives’. This emphasis on universal, fundamental principles and rights is certainly not on the way out. Recent events have, instead, indicated that the ILO might further elaborate on the work it did in the late 1990s. The interaction between the ILO and the UN should not be overlooked in this regard. The ILO Declaration of 1998 received a new dimension with the adoption of 2011’s UN Guiding Principles on Business and Human Rights. Principle 12 states that ‘[t]he responsibility of business enterprises to respect human rights refers to internationally recognized human rights’, such as those in the 1998 Declaration. Most importantly, the principle’s commentary adds that this authoritative list is ‘coupled with the principles concerning fundamental rights in the eight ILO core conventions as set out in the Declaration on Fundamental Principles and Rights at Work’. This phrasing makes the link between corporate social responsibility and the ILO’s Fundamental Conventions very tangible. Especially Janice R. Bellace has suggested that the Employers’ Group’s resistance in 2012 against the right to strike, which is embedded in the ILO’s Fundamental Conventions on collective rights, was triggered by this development.61 Considering this, it is remarkable that the ILC agreed in 2022, after some reluctance at 2019’s Centenary conference, to designate a safe and healthy working environment as the fifth category of fundamental principles and rights at work. In parallel, Conventions No. 155 and No. 187 were accorded the fundamental convention status.62

IV QUO VADIS?

As was the case in 1969, tripartism and universalism are still two of the ILO’s core tenets. Regarding tripartism, despite an ongoing and worthwhile debate on the desirability of giving a meaningful role to civil society and non-governmental organizations at the ILO,63 for the time being there seem to be no concrete plans to move beyond present-day tripartism. The core message seems to be that Member States have to adopt public policies that promote collective representation and social dialogue.64 In contrast to what is happening with tripartism, certain remarkable developments do seem to be taking place regarding the principle of universality. One of these is structural in nature and relates to the composition of the Governing Body (GB). Although many would consider the ILC to be the ILO’s most important organ, arguably the GB still is the organ where some of the most 60 61

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D. Maul, The International Labour Organization: 100 Years of Global Social Policy (Berlin: De Gruyter, 2019), 241. J. R. Bellace, ‘ILO Convention No. 87 and the right to strike in an era of global trade’, Comparative Labor Law & Policy Journal, 39(3) (2018), 495–530, at 524–7. Resolution on the inclusion of a safe and healthy working environment in the ILO’s framework of fundamental principles and rights at work, 10 June 2022, www.ilo.org/ilc/ILCSessions/110/reports/texts-adopted/WCMS_848632/ lang--en/index.htm. G. Mundlak, ‘Tri-Plus: Reflection on opening the ILO’s tripartite structure’ in G. P. Politakis, T. Kohiyama, and T. Lieby (eds.), ILO100: Law for Social Justice, 311–36 (Geneva: ILO, 2019). Global Commission on the Future of Work, Work for a Brighter Future (Geneva: ILO, 2019), 41–3.

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important decisions are made.65 The GB, for instance, sets the agenda of the Conference, something that in practice gives it key control over standard-setting activity. To this extent, as recalled by the Centenary Declaration,66 it is very important for the 1986 Amendment to the ILO Constitution, which aims for a more representative and democratic GB, to finally receive the number of ratifications necessary to enter into force.67 The amendment stipulates that the GB’s ‘composition shall be as representative as possible, taking into account the various geographical, economic and social interests within its three constituent groups, without, however, impairing the recognized autonomy of those groups’.68 Unlike the current situation, with ten non-elective seats preserved for states of chief industrial importance, the amendment’s spirit fits the ILO’s twenty-first-century mission. As argued by Hepple, ‘[i]t is no longer possible for a small number of relatively wealthy developed countries to dictate labour standards for the whole world, reflecting the models adopted in the North’.69 Subsequent to the launch of the Decent Work Agenda in 1999, the Agenda’s rationale has been debated and accepted by the ILO constituents, most notably in the run up to 2008’s Social Justice Declaration. Between 1999 and 2008, at last, the tripartite delegations of developing countries could debate what it was they wanted one of the ILO’s future-defining instruments to prescribe. Such an exercise had not been undertaken since 1944’s Declaration of Philadelphia. The 2008 Declaration was layered on top of the ILO Constitution and the Declaration of Philadelphia, providing a compass on how to navigate the ILO Constitution. The fact that developing countries have significantly shaped the drafting of the 2008 and 2019 Declarations is significant.70 It also means that now, more than in the past, developing countries have actively committed themselves to texts on the purposes and aims of the ILO, written by their own hand. In particular, all Member States have agreed to implement the ILO’s constitutional mandate through the Decent Work Agenda’s four strategic objectives.71 More recently, in pursuit of a human-centred approach to the future of work, the ILC has called upon all Member States to: (i) strengthen ‘the capacities of all people to benefit from the opportunities of a changing world of work’; (ii) bolster ‘the institutions of work to ensure adequate protection of all workers’; and (iii) promote ‘sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’. Over time, both the four strategic objectives of the Decent Work Agenda and these three ‘pillars’ of the ILO’s human-centred approach to the future of work will shape the International Labour Code. Delegates from developing countries will be provided with the opportunity to also make their mark on the future Code. To this extent, similar to ‘decent work for all’, the Centenary Declaration’s three pillars exhibit the principle of universality. The concrete policy proposals under each of these pillars are based on the 2019 report of the Global Commission on the Future of Work. This Commission, which fulfilled a key role in the ILO’s four-year-long Future of Work Initiative, was composed of 65

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M. Louis, ‘Who decides? Representation and decision-making at the International Labour Organization’, Revue internationale de politique de de´veloppement, 11 (2019), 40–58. ‘Desiring to democratize ILO governance by ensuring a fair representation of all regions and establishing the principle of equality among member States’ in the preamble of the ILO Centenary Declaration for the Future of Work, 21 June 2019. The Resolution on the ILO Centenary Declaration for the Future of Work, 21 June 2019, explicitly asks to complete the process of ratification of the 1986 Amendment as soon as possible. ILO, Report of the Tripartite Working Group on Full, Equal and Democratic Participation in the ILO’s Tripartite Governance (Geneva: ILO, 2022). Art. 7 Instrument for the Amendment of the Constitution of the International Labour Organization, 24 June 1986. Hepple, Labour Laws and Global Trade, 66. B. Chigara, ‘Latecomers to the ILO and the authorship and ownership of the International Labour Code’, Human Rights Quarterly, 29(3) (2007), 706–26. Paragraph I.A. ILO Declaration on Social Justice for a Fair Globalization, 10 June 2008.

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prominent academics, politicians, civil society members, and so forth. Its assignment was to elucidate how the ILO could pursue its mandate in the twenty-first century. The Global Commission made many noteworthy proposals to this end, some of which have found their way into the Centenary Declaration, albeit often in less stark terms than originally proposed. We will pay attention to two of these proposals, namely the proposal to coin ‘safe and healthy working conditions’ a fundamental principle and right at work and the proposal to implement a ‘Universal Labour Guarantee’. These two proposals intervene at different levels of the ILO’s standards framework. The first can be understood to intervene at the level of ‘basic social justice’. In 1998, the ILO constituents adopted the ILO Declaration on the Fundamental Principles and Rights at Work. The Declaration first recalled that the principles and rights of the Constitution and the Declaration of Philadelphia have been expressed and developed in the Fundamental Conventions. In the subsequent paragraph, the Conference declared ‘that all Members, even if they have not ratified the Conventions in question, have an obligation arising from the very fact of membership in the Organization to respect, to promote and to realize, in good faith and in accordance with the Constitution, the principles concerning the fundamental rights which are the subject of those Conventions’. This innovative move, which stretched the limits of conventional international law,72 received criticism for, among other things, only designating four categories of principles and rights as ‘fundamental’, even though the International Labour Code contains many more labour and social rights with a human rights foundation.73 The Global Commission’s request to recognize safety and health at work as a fundamental principle and right at work breathed new life into this discussion, eventually leading to a safe and healthy working environment becoming a new fundamental principle and right at work.74 The discussion demonstrates that it is up to the GB and the ILC to determine what ‘basic social justice’ means, at least within the ILO’s legal universe.75 This notion of basic social justice can continue to progressively expand in the future. It concerns the principles and rights that ILO Member States commit themselves to on account of being members of the ILO,76 and, arguably, the fundamental social rights and principles that businesses must respect as part of their responsibility to respect human rights.77 The enforcement of these fundamental principles and rights has to be taken more seriously in this regard. It is not unreasonable for serious infringements to lead to sanctions, ranging from trade sanctions to the forced suspension of membership rights.78 The second proposal for a Universal Labour Guarantee moves beyond this level of ‘basic social justice’. The draft Centenary Declaration worded the Global Commission’s proposal thus: All workers, regardless of their employment status or contractual arrangements, should be guaranteed: (i) respect for their fundamental rights; (ii) an adequate living wage; (iii) limits on maximum working hours; (iv) safety and health at work; (v) privacy and personal data protection; 72

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J. E. Alvarez, ‘Frameworks for understanding the ILO’ in G. P. Politakis, T. Kohiyama, and T. Lieby (eds.), ILO100: Law for Social Justice, 59–89 (Geneva: ILO, 2019), 64. P. Alston, ‘“Core labour standards” and the transformation of the international labour rights regime’, European Journal of International Law, 15(3) (2004), 457–521. Global Commission on the Future of Work, Work for a Brighter Future, 39. It is important to note that the Resolution amending the Declaration on Fundamental Principles and Rights at Work contains a ‘saving clause’. The designation of a safe and healthy working environment as a fundamental principle and right at work is meant not to affect the rights and obligations of a Member State arising from existing trade and investment agreements between states. See Resolution of 10 June 2022, supra note 62. Paragraph 2 ILO Declaration on Fundamental Principles and Rights at Work and Its Follow-Up, 18 June 1998. Paragraph 12 UN Guiding Principles on Business and Human Rights, 16 June 2011. Hepple, Labour Laws and Global Trade, 274; S. Charnovitz, ‘The lost history of the ILO’s trade sanctions’ in G. P. Politakis, T. Kohiyama, and T. Lieby (eds.), ILO100: Law for Social Justice, 217–56 (Geneva: ILO, 2019).

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Valerio De Stefano and Mathias Wouters and (vi) scope for achieving better work–life balance, by having greater influence over their working time, in ways that respect enterprise needs and promote productive efficiency and shared benefits.79

Although the ILO constituents put the brakes on the Universal Labour Guarantee at the ILC, the adopted Centenary Declaration, nevertheless, still declares that ‘[a]ll workers should enjoy adequate protection in accordance with the Decent Work Agenda, taking into account: (i) respect for their fundamental rights; (ii) an adequate minimum wage, statutory or negotiated; (iii) maximum limits on working time; and (iv) safety and health at work’.80 What this might entail is that the ILO advances other frameworks, in addition to the ILO Declaration on Fundamental Principles and Rights at Work and the Promotional Framework for Occupational Safety and Health Convention, 2006 (No. 187), to similarly push respect for minimum wages and maximum working hours beyond the realm of employment relationships. This would once again give effect to the principle of universality, providing all workers with certain protections in relation to more than just the fundamental principles and rights at work. It would be an essential tool with which to adequately face a future of work where the boundaries between employment and self-employment and their need for protection seem permanently blurred. Considering how one of the ILO’s strategic goals for 2022–5 is ‘to leave no one behind’,81 this would, moreover, benefit both workers in the global South and marginalized workers in industrialized countries. One prominent ILO study stressed that 61.2 per cent of the world’s population earn their livelihood in the informal economy,82 a percentage that is hard to fathom for those who live in the global North. Another research report highlighted the differences between regions in terms of their percentage of self-employed workers. In Europe and Central Asia, 10 per cent of employment can be considered self-employment, whereas this percentage rises to 50 per cent for sub-Saharan Africa and 66 per cent for South Asia.83 Based on recent policy documents, these self-employed workers are as much entitled to decent working conditions as any employee. The difficulty of reaching these informal and self-employed workers has been called ‘the ILO’s Achilles’ heel’.84 And it is a difficulty that is bound to expand in industrialized countries, too, where informality and under-declared work, also driven by techenabled forms of work in the grey zone between employment and self-employment, are on the rise. Arguably, this Achilles’ heel will remain in place unless the organization adjusts its methods and structures. To this end, a first ‘structure of concern’ is how the ILO nurtures research. As noted by Brian Langille, if it wants to carry out its mission, the ILO ‘must become the world’s leading, multi-discipline, open-minded research institution operating on the academic model’.85 It should offer space for a respectful clash of ideas, including unconventional theories. Research should regularly investigate the ILO’s and the constituents’ agenda and actions. Furthermore, the ILO must carry the torch of global democracy. The organization must provide a space where 79 80 81 82 83

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ILO, Report IV: ILO Centenary Outcome Document (Geneva: ILO, 2019). ILO Centenary Declaration for the Future of Work, 21 June 2019. ILO, The ILO’s Strategic Plan for 2022–25 (Geneva: ILO, 2020). ILO, Women and Men in the Informal Economy: A Statistical Picture, 3rd ed. (Geneva: ILO, 2018), 67. ILO, Small Matters: Global Evidence on the Contribution to Employment by the Self-Employed, Micro-enterprises and SMEs (Geneva: ILO, 2019), 22, 30. G. Rodgers, E. Lee, L. Swepston, and J. Van Daele, The International Labour Organization and the Quest for Social Justice, 1919–2009 (Geneva: ILO, 2009), 237. B. Langille, ‘The political economy of decency’ in G. P. Politakis, T. Kohiyama, and T. Lieby (eds.), ILO100: Law for Social Justice, 503–29 (Geneva: ILO, 2019), 528.

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ILO constituents can scrutinize national and international policies, in particular of an economic and financial nature, at the global stage. For it to fulfil this function to the fullest, it might have to re-engage with its standards on collective labour law, with the aim of obtaining ‘inclusive voice within sustainable participatory representative systems’.86 To re-engage with a certain topic does not necessarily mean that prior principles have to be abandoned. Updating the International Labour Code should mostly aim to make its guidelines more effective. The yearly ILO Standards Review Mechanism Tripartite Working Group, which reviews standards in search of gaps and issues recommendations to the GB, can do valuable work in this regard. For instance, so far the working group has asked to draft proposals for standards on apprenticeships (2016) and biological hazards and ergonomics, to revise the standards regarding guarding on machinery, and to consolidate the standards on chemical hazards (2017). Things have been moving rather smoothly, as evidenced by the adoption of the Quality Apprenticeships Recommendation, 2023 (No. 208). However, it remains to be seen whether this constructive mood will last, once the instruments on working time, employment security, and so on are up for discussion. Without external inputs, it seems difficult for this tripartite working group to ask the International Labour Office to advance new instruments in relation to sensitive topics such as privacy and personal data protection. Furthermore, one cannot but wonder whether it is justifiable for ILO standard-setting activities to progress this slowly. The idea to hold a yearly ILC every June and for the GB, the organization’s executive branch, to come together three times a year might have made sense before DG Morse received the Nobel Prize, but the time might have come now for intermittent, virtual conferences, like regional sub-assemblies.87 Since the ILO will have to, indeed, concern itself with environmental issues,88 for instance because they will severely impact the world of work,89 it can lead by example and might even achieve efficiency gains by doing so. From this perspective, why should the organization not strive to take a leading role once again. Why not force domestic audiences to ask, reminiscent of Morse’s words: If environmentally sustainable work can ‘be accepted and applied in Geneva, why not at home?’.

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T. Novitz, ‘Past and future of work at the International Labour Organization: Labour as a fictitious commodity, countermovement and sustainability’, International Organizations Law Review, 17(1) (2020), 10–40, at 40. A. Hyde, ‘The International Labor Organization in the stag hunt for global labor rights’, Law & Ethics of Human Rights, 3(2) (2009), 154–79, at 177. For instance, during the Covid-19 pandemic, the ILO Global Summit on Covid-19 and the World of Work, and the 340th Session of the GB took place virtually. These events have shown that virtual discussions are possible. A. Supiot, ‘The tasks ahead of the ILO at its centenary’, International Labour Review, 159(1) (2020), 117–36. ILO Enterprises Department, The Role of the ILO in Addressing Climate Change and a Just Transition for All (Geneva: ILO, 2020).

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3 The Digitalisation of Work and the EU: Jurisprudential and Regulatory Responses in the Labour and Social Field Despoina Georgiou and Catherine Barnard

I INTRODUCTION

The European labour market is undergoing a process of radical change. While the standard contract of employment remains the predominant form of work organisation (often based on full-time work for one employer), its social importance has been declining. In addition to parttime, fixed-term, and agency work (the original ‘atypical’ contracts), new casual forms of employment have become more prevalent; these include zero-hours contracts, employee sharing, information communication technology (ICT)-based mobile work, voucher-based work, interim management, portfolio, crowd, and gig work.1 The data are revealing: half of all the new jobs created in the last ten years have been non-standard, with more than 25 per cent of the workforce of the twenty-seven European Union countries (EU-27) being engaged in casual and atypical forms of work at any given time.2 The number of workers on contracts lasting less than a month, for instance, increased from 373,000 in 2002 to 1.3 million in 2016 with a large number of people (3.8 million) working fewer than 8 hours per week.3 The casualisation of work has been largely precipitated by technological advancements that have disrupted the traditional paradigm of work organisation. The automation and digitalisation of work, the emergence of innovative new business models that rely on artificial intelligence (AI) and algorithmic management, the growing importance of the service sector, and the proliferation of large platforms that perform labour-brokering functions have transformed the world of work as we know it. Research conducted, for instance, in 2017 by the Joint Research Council (JRC) in its COLLEEM (COLLaborative Economy and EMployment) surveys shows that more than 10 per cent of the adult population in the EU has provided services through platforms.4 Of those, more than 5 per cent earned at least a quarter of their income by working for and through an app, while 2.3 per cent earned the majority of their income this way.5 Similar numbers have also been reported in other studies.6 While it is difficult to know the exact number of people 1

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European Commission, Refit Evaluation of the Written Statement Directive (91/533/EEC), SWD (2017) 205 final 6; Eurofound, New Forms of Employment (Luxembourg: Publications Office of the EU, 2015). European Commission, Impact Assessment Accompanying the Proposal for a Directive of the European Parliament and of the Council on Transparent and Predictable Working Conditions, SWD (2017) 478 final, 17. Ibid., 13. A. Pesole, M. C. Urzi Brancati, E. Fernandez Macias, F. Biagi, and I. Gonzalez Vazquez, Platform Workers in Europe: Evidence from the COLLEEM Survey (Luxembourg: Publications Office of the EU, 2018). Ibid. C. Forde, M. Stuart, S. Joyce et al., The Social Protection of Workers in the Platform Economy (Brussels: European Parliament, 2017), 38; U. Huws, N. H. Spencer, D. S. Syrdal, and K. Holts, Work in the European Gig Economy: Research Results from the UK, Sweden, Germany, Austria, The Netherlands, Switzerland and Italy (Brussels: FEPS [Foundation for European Progressive Studies], 2017).

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actively engaged in platform work today, it is widely accepted that the platform economy is on the rise. As De Stefano and Aloisi note, the collaborative economy is ‘growing by 25% a year’.7 In 2015, for instance, the gross revenue in the EU from collaborative platforms was estimated to be €28 billion – a number that would be much higher today, especially after the Covid-19 pandemic and the subsequent lockdowns that forced many people to use online platforms for the execution of various tasks.8 As experts estimate, the collaborative economy could add €160 billion–€572 billion to the EU market, contributing to the creation of jobs and growth in the EU.9 These technological developments can have a profoundly positive impact on the EU labour market. Platform work can boost productivity, unleash creativity, and promote more flexible and efficient working conditions. Furthermore, it can be a source of income for people who are traditionally excluded from the labour market. Online work can help break down barriers to entry for people who encounter difficulties joining the labour force (e.g. immigrants, low-skilled workers, the young and the old, persons with disabilities), facilitating inclusivity and labour market integration. However, if these technological advancements are not made in a regulated and responsible manner, they can lead to the erosion of workers’ rights. Labour law academics have long stressed that the gig economy is not necessarily the ‘entrepreneurial renaissance’ it claims to be.10 The lack of control over working activities, the low and unstable incomes, the unclear employment status, the low level of social security coverage, and the lack of voice and representation are some of the reasons why commentators have started referring to the sharing economy as the ‘skimming economy’11 and to click-workers as the new class of ‘cybertariat’12 or, even worse, as ‘digital slaves’13 working in ‘virtual sweatshops’.14 While national labour law systems have also struggled with this rapidly changing domain, the problem is more acute for the EU because of its constrained legal competence to act. Nevertheless, aware of the challenges and opportunities the ‘platform model’ raises for the EU labour market, the Commission has launched, in recent years, a series of legislative initiatives to promote technological development through fair competition. Starting with the European Pillar of Social Rights,15 several soft law and hard law instruments have been introduced that directly or indirectly boost workers’ rights. More recently, the European Commission has published a package that includes (i) a proposal for a Directive on improving the working conditions in platform work16 and (ii) draft Guidelines on the application of EU competition law to collective 7

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V. De Stefano and A. Aloisi, European Legal Framework for Digital Labour Platforms (Luxembourg: Publications Office of the EU, 2018), 8; R. Vaughan and R. Daverio, Assessing the Size and Presence of the Collaborative Economy in Europe (London: PWC 2016). Eurofound, ‘Platform economy: Developments in the COVID-19 crisis’ (3 July 2020), www.eurofound.europa.eu/ data/platform-economy/dossiers/developments-in-the-covid-19-crisis. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, A European Agenda for the Collaborative Economy COM (2016) 356 final, 2. IZA, Social Protection Rights of Economically Dependent Self-Employed Workers, IZA Research Report No. 54 (Bonn: IZA, 2013), 19. A. Malhotra and M. van Alstyne, ‘Economic and business dimensions: The dark side of the sharing economy . . . and how to lighten it’, Communications of the ACM, 57(11) (2014), 25. U. Huws, The Making of a Cybertariat: Virtual Work in a Real World (New York: Merlin Press, 2003). V. Dubal, ‘Wage slave or entrepreneur? Contesting the dualism of legal worker identities’, California Law Review, 105 (1) (2017), 101. A. Casilli, ‘Digital labor: Travail, technologies et conflictualite´s’ in D. Cardon, and A. Casilli (eds.), Qu’est-ce que le Digital Labor? (Paris: Editions de l’ INA, 2015) 10. European Commission, ‘European Pillar of Social Rights’ (n.d.), https://ec.europa.eu/info/strategy/priorities-20192024/economy-works-people/jobs-growth-and-investment/european-pillar-social-rights_en. European Commission, Proposal for a Directive of the European Parliament and of the Council on improving working conditions in platform work COM(2021) 762 final.

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agreements regarding the working conditions of solo self-employed persons17 (analysed in Sections IV.A and IV.B, respectively). If adopted, these instruments will cover platform and other casual workers, protecting them from the erosive effects of the new technologies. The European Court of Justice (ECJ) has yet to definitively pronounce itself on the issue. The two Uber cases that have come to the Court (albeit not concerning employment status) have provided an indication of the ECJ’s willingness to look behind the formalities of the contractual arrangements to find the true nature of the relationship between the platforms and the persons who provide their services through them. The Yodel Order18 provides further insight into the Court’s stance vis-a`-vis the status of individuals engaged in digital labour platforms, without, however, settling the question of whether they are ‘workers’ or ‘self-employed persons’ for the purposes of EU labour and social security provisions. This chapter examines the disruptive effects new technologies have had on the EU labour and social field and considers the measures that have been adopted to combat them. More precisely, Section II gives a brief overview of the European social acquis in the area and explains how it has been superseded by recent changes in labour market structures. Section III examines the ECJ’s recent case law and highlights the dominant trends in the jurisprudence. Section IV discusses recent regulatory developments that indicate a way forward, then Section V concludes. II TECHNOLOGICAL DISRUPTIONS TO THE EUROPEAN SOCIAL ACQUIS

A The European Social Acquis Trying to pinpoint the beneficiaries of the various labour law instruments has always been the most central issue of labour law in domestic jurisdictions, let alone when dealing with a supranational legal order like the EU. Definitions, in this context, are particularly important not just as a matter of nomenclature or semantics but because they form the ‘vehicle for the delivery of rights and entitlements’.19 In the European legal order, despite the fact that the free movement of workers (FMW) under Article 45 of the Treaty on the Functioning of the European Union (TFEU) constituted one of the main objectives of the Treaty of Rome, the EU did not attempt to define the concept of ‘worker’. Instead, the founding treaties, as well as subsequent labour law Directives, either refrained from defining the personal scope of their provisions in any substantial way or expressly reserved that task for domestic jurisdictions. The ‘worker’ definition currently used was developed by the ECJ in the seminal case of Lawrie-Blum.20 There, the Court held that a ‘worker’ is any person who ‘performs services for and under the direction of another in return for which he receives remuneration’.21 Three criteria thus emerged as relevant for the assessment – ‘the performance of effective and genuine economic activities’, ‘remuneration’, and ‘subordination’ – with ‘subordination’ arguably constituting the crux of the EU ‘worker’ definition. Through a lengthy jurisprudence, the Court has

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European Commission, Approval of the content of a draft for a Communication from the Commission – Guidelines on the Application of EU competition law to collective agreements regarding the working conditions of solo selfemployed persons COM(2021) 8838 final, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=PI_COM%3AC% 282021%298838. C-692/19, B v. Yodel Delivery Network Ltd [2020]. G. Davidov and B. Langille, ‘Introduction: Goals and means in the regulation of work’ in G. Davidov and B. Langille (eds.), Boundaries and Frontiers of Labour Law: Goals and Means in the Regulation of Work (Oxford: Hart, 2006) 4. C-66/85, Deborah Lawrie-Blum v. Land Baden-Wu¨rttemberg [1986] ECR I-02121. Ibid., para. 17.

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created a broad and autonomous EU concept of ‘worker’ for the FMW (Article 45 TFEU),22 one that has increasingly been rolled out across the labour law Directives. More precisely, the same expansive definition has been used to inform the personal scope of the equal pay provisions of the Treaty (Article 157 TFEU and the Equality Directives),23 as well as the Pregnant Workers,24 Working Time,25 Information and Consultation,26 and Collective Redundancies27 Directives.28 Expansive rulings have also been delivered on the personal scope of those social law Directives that expressly defer to domestic definitions.29 As Countouris notes, ‘the Court is increasingly steering their [sic] scoping provisions in ways that are pushing towards convergence’30 and does so, notably, whenever the national nomenclature deprives de facto workers of their labour rights, rendering the transposition of the relative Directive incomplete.31 In general, and despite the strong textualist argument, ‘the ECJ’s action in this area has been overall worker-protective’,32 with it progressively incorporating within the protective ambit of atypical work Directives on part-time,33 fixed-term,34 temporary-agency,35 and zero-hours36 workers, as well as those working under intermittent contracts of employment.37 The FMW ‘worker’ definition has also been transposed into other areas of primary EU law, most notably, the free movement of services and competition law provisions of the TFEUy. After repeating verbatim that, for the purposes of Articles 5638 and 101 TFEU,39 a ‘worker’ is also ‘any person who performs services for and under the direction of another in return for which he receives remuneration’, the Court draws a distinction between ‘workers’ (who do not fall within the scope of Articles 56 and 101 TFEU) and ‘self-employed persons–undertakings’ (who do).40 If an individual is a ‘worker’, he/she is not a ‘self-employed person–undertaking’ and vice versa. Hence, for the purposes of EU labour law, free movement of services, and competition law provisions, a common and autonomous definition of ‘worker’ has emerged that relies on the Lawrie-Blum formula of ‘subordination’.41

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32 33 34 35 36 37 38 39 40

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B. Waas, ‘The legal definition of the employment relationship’, European Labour Law Journal [ELLJ], 1(1) (2010), 45. Article 157 TFEU and Equality Directives; C-256/01, Allonby [2004] ECR I-00873. Directive 92/85/EEC; C-116/06, Kiiski [2007] ECR I-07643. Directive 2003/88/EC; C-428/09, Union Syndicale Solidaires Ise`re [2010] ECR I-09961. Directive 2002/14/EC; C-176/12, Association de Me´diation Sociale [2014]. Directive 98/59/EC; C-382/92, Commission of European Communities v. UK [1994] ECR I-02435. These Directives do not defer to domestic ‘worker’ definitions. Insolvency Directive (2008/94/EC); Information and Consultation Directive (2002/14/EC); Part-Time Work Directive (97/81/EC); Temporary Agency Work Directive (2008/104/EC); Fixed-Term Work Directive (1999/ 70/EC). N. Countouris, ‘The concept of “worker” in European labour law – Fragmentation, autonomy, and scope’, Industrial Law Journal [ILJ], 47(2) (2018), 202. The Court has taken a more deferential approach in the interpretation of the Transfer of Undertakings Directive (2001/23/EC). See C-105/84, Danmols Inventar [1985] ECR I-02639. Countouris (n. 31), 1. C-413/01, Ninni-Orasche [2003] ECR I-13187. C-307/05, Del Cerro Alonso [2007] ECR I-07109. C-216/15, Ruhrlandklinik [2016]. C-357/89, Raulin [1992] ECR I-00077. C-78/98, Preston [2000] ECJ I-03201. C-151/04 and C-152/04, Nadin and Durre´ [2005] ECR I-11203, para. 31. C-179/90, Merci [1991] I-05889, para. 13; C-22/98, Becu [1999] ECR I-05665, para. 26. The distinction is important because the right to collective bargaining has been recognised only for ‘associations of workers’ and not for ‘associations of undertakings’. See Section IV.B. I. Lianos, N. Countouris, and V. De Stefano, ‘Re-thinking the competition law/labour law interaction: Promoting a fairer labour market’, ELLJ, 10(3) (2019), 295; D. Georgiou, ‘“Business risk-assumption” as a criterion for the determination of EU employment status: A critical evaluation’, ILJ, 51(1) (2022), 109–37.

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In this context, ‘subordination’ has traditionally been understood as referring solely to the control of the employer over the worker’s activities. More particularly, the employment relationship has been viewed as a hierarchical structure under which the employer is in a position of power to dictate ‘the type of work and tasks to be executed, the manner in which that work or those tasks are to be performed, and the time and place of work’.42 The ‘control’ exercised by the employer, however, does not have to be direct or absolute – more subtle forms of power relations count as well. Hence, presidents of national authorities,43 directors of companies,44 judges,45 and other senior officials have been found to be ‘workers’ even though they enjoy a large margin of discretion in the performance of their duties. In these instances, what matters is that the persons form ‘an integral part’46 of the principal’s business unit and that they ‘ha[ve] to report to a [superior] and to cooperate with it’.47 In addition to ‘control’, the ECJ has more recently been paying attention to another criterion, namely the ‘assumption of business risks’.48 Agegate,49 for instance, was an Article 45 TFEU case concerning fishermen on British vessels whose salary was calculated on the basis of a share from the proceeds of their catches. The Court held that ‘the sole fact that a person is paid a “share” and that his remuneration may be calculated on a collective basis’50 is not enough to deprive this person of his ‘worker’ status. Instead, what matters is whether the person is ‘sharing the commercial risks of the business’.51 Similar statements were later made in Becu.52 Following AG Colomer’s suggestion, the ECJ decided that the dockers in question were ‘workers’ and not ‘self-employed persons–undertakings’ because they were under the control of their principal and did not take on business risks. As the AG argued, ‘it is that ability to take on financial risks which gives an operator sufficient significance to be capable of being regarded as an entity genuinely engaged in trade’.53 ‘Although [both ‘workers’ and the ‘self-employed’] offer their services to various customers, . . . [they] perform a functionally different activity, . . . from a social point of view; . . . [workers] receive orders and do not bear any commercial risk’ (emphasis added).54 The criterion of ‘business risk-assumption’ has since been used in a number of cases concerning the classification status of customs agents,55 doctors,56 lawyers,57 opera singers,58 and chartered accountants.59 In all these instances, the ECJ found that the persons in question were not ‘subordinate’ to their principal because they ‘assumed the financial risks involved in the 42 43 44 45 46 47 48

49 50 51 52 53 54 55 56 57 58 59

C-270/13, Haralambidis [2014], para. 33. Ibid. C-232/09, Danosa [2010] ECR I-11405. C-393/10, O’Brien [2012]. Danosa (n. 45), para. 56. Ibid., para. 49. It could be argued that the cumulative use of these criteria has precipitated a broader reading of the EU notion of ‘subordination’ as an umbrella term that encompasses both elements of ‘control’ and ‘business risk-assumption’. The exact relationship between the two criteria has not yet been specified. However, it could be argued that the strong presence of each criterion would be enough to assert ‘worker’ status. In other words, the strong presence of elements of ‘control’ would not require the existence of ‘business risks-assumption’ and vice versa. See Georgiou (n. 42). C-3/87, Agegate [1989] ECR I-04459. Ibid., para. 36. Ibid. Becu (n. 40). Ibid., Opinion of AG Colomer, para. 53. Ibid., para. 56. C-35/96, Commission v. Italy [1998] ECR I-03851. C-180 to 184/98, Pavlov [2000] ECR I-06451, para. 76. C-309/99, Wouters [2002] ECR I-01577, para. 48. RAI/Unitel (Case IV/29.559) Commission Decision 78/516/EEC [1978] OJ L157/39. C-1/12, Ordem dos Te´cnicos Oficiais de Contas [2013], para. 37.

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exercise of [their] activity’,60 meaning that in the event of ‘an imbalance between expenditure and receipts, they [would have to] bear the deficit’.61 ‘Business risk-assumption’ has recently been used as a reclassification criterion in cases concerning disguised employment. FNV Kunsten62 was an Article 101 TFEU case concerning, inter alia, the status of substitute orchestra musicians. The Court took the opportunity to give instructions to national judges on how to identify bogus self-employment. It said that ‘a service provider can lose his status of an independent trader, and hence of an undertaking, if he does not determine independently his own conduct on the market, but is entirely dependent on his principal, because he does not bear any of the financial or commercial risks arising out of the latter’s activity’.63 From this analysis, it becomes clear that the EU legal framework has been structured around a hard binary divide between ‘workers’ and ‘self-employed persons–undertakings’. Those who do not assume business risks and are under the control and supervision of a principal are considered to be ‘workers’ and are granted a level of labour and social protection. Those, on the other hand, that assume business risks and are not under the control of a principal are classified as ‘selfemployed’ and are excluded from labour-protective provisions. B Technological Disruptions to the EU Social Acquis: The Platform Model While the traditional formula of ‘subordination’ might have been effective in classifying individuals in the past, it is not necessarily fit for dealing with many modern-day workers. The rise of large digital labour platforms and the technological advancements in AI and algorithmic management have pushed the boundaries of what we perceive as ‘subordination’,64 leaving many individuals standing uncomfortably in the grey area between employment and selfemployment.65 More particularly, digital platforms have invented new ways to exert control over individuals providing services through their app. Uber, for instance, is known to set various requirements that its drivers have to meet before they are eligible to offer rides. For example, drivers have to be of a certain age, drive an acceptable type of vehicle, and pass a ‘city knowledge exam’ before they can enrol on the app.66 They also have to abide by a list of ‘recommendations’ published by Uber, such as keeping their vehicle clean at all times, listening only to certain genres of music (jazz or classical) while performing their tasks, wearing professional clothes, having water available for passengers in the vehicle, carrying an umbrella, helping passengers with their luggage, and others.67 Similar ‘rules of conduct’ are imposed on service providers engaged in other platforms. Lyft drivers, for instance, are told to be the only non-passenger in the vehicle and to greet every customer with a smile.68 Cleaners ‘hired’ through Handy have to listen 60 61 62 63 64

65

66

67 68

Commission v. Italy (n. 56), para. 37. Ibid. C-413/13, FNV Kunsten [2014]. Ibid., para. 33. A. Perulli, Economically Dependent/Quasi-subordinate (Parasubordinate) Employment: Legal, Social and Economic Aspects (Brussels: European Commission, 2003); A. Supiot, Beyond Employment: Changes in Work and the Future of Labour Law in Europe (Oxford: Oxford University Press, 2001). Eurofound (n. 1); R. Bo¨heim and U. Muehlberger, Dependent Forms of Self-Employment in the UK: Identifying Workers on the Border between Employment and Self-Employment (Bonn: IZA, 2006). V. De Stefano, The Rise of the ‘Just-in-Time Workforce’: On-Demand Work, Crowdwork and Labour Protection in the ‘Gig-Economy’ (Geneva: International Labour Organization [ILO], 2016) 18. Ibid. United States District Court, Northern District of California, Cotter et al. v. Lyft Inc., Order Denying Cross-Motion for Summary Judgment, 11 March 2015, Document 94, 7; De Stefano (n. 67), 18.

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to music only through their headphones and only after having acquired the relevant permission from the customer,69 while those engaged in TaskRabbit have to wear a green T-shirt with the company’s logo on it while performing their tasks.70 Finally, MTurkers have to agree to a number of terms and conditions set by the platform, such as the requirement not to ‘use scripts, or other automated methods to complete the services [assigned]’.71 Apart from setting a list of requirements for service providers to comply with, platforms exert control over them by monitoring their performance. Uber, for instance, uses Global Positioning System (GPS) services to oversee its drivers’ location, the route they are using, and the speed at which they are travelling.72 It further controls their behaviour by using a system of customer-led ratings. Many platforms have been known to suspend individuals who fail to maintain a high acceptance or performance rate.73 Even if the individual’s account is not deactivated, there are other ways in which platforms can penalise ‘misbehaving’ providers: algorithmic management, for instance, can push those who decline task offers to the bottom of the option list, meaning that they get fewer offers and get paid less for them. Other ways in which platforms control individuals’ behaviour is by locking them into the app of one company. This can be done, for instance, by increasing the individuals’ cost of switching either through establishing non-transferrable ratings between platforms74 or through offering ‘predatory’ loans that individuals have to repay by working for the app that facilitated the lending.75 Lock-up situations can further be precipitated by the introduction of cumbersome incompatibility clauses. Many platforms, for instance, require individuals to sign noncircumvention agreements under which they are prohibited from contacting and taking on work with clients identified through the app.76 Others introduce exclusivity clauses that restrict individuals from searching for alternative work with a competitor.77 Empirical research, for instance, shows that 0.5 million–1.5 million EU workers are currently subject to these sorts of clauses that diminish their opportunity to diversify their human capital. The main way, however, through which platforms exert control over their service providers is through their influence on ‘price’. Certain platforms retain the right to determine the fares for the provided services and to unilaterally alter the providers’ expected rate of return.78 By changing ex post their price-surging algorithm and the level of commission retained, these platforms can increase their revenue while reducing ad hoc the providers’ level of income.79 Other ways through which platforms exert control through pricing is by establishing 69

70

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74 75 76

77 78 79

S. Kessler, ‘The gig-economy won’t last because it’s being sued to death’, Fast Company (17 February 2015), www .fastcompany.com/3042248/the-gig-economy-wont-last-because-its-being-sued-to-death. R. Sethi, ‘How TaskRabbit works: Insights into business & revenue model’, Jungleworks (10 August 2015), https://bit .ly/449bPsd; J. Prassl, Humans as a Service: The Promise and Perils of Work in the Gig Economy (Oxford: Oxford University Press, 2018), 57. Amazon Mechanical Turk, ‘Amazon Mechanical Turk Participation Agreement’ (25 March 2020), www .mturk.com/mturk/conditionsofuse, clause 3(b). D. E. Sanders and P. Pattison, ‘Worker characterization in a gig economy viewed through an uber centric lens’, Southern Law Journal, 26(2) (2016), 300; Prassl (n. 71), 57. A. Todolı´-Signes, ‘The gig economy: Employee, self-employed or the need for special employment regulation?’, Transfer, 23(2) (2017), 195; A. Aloisi, ‘Commoditized workers: Case study research on labour law issues arising from a set of “on-demand/gig economy” platforms’, Comparative Labor Law and Policy Journal [CLLPJ], 37(3) (2016), 673. Prassl (n. 71), 67. Ibid., 68. P. Akman, ‘Online platforms, agency, and competition law: Mind the gap’, Fordham International Law Journal, 43 (2) (2019), 272. Impact Assessment (n. 2), 19. Sanders and Pattison (n. 73), 299. Prassl (n. 71), 63; A. Wolf, ‘The city is ours, not Uber’s’, Jacobin (5 August 2019), www.jacobinmag.com/2019/05/ubersipo-strike-lyft-cities-governance.

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productivity-related models of remuneration. Platforms often prefer these methods because they allow them to control workers while passing down many payment-related costs to them. Under these systems of payment, workers are not compensated for their time and effort but instead are paid according to their output. If they work slowly or do a poor job, they might not get compensated at all.80 Many crowd-work platforms, for instance, operate by launching online competitions for the advertised tasks. While several people will take the time to submit their ideas, only the winner will get compensated for the work. Other platforms allow clients to withhold payment altogether if they think that the product of work is unsatisfactory. These types of arrangement raise serious concerns not only because they force individuals to yield unpaid labour but also because they leave them exposed to intellectual property theft.81 Even without paying the tasker, the client retains the right to use the content of the submission without suffering any adverse consequences. Financial and commercial risks are also passed down to workers in other ways. Individuals engaged, for instance, in transportation services have to make the following material investments: they have to supply and maintain their own vehicle at a certain standard set by the platform and to pay for their own petrol, insurance, tax, and potential leasing costs.82 Many of these investments (i.e. in platform-specific skills or particular pieces of equipment) face the risk of being sunk and are subject to depreciation costs, especially considering the fast pace of technological advancements. Furthermore, platform workers are much less likely to receive training than their permanently employed counterparts.83 Hence, if they want to remain competitive in this volatile labour market, these individuals have to invest in their own training in order not to see their skills become obsolete. Finally, modern-day workers are often called to shoulder heightened health and safety risks. The low and unstable incomes associated with platform work combined with the long and irregular working hours have been linked to high levels of stress, anxiety, and depression.84 These psychological health conditions place extra strain on workers, often leading to physical health problems and, hence, heightened health and safety expenses.85 For instance, ICT-based mobile workers are often responsible for the health and safety conditions of the environment they work in,86 while gig workers are responsible not only for their own health and safety87 but also for that of their ‘customers’. Some contracts for gig work, for instance, include clauses under which the platform absolves itself of any liability for damages incurred to third parties and/or to the gigger in the course of the performance of the gigger’s tasks.88 From these examples, it is clear that new technologies have brought about new ways to control and to pass on business costs to workers. On the one hand, these individuals do not satisfy the 80

81

82 83 84

85 86 87

88

A. Davies, ‘Getting more than you bargained for? Rethinking the meaning of “work” in employment law’, ILJ, 46(4) (2017), 482. L. Irani, ‘Difference and dependence among digital workers: The case of Amazon Mechanical Turk’, South Atlantic Quarterly, 114(1) (2015), 227. Aloisi (n. 74), 673. Eurofound (n. 1), 66. E. Kleppa, B. Sanne, and G. Tell, ‘Working overtime is associated with anxiety and depression: The Hordaland health study’, Journal of Occupational and Environmental Medicine, 50(6) (2008), 658–66. E. Caroli and M. Godard, ‘Does job insecurity deteriorate health?’, Health Economics, 25 (2016), 131. Eurofound (n. 1), 2. K. Kuhn, ‘The rise of the “gig economy” and implications for understanding work and workers’, Industrial and Organizational Psychology, 9(1) (2016), 159. According to Uber UK’s T&Cs, Uber will be liable only for personal injury or death caused directly by Uber’s negligence: Uber, ‘General Terms’ (17 March 2020), www.uber.com/legal/en/document/?name=general-terms-ofuse&country=great-britain&lang=en-gb. However, it is unclear whether such a clause would stand up in court. On the fact that Uber drivers ‘assume all responsibility should an accident occur’, see Todolı´-Signes (n. 74), 195.

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archetypical paradigm of dependent employees who work under an open-ended contract of employment for one principal throughout their working life. On the other, they are not entrepreneurs free to provide their services in the market in whatever way they please. Since they exhibit characteristics of both categories, their classification has become increasingly troublesome. Are all these quasi-subordinate persons ‘workers’ or are they ‘independent contractors’? In other words, should they be captured by or considered irrelevant to EU labour and social regulation and how do we decide? And should labour law move away from the basic model of providing protection only to workers and focus instead on the rights that all working individuals should enjoy? Or should the concept of worker be stretched to accommodate these novel situations?

III THE ECJ’S STANCE

The question of whether gig workers are independent entrepreneurs or dependent employees has preoccupied the courts in many domestic jurisdictions. Tribunals in France,89 Spain,90 Belgium,91 Italy,92 the Netherlands,93 and other European countries have not hesitated to expose false self-employment and reclassify people who provide personal services through platforms as ‘workers’. So how has the ECJ addressed the issue? A The Uber Cases The first case the ECJ heard on the platform economy was Elite Taxi.94 The case was brought by an association of taxi drivers from Barcelona who alleged that the UberPop service was competing unfairly by using unlicensed drivers for its service. Uber claimed that it did not need to follow the relevant regulations because it was an ‘information society service’ (Directives 98/34/EC and 2000/31/EC) and not a ‘transportation company’ under Directive 2006/123/EC. In his Opinion, Advocate General (AG) Szpunar gave a detailed description of how the Uber platform operates. As he observed, Uber exerts control over the following aspects of the service: (i) The condition and characteristics of the vehicles used by the service providers: Uber requires that the vehicles have four or five doors, be of a certain age, have passed a roadworthiness inspection, and comply with the provision on mandatory insurance. (ii) The drivers’ credentials: The drivers must have had a driving licence for a specific period of time, and have no criminal record and no traffic offences. (iii) The drivers’ performance: Uber uses a system of passenger-led ratings to monitor the quality of services provided by drivers. Individuals who fall below a given threshold are excluded from the app. (iv) The working time: Even though there are no formal rules on working time so that drivers may pursue other activities in tandem, in reality the majority of drivers use Uber as their main source of income. Uber also keeps drivers engaged in the app by providing them with financial incentives (through rewards and nudges) to keep working.

89 90 91 92 93 94

Mr X v. Uber France and Uber BV Ruling No. 374; Mr B. v. Take Eat Easy (Judgment N 1737). Rider v. Glovo App 23, S.L. Dossier n˚: 187 – FR – 20200707. R.G. 35445/2015 e RG 36491/2015 v. Uber; Cass. n. 1663/2020 (Foodora); Yiftalem Parigi v. Just Eat Italy. Deliveroo v. Federation of the Dutch Trade Movement (FNV). C-434/15, Asociacio´n Profesional E´lite Taxi v. Uber Systems Spain SL [2017].

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(v) The price: Even though Uber drivers are, in theory, free to ask for a lower fare than that indicated by the platform, in reality this is ‘not . . . a genuinely feasible option’.95 Since any reduction in the fare would be deducted from the driver’s earnings, it is unlikely that drivers would exercise this discretion. For this reason, it is considered that Uber controls pricing. For the AG, the fact that the drivers own the vehicles was not determinative for the assessment.96 What mattered was (a) that the app was indispensable for the provision of the services without which the drivers would not have pursued the relevant activity and (b) that the platform exercised control over the drivers. For these reasons, the AG concluded that viewing Uber as a mere intermediary ‘is an unduly narrow view of its role’.97 As he said: Uber exerts control over all the relevant aspects of an urban transport service . . .. While this control is not exercised in the context of a traditional employer–employee relationship, one should not be fooled by appearances. Indirect control such as that exercised by Uber, based on financial incentives and decentralised passenger-led ratings, with a scale effect, makes it possible to manage in a way that is just as – if not more – effective than management based on formal orders given by an employer to his employees and direct control over the carrying out of such orders.98

The Court agreed with the AG. Taking into account the central role of the platform in providing the service and the ‘decisive influence’99 exercised over the drivers, the ECJ concluded that Uber is a ‘service company operating in the field of transport’ (Directive 2006/123/ EC) and not an ‘information society service’ (under Directives 98/34/EC and 2000/31/EC). This ruling was later affirmed in Criminal Proceeding Against Uber France.100 Even though it was noted that ‘the controversy surrounding the status of drivers with respect to Uber [is] wholly unrelated to the legal question of the case’101 and that the findings ‘do not mean that Uber’s drivers must necessarily be regarded as employees’,102 undoubtedly the ECJ’s decision is telling of its stance towards digital labour platforms that present themselves as intermediaries in order to bypass rules designed to preserve the public interest.103 With its decisions, the Court showed its willingness to look behind the letter of the contractual arrangements to find the true nature of the relationship between the platforms and the service providers. Clauses that were inserted in the contract with the aim of preventing a finding of a genuine transportation service were not taken at face value but instead were examined against the reality of the situation on the ground. Hence, even though the two Uber cases did not concern the legal status of gig workers as ‘workers’ or ‘self-employed persons’ per se, they provided an initial insight into the Court’s stance towards digital labour platforms. If a similar approach were to be adopted 95 96

97 98 99 100 101 102 103

Ibid., Opinion of AG Szpunar, para. 50. The fact that the Court and its AG did not consider ‘ownership over key assets’ to be a determinative criterion for the assessment is interesting, especially considering that this was named as a relevant factor in the Commission’s Agenda for the Collaborative Economy (n. 9). As De Franceschi notes, this position should be welcomed as it constitutes ‘a step forward towards an enhanced liability level for platforms’. See A. De Franceschi, ‘Uber Spain and the “Identity Crisis” of Online Platforms’, Journal of European and Consumer Market Law [EuCML], 1 (2018), 2. Opinion of AG Szpunar in E´lite Taxi (n. 95), para. 43. Ibid., paras. 51–2. Judgment of the Court in E´lite Taxi (n. 95), para. 39. C-320/16, Criminal Proceedings Against Uber France [2018]. Opinion of AG Szpunar in E´lite Taxi (n. 95), para. 54. Ibid. M. Finck, ‘Distinguishing internet platforms from transport services: Elite Taxi v. Uber Spain’, Common Market Law Review, 55(5) (2018), 1619–39.

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in the labour law field, it would arguably lead to the reclassification of drivers as ‘workers’ for the purposes of EU labour and social security provisions.104 B Yodel The Court took a more modest stance in the first gig economy case that came before it under labour law provisions. The case B v. Yodel105 concerned the classification status of a parcel delivery courier (B) for the Yodel platform under the Working Time Directive (2003/88/EC). According to the contract, B was classified as a ‘self-employed independent contractor’. Before starting the job, B had to undergo training to learn how to operate the handheld delivery device provided by Yodel. After that, he used his own vehicle and phone to carry out deliveries and to communicate with the platform and the customers. Further, B did not have to accept all delivery assignments and could set the maximum number of parcels he was willing to deliver each week. Conversely, Yodel did not have to provide him with work. After an assignment was accepted, Yodel would take the packages to B’s house for him to deliver to customers. Apart from fixed-time deliveries that had to be completed at a specific time, all other deliveries could be made at any point between 7.30 a.m. and 9.00 p.m. Within this time frame, B was free to decide the times of the deliveries, the order in which he was going to make them, and the route he was going to take. For his services, he was compensated based on a fixed rate determined by the platform, which varied according to the place of delivery. Furthermore, the agreement provided B with the option to use substitutes, provided they met the level of skill and qualification set by the platform; otherwise, they could be vetoed by Yodel. In any case, the courier would remain personally liable for any acts or omissions made by the appointed substitutes. Finally, the contract did not contain any non-circumvention clauses, meaning that B was free to simultaneously provide his services to third parties, including competitors. As it turned out, B had not taken advantage of the substitution and non-exclusivity clauses of the contract; he had provided his services personally and exclusively for the Yodel platform since 2017. Under these circumstances, B brought a claim before the British courts to be reclassified as a ‘worker’ for the purposes of the Working Time Regulation. After a preliminary assessment, the Watford Employment Tribunal concluded that B was probably a self-employed contractor because he had the ability to use substitutes and to work for multiple principals. The Tribunal, however, was not sure about the compatibility of the UK case law in this area with EU provisions. For this reason (and with some rapidity given the advent of Brexit), it filed a request for a preliminary ruling asking the ECJ for guidance on: (a) the compatibility of the UK law with EU law and (b) calculation of the working time of a person who has the ability to work in tandem for multiple principals. The Court responded by Reasoned Order and not a full judgment.106 It began by making some preliminary remarks on the personal scope of the Working Time Directive (2003/88/EC). As it said, even though the concept of ‘worker’ is not defined in the Directive, the ECJ has already created a rich jurisprudence on the topic. As described earlier, the concept of ‘worker’ for the purposes of Directive 2003/88/EC coincides with that used in the FMW context. Both areas rely

104

105 106

E. Gramano, ‘Digitalisation and work: Challenges from the platform-economy’, Contemporary Social Science, 15 (4) (2020), 476–88. Yodel (n. 18). Under Article 99 of its Rules of Procedure, the ECJ can rule by Reasoned Order when the answer to a question referred to the Court for a preliminary ruling may be clearly deduced from existing case-law.

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on the Lawrie-Blum formula according to which ‘the essential feature of an employment relationship is that for a certain period of time a person performs services for and under the direction of another person in return for which he receives remuneration’.107 This, said the Court, was a broad and autonomous concept that supersedes domestic definitions.108 To classify persons, national courts have to rely on objective criteria and make an overall assessment of all the circumstances of the case, having regard to both the nature of the activities concerned and the relationship of the parties involved.109 Having said that, the ECJ held that, as a rule, individuals are considered ‘self-employed’ if they have discretion: (a) to use subcontractors or substitutes in the provision of services; (b) to accept or not accept the various tasks offered by the putative employer, or unilaterally set the maximum number of those tasks; (c) to provide their services to any third party, including direct competitors of the putative employer; and (d) to fix their own hours of ‘work’ within certain parameters and to tailor their time to suit their personal convenience rather than solely the interests of the putative employer.110 It did, however, introduce a caveat. Relying on its previous jurisprudence on bogus self-employment, the Court clarified that individuals will lose their status as ‘independent traders’ if their independence is ‘merely notional’.111 This would be the case, in particular, if the person ‘acts under the direction of his employer as regards his freedom to choose the time, place and content of his work [and] does not share in the employer’s commercial risks’.112 Applying this framework to the case in question, the Court suggested that B was correctly classified as ‘self-employed’ because: (a) he had the option to use substitutes. The fact that Yodel could veto substitutes who did not meet certain criteria set by the platform was not considered to be determinative for the assessment. The control of the putative employer over the choice of substitutes was found to be ‘limited’113 because it was based on objective criteria that did not take into account personal preferences; (b) he had the option to reject tasks and could set a limit on the number of deliveries he was willing to perform; (c) he had the option to provide his services to third parties, including direct competitors; (d) he had the option to choose the times of deliveries. The fact that couriers had to deliver parcels within specified time slots was not considered to be determinative for the assessment. As the Court said, ‘such a requirement is inherent to the very nature of that service, since compliance with those time slots appears essential in order to ensure the proper performance of that service’.114 These considerations, according to the Court, suggested that B had a ‘great deal of latitude’115 in the performance of his duties, a finding that seemed to affirm his tentative classification by the British courts as a ‘self-employed contractor’. Nevertheless, the ECJ noted that it is for the

107 108 109 110 111 112 113 114 115

Yodel (n. 18), para. 29 referring to C-316/13, Fenoll [2015], para. 27 and C-518/15, Matzak [2018], para. 28. Yodel (n. 18), para. 26 referring to C-147/17, Sindicatul Familia Constant¸a and Others [2018], para. 41. Ibid., para. 27 referring to Union Syndicale Solidaires Ise`re (n. 26), para. 29 and Fenoll (n. 108), para. 29. Ibid., para. 45. Ibid., para. 30. Ibid., para. 31 referencing FNV Kunsten (n. 63), para. 36. Ibid., para. 39. Ibid., para. 42. Ibid., para. 35.

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referring court to ascertain whether the independence of B was fictitious and whether he was, in fact, in a relationship of subordination with the putative employer.116 In reaching this conclusion, the Court reiterated well-established case law in the labour law field, focusing on the Lawrie-Blum formula of subordination and the criteria of ‘control’ and ‘business risk-assumption’ that ascertain its presence. However, there is a tension in the Court’s approach in the Yodel case, compared with that adopted in the Uber cases. More particularly, even though in the Uber cases the Court looked behind the letter of the contractual arrangements to find the true nature of the relationship between the service providers and the platform, it adopted a more formalistic approach in Yodel. The Court did not focus on the reality of the situation, namely that B had provided his services personally and exclusively for the Yodel platform for a prolonged period of time, but instead emphasised his contractual ability to hire substitutes and to work for other principals, had he wanted to. Furthermore, the Court took for granted contractual clauses according to which B was free to turn down assignments, without examining whether this constituted a viable option for the courier. Hence, in contrast to its approach in the Uber cases (and indeed the approach adopted by the Supreme Court in the Uber117 case in the UK), in the Yodel case the ECJ did not explore the repercussions of turning down too many job assignments and did not look for other ways in which the platform might exercise control over the couriers, such as through customer-led ratings, financial incentives to work longer hours, geolocation systems, scheduling software, and others. Furthermore, the Court’s approach in the Yodel case deviates, in certain respects, from previous case law in the labour and social field. While the ECJ clarified in the cases of Raulin118 and Allonby119 that a person can turn down job assignments without harming their ‘worker’ status, it did not follow this approach in Yodel. In this instance, the Court used the contractual capacity of the courier to refuse assignments as an element that would point to the existence of an independent working relationship. Moreover, even though the Court had made clear in past decisions that a person can be a ‘worker’ even though they enjoy a large margin of discretion in the performance of their duties,120 in the present case it used the ability to decide, within a specific time window, the order of the deliveries and the route followed as an indication of autonomy. As Todolı´-Signes notes, it does not seem coherent, and [is] far less clearly deducible from previous case-law, to consider that an administrator, who has great freedom to choose the content of their work and their schedule and is only accountable to the shareholders’ meeting (which usually meets once a year), is considered to have sufficient dependence, while a delivery person who must deliver to the assigned areas and to the places (homes) determined by the company following a schedule also set by the company and, additionally, cannot negotiate their own working conditions is an independent professional without the right to the application of the Labour Directives.121

It is particularly striking in this regard that the Court asserted that the requirements set by the platform vis-a`-vis the time frame of the deliveries should not be taken into account as elements of ‘subordination’ because they are ‘inherent’122 to the nature of the service and have to be adhered 116 117 118 119 120 121

122

Ibid., para. 45. Uber B.V. (UBV) and others v. Aslam and others [2021] UKSC 5. Raulin (n. 37). Allonby (n. 24). See footnotes 44–182. A. Todolı´-Signes, ‘The concept of worker in European Union law and its application to the new economic realities: Is the Reasoned Order of the CJEU in the case of food delivery riders a good solution?’ (23 October 2020), https://ssrn .com/abstract=3717603, 8–9. Yodel (n. 18), para. 42.

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to ‘in order to ensure [its] proper performance’.123 Traditionally, instructions and orders regarding the time and place of work have been understood by the Court as elements that would point to the existence of a hierarchical working relationship with democratic deficits. By holding, in Yodel, that such limitations should not be used as indicia of ‘subordination’ because they are vital to the performance of the service, the ECJ went against its previous case-law in the labour field, indulging in ‘a paternalism that tolerates a competitive advantage gained through the partial application of labour and social security regulation’.124 Even though the Court clarified that ultimately it was up to the domestic courts to ascertain the existence of a relationship of subordination, such ‘ambiguous passages’125 can be exploited by employing platforms to justify the restriction of workers’ rights in the name of the ‘proper functioning’ of its service. Finally, it should be noted that, with its Order in Yodel, the Court missed the opportunity to rule on the method of calculating the working time of platform workers who have the ability to simultaneously work for multiple principals. Even though the ECJ was asked by the Watford Employment Tribunal to provide guidance on the issue, the Court avoided the question altogether by indicating that B was a ‘self-employed-contractor’.126 This precluded an examination into his working time as B fell outside the scope of the relevant Directive. Overall, the Yodel judgment has attracted criticism for being ‘too focused on the formal description of the relationship presented by the remitting court to the point of omitting an investigation into the most problematic elements of the case’.127 As Todolı´-Signes as well as De Stefano et al. contend, ‘little value should be attached to this Reasoned Order’128 because (a) it ‘is out of line with the Court of Justice’s well-established jurisprudence on employment status’129 and (b) it has ‘limited precedential value given that it is not a formal ruling handed down by the Court’.130 Unlike the bold decisions delivered earlier in the free movement of services context (Uber cases), in the labour field the ECJ ‘seems to adopt a “wait and see” approach, relinquishing the role as a key player in the debate’131 on whether gig workers are ‘workers’ or ‘self-employed’ service providers for the purposes of EU labour and social law provisions.

IV REGULATORY DEVELOPMENTS

In its 2021 Work Programme, the European Commission recognised that ‘there is a growing uncertainty on a number of issues [concerning] platform-based work, . . . including employment status, working conditions, access to social protection, and access to representation and collective bargaining’.132 It therefore committed itself to proposing ways to improve the labour conditions of platform workers. The measures the Commission has adopted in recent years for the 123 124

125

126

127 128 129

130 131 132

Ibid. A. Aloisi, ‘“Time is running out”: The Yodel Order and its implications for platform work in the EU’, Italian Labour Law e-Journal, 13(2) (2020), 77. Similar criticism has also been voiced by Todolı´-Signes (n. 122), 8. Aloisi (n. 125), 68. Todolı´-Signes also argues that several of the passages in the ECJ’s decision are ‘obscure’; see Todolı´-Signes (n. 122), 7. As Todolı´-Signes notes, ‘the silence of the Court on this matter can be perceived as an implicit, and yet clear, position of the Court, which still relies on an anachronistic view of subordination’; see Todolı´-Signes (n. 122), 4. Aloisi (n. 125), 76. Todolı´-Signes (n. 122), 9. V. De Stefano, J. Adams-Prassl, A. Aloisi, and N. Countouris, ‘EU Court of Justice’s decision on employment status does not leave platforms off the hook’, Regulating for Globalization (29 April 2020), https://bit.ly/3NPlaQB. Ibid. Aloisi (n. 125), 79–80. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Commission Work Programme 2021: A Union of Vitality in a World of Fragility, COM(2020) 690 final, 4.

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protection of the EU workforce from the corrosive effects of the new technologies are analysed in this section. A Proposal for a New Directive on Improving the Working Conditions in Platform Work On 9 December 2021, the European Commission published its proposal for a new Directive on Platform Work.133 Adopted in the context of the European Pillar of Social Rights,134 the new Directive aims to (i) tackle employment status misclassification; (ii) ensure fairness, transparency, and accountability in algorithmic management; and (iii) improve enforcement of the applicable rules. To achieve this, the proposed Directive provides for a broad personal scope. More particularly, unlike some laws introduced in domestic jurisdictions that cover only platform workers working in a particular sector (i.e. the Ley Rider law in Spain135 and the Orientation des mobilite´s [Direction of mobility] law in France136), the proposed Directive covers platform workers engaged in all types of work, whether online or on-site. According to Article 2(1)(4), a ‘platform worker’ is ‘any person performing platform work who has an employment contract or employment relationship as defined by the law, collective agreements or practice in force in the Member States with consideration to the case-law of the Court of Justice’.137 To help tribunals make the assessment, Article 4 introduces a legal presumption of ‘worker’ status for individuals who are controlled by a platform. This is considered to be the case when the platform: (a) effectively determines or sets upper limits for the level of remuneration; (b) requires the person performing platform work to respect specific binding rules with regard to appearance, conduct towards the recipient of the service, and/or performance of the work; (c) supervises the performance of the work or verifies the quality of the results of the work, including by electronic means; (d) effectively restricts the freedom, including through sanctions, to organise one’s work, in particular the discretion to choose one’s working hours or periods of absence, to accept or to refuse tasks, or to use subcontractors or substitutes; (e) effectively restricts the possibility to build a client base or to perform work for any third party. This presumption, however, is rebuttable (Article 5). Platforms can rebut the presumption by proving that the contractual relationship in question is not an employment relationship as defined by the law, collective agreements, or practice in force in the Member State in question, with consideration to the case-law of the ECJ. As it is stipulated, in making the assessment

133 134 135

136 137

Proposal for a Directive on improving the working conditions in platform work (n. 16). European Commission, ‘European Pillar of Social Rights’ (n. 15). Jefatura del Estado [Head of State], ‘Real Decreto-ley 9/2021, de 11 de mayo, por el que se modifica el texto refundido de la Ley del Estatuto de los Trabajadores, aprobado por el Real Decreto Legislativo 2/2015, de 23 de octubre, para garantizar los derechos laborales de las personas dedicadas al reparto en el a´mbito de plataformas digitales [Royal Decree Law 9/2021, of 11 May, which modifies the revised text of the Workers’ Statute Law, approved by Royal Legislative Decree 2/2015, of 23 October, to guarantee the labour rights of people dedicated to distribution in the field of digital platforms]’, Boletı´n Oficial del Estado (BOE) [Official State Gazette], 113 (2021), 56733–8. Law 2019-1428 (24/12/2019) on mobility orientation (LOM). See also Articles 1(2) and 3(1).

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attention should be paid to what the individual actually does in the case in question, rather than to their formal classification in the contract (primacy of facts principle). Apart from establishing a broad ‘platform worker’ category, the proposed Directive also provides certain rights to genuinely self-employed individuals who offer their services through apps. Recognising the potentially pervasive effects of algorithmic management, the proposed Directive stipulates that platforms must now disclose to all persons who provide services through them the types of activities monitored and the types of decision taken through the use of automated decision-making systems. They should also disclose the parameters factored in the decision-making, the relative weight attributed to them, and the grounds for decisions taken to restrict, suspend, or terminate workers’ accounts (Article 6). Furthermore, the Directive stipulates that platform workers who are genuinely self-employed should also enjoy information and consultation rights as regards algorithmic monitoring and management, and envisages methods to increase transparency and to provide redress (Articles 9–15). Overall, the proposed Directive would have the potential to cover a large number of platform workers who are in need of protection. The legal presumption of ‘worker’ status, the reversal of the onus of proof, and the recognition of algorithmic management as a form of control are all positive steps in the right direction. The Commission estimates that, as a result of the proposed Directive, between 1.72 million and 4.1 million people will be reclassified as ‘workers’.138 That being said, the effectiveness of the Directive will depend, to a large extent, on how it is implemented in the national jurisdictions and interpreted by the ECJ. Considering that (a) the legal presumption can be reversed if the person is not found to be a ‘worker’ according to national and EU definitions (because, for example, they involuntarily assume business risks), (b) platforms will take advantage of loopholes and carve-outs in the Directive (such as the carve-out for start-ups and platforms whose primary purpose is to exploit assets), and (c) certain platforms will amend their practices to maintain the self-employed model, it is possible that a large number of platform workers might not be granted protection.139 B Draft Guidelines on the Application of Competition Law to Collective Agreements Regarding the Working Conditions of Solo Self-Employed Persons On the same day the Commission published its proposal for a Directive on platform work, it also published draft Guidelines on the application of EU competition law to collective agreements by the self-employed.140 Under the current framework, associations of self-employed persons– undertakings are not allowed to unionise and bargain collectively for the amelioration of their working conditions. This right has been recognised only for associations of workers. More particularly, the ‘limited antitrust immunity’141 for labour was established by the ECJ in

138 139

140

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Proposal for a Directive on improving the working conditions in platform work (n. 16), 12. The Commission estimates that there are currently up to 5.5 million platform workers who are at risk of employment status misclassification. See ibid. For a more extensive analysis of the potential loopholes in the proposed Directive, see A. Aloisi and D. Georgiou, ‘Two steps forward, one step back: The EU’s plans for improving gig working conditions’, Ada Lovelace Institute (7 April 2022), www.adalovelaceinstitute.org/blog/eu-gig-economy/; D. Georgiou, ‘Some thoughts on potential loopholes in the personal scope of the Commission’s proposed directive on platform work’, (pre-print) https://bit.ly/3PE1TTH. Draft Guidelines on the Application of EU competition law to collective agreements regarding the working conditions of solo self-employed persons (n. 17). Opinion of AG Jacobs in C-67/96, Albany [1999] ECR I-05751, para. 183.

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Albany.142 Using a teleological approach,143 the Court found that, under ‘an interpretation of the provisions of the Treaty’ as a whole which is both effective and consistent, agreements concluded in the context of collective negotiations between management and labour . . . must, by virtue of their nature and purpose, be regarded as falling outside the scope of Article [101](1) of the Treaty.144 Two criteria thus emerged as relevant for the assessment: the agreement (a) must have as its objective the adoption of measures to improve conditions of work and employment and (b) must be the product of collective bargaining negotiations between associations representing workers and employers.145 Collective agreements, by contrast, concluded between associations of employers and the self-employed do not fall under the Albany rubric and have to be assessed for their object and effects on trade.146 The only exception allowed is for those who are falsely self-employed. As the Court held in FNV Kunsten, self-employed persons who ‘cannot independently determine their own conduct on the market’ and ‘do not bear any of the financial or commercial risks of the activity’ should be reclassified as ‘workers’ and should be allowed to bargain collectively for their rights.147 Even though, with its decision in FNV Kunsten,148 the ECJ accorded collective labour rights to fully dependent self-employed workers (de facto employees), it did not go so far as to guarantee protection for quasi-subordinate workers. The European judges prompted national courts to reclassify only those individuals who are blatantly ‘bogus self-employed’. Those, on the other hand, who are not under the direct control of their principal and bear a level of business risk do not escape the ‘antitrust menace’.149 If these individuals unionise and bargain collectively for their rights, they run the risk of being found liable for breaching competition law provisions. Lao, for instance, observes that ‘click-workers’ are not able to take advantage of the Albany exception.150 As she says, the current exclusion of independent contractors from collective bargaining ‘emerged in an era that did not contemplate the new hybrid work relationships that are characteristic of the gig economy’.151 Schiek and Gideon also worry that ‘ringfencing agreements, consisting of promises by “giggers” to each other not to engage any app or crowdworking platform not agreeing to certain minimum prices or minimum data protection, risk attracting the wrath of the competition authorities’.152 The same is true of other solutions proposed by gig-workers’ associations,153 like the creation of portable benefits between platforms. These ‘may be found to violate simultaneously prohibitions of cartels and abuse of a dominant

142 143

144 145 146 147 148 149

150 151

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Ibid, judgment of the Court, para. 60. S. Vousden, ‘Albany, market law and social exclusion’, ILJ, 29(2) (2000), 181. R. van den Bergh and P. Camesasca, ‘Irreconcilable principles? The Court of Justice exempts collective labour agreements from the wrath of antitrust’, European Law Review [ELRev], 25(5) (2000), 492. Albany (n. 142), para. 60. Ibid., para. 59; C-319/07 P., 3F v. Commission [2009] ECR I-05963, para. 50. Pavlov (n. 57), para. 70; FNV Kunsten (n. 63), paras. 28, 30. FNV Kunsten (n. 63), para. 33. Ibid. V. De Stefano, ‘Non-standard work and limits on freedom of association: A human rights-based approach’, ILJ, 46(2) (2017), 190. Albany (n. 142). M. Lao, ‘Workers in the “gig economy”: The case for extending the antitrust labor exemption to them’, UC Davis Law Review, 51 (2018), 1547. See also M. Doherty and V. Franca, ‘Solving the “gig-saw”? Collective rights and platform work’, ILJ, 49(3) (2020), 352–76. D. Schiek and A. Gideon, ‘Outsmarting the gig-economy through collective bargaining – EU competition law as a barrier?’, International Review of Law, Computers & Technology, 32 (2018), CETLS Online Paper Series, 6 (2018), https://ssrn.com/abstract=3161660, 11. By analogy to C-136/12, Consiglio Nazionale Dei Geologi [2013] where an Italian professional organisation of geologists was fined for suggesting the introduction of minimum fees for its self-employed members.

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market position,154 which again would result in higher fines than just for finding an infringement of one article’.155 To address these issues the Commission published on 9 December 2021 draft Guidelines that remove some of the existing competition law restrictions to collective bargaining for vulnerable self-employed people. More particularly, the draft Guidelines (i) clarify that certain categories of collective agreements concluded with solo self-employed people fall outside the scope of Article 101 TFEU and (ii) specify that the Commission will not intervene against certain other categories of collective agreements concluded with the solo selfemployed. Amongst the categories of self-employed individuals who are covered by the draft Guidelines are those who provide their services through digital labour platforms.156 The term ‘digital labour platform’ here is defined in the same way as in the Commission’s proposal for a Directive on platform work.157 Individuals who cannot benefit from the legal presumption of ‘worker’ status established in Article 4 of the proposed Directive or whose status as ‘workers’ has been successfully rebutted (Article 5) will be considered ‘self-employed’ if they are ‘in a situation comparable to that of workers’158 and will be granted protection under the Guidelines.159 This means that genuinely self-employed platform workers will, after the adoption of the Guidelines, be able to bargain collectively for the improvement of their working conditions without the fear of being found liable for breaching competition law provisions. C Other Worker-Protective Measures Apart from these two newly proposed instruments, the Commission has recently adopted other measures that directly or indirectly protect workers from the corrosive effects of the new technologies. These measures include: (i) Council Recommendation on Access to Social Protection for Workers and the Self-Employed The Recommendation boosts platform workers’ protection by asking Member States to commit to extend the coverage of their social security systems to include all types of employment, including self-employment.160 More precisely, the Council Recommendation calls upon Member States to: (a) allow non-standard workers and the self-employed to enrol into social security schemes, thus closing formal coverage gaps; (b) take measures to ensure that nonstandard workers and the self-employed can build up and take up adequate social benefits so that they are effectively and adequately covered; and (c) increase transparency regarding social security systems and rights. In achieving these goals, the Commission will support the Member States through dialogue and mutual learning activities as well as through the 154 155 156 157 158 159

160

Article 102 TFEU. Schiek and Gideon (n. 153), 12. Draft Guidelines (n. 17), see especially chs. 2–4. Proposal for a Directive on improving working conditions in platform work (n. 16), Article 1(1). Draft Guidelines (n. 17), para. 23. For an assessment of the draft Guidelines, see D. Georgiou, ‘An assessment of the EU’s draft Guidelines on the application of EU competition law to collective agreements of the solo self-employed’, Competition Policy International (20 July 2022), https://bit.ly/3Nwfbi8. Council Recommendation of 8 November 2019 on Access to Social Protection for Workers and the Self-employed (2019/C 387/01) OJ C 387/1.

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establishment of a monitoring framework that will follow the implementation of the Recommendation in the different Member States. (ii) Communication on Better Working Conditions for a Stronger Social Europe: Harnessing the Full Benefits of Digitalisation for the Future of Work Harnessing In its Communication on Better Working Conditions for a Stronger Social Europe: Harnessing the Full Benefits of Digitalisation for the Future of Work,161 the Commission calls on Member States, social partners, and all relevant actors to put forward concrete measures to improve working conditions in platform work. Its aim is to harness the benefits of the digital transformation and protect the European social market economy. The Communication also lays the foundations for work on future global standards for high-quality platform work. (iii) The General Data Protection Regulation (GDPR) The GDPR162 provides workers with a variety of rights with respect to their personal data. Under the new instrument, workers have the right to: (a) information about the collection and processing of their personal data; (b) access to their personal data; (c) have their personal data rectified or erased by the data controller if they think it is inaccurate or incomplete; (d) object to their personal data being processed for unlawful reasons or for direct marketing or scientific and historical research; (e) object to the reuse of the data obtained by their employer for other purposes (data portability); and others. In general, the GDPR increases employers’ responsibilities in regard to collecting, processing, and storing employees’ data. Its aim is, inter alia, to safeguard workers’ human dignity, legitimate interests, and fundamental rights.163 Employers, for instance, who use closed-circuit television (CCTV) systems and geolocation devices or access employees’ emails and tap phone calls to detect crime are required to make their staff aware of the nature of and the reason(s) for the monitoring. (iv) The Platform-to-Business Regulation (P2B) The EU P2B Regulation,164 which came into force in July 2019, sets the conditions for a fairer, more transparent, and predictable online environment for traders and service providers. Under the new Regulation, platforms and search engines that operate in the EU are obligated to disclose the key algorithmic parameters they use to rank products and services on their site. In this context, the Commission has also established an Observatory on the Online Platform Economy to monitor the latest trends in the field. 161

162

163

164

European Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Better working conditions for a stronger social Europe: Harnessing the full benefits of digitalisation for the future of work, COM(2021) 761 final. Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the Protection of Natural Persons with Regard to the Processing of Personal Data and on the Free Movement of Such Data, and Repealing Directive 95/46/EC, OJ L 119/1. See, in particular, Article 88 and Recital 155 on ‘Processing in the context of employment’. S. Tsimikalis, ‘GDPR and Employee Personal Data’, Greek Law Digest (5 March 2019), http://greeklawdigest.gr/topics/ data-protection/item/314-gpdr-and-employee-personal-data. Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on Promoting Fairness and Transparency for Business Users of Online Intermediation Services OJ L 186/57.

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(v) The Digital Services Act (DSA) and the Digital Markets Act (DMA) On 5 July 2022, the European Parliament adopted two new regulations, namely, the Digital Services Act (amending the e-Commerce Directive)165 and the Digital Markets Act.166 The instruments call for increased transparency in the online world, providing for a safer and more open digital space. More precisely, under the new instruments, platforms are required to: (a) disclose information on their terms and conditions as well as the algorithmic systems and advertisement tools they use; (b) increase protection against illegal content, including the provision of illegal goods and services; and (c) refrain from anticompetitive and unfair practices. (vi) Seventh Amendment to the Directive on Administrative Cooperation (DAC7) The DAC7167 is part of the Commission’s new Tax Package for Fair and Simple Taxation.168 Adopted by the Council on 22 March 2021, the DAC7 extends due diligence and reporting obligations to platforms who are required to verify the identity and report the income of traders and service providers that operate through their site or app. The amendment addresses phenomena of tax evasion and updates the EU tax framework to ensure that it keeps pace with technological advancements in the online world. The information acquired by the platforms can be used by national tax authorities to combat bogus self-employment, undeclared work, as well as work taking place in the informal or so-called grey economy. (vii) Europe’s Digital Decade, the 2030 Digital Compass, and the Digital Education Action Plan On 9 March 2021, the Commission published its 2030 Digital Compass and the Digital Decade programme,169 which contains aims and steps towards the successful digital transformation of Europe by 2030. By the end of the decade, the Commission is expecting that three out of four businesses will use cloud computing, big data, and AI to perform their services. For this reason, it considers it vital to establish a framework of digital principles to ensure the human-centred development of the new technologies. The digital framework is expected to build on and complement the European Pillar of Social Rights, making sure that ‘the same rights that apply offline can be fully exercised online’.170 One of the main objectives of the new programme is the enhancement of digital skills and competences in the EU. As the Commission suggests, ‘by 2030, at least 80% of all adults should have basic digital skills and there should be 20 million employed ICT specialists in the EU’.171 This aim is also highlighted in the Commission’s Digital Education Action Plan (2021–7), which outlines its vision for improving digital literacy in the EU. The Action Plan comes with a pack of 165

166

167

168 169

170 171

Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market for Digital Services and amending Directive 2000/31/EC (Digital Services Act), OJ L 277/1. Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on Contestable and Fair Markets in the Digital Sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act), OJ L 265/1. Council Directive Amending Directive 2011/16/EU on Administrative Cooperation in the Field of Taxation 2020/ 0148 (CNS). European Union, ‘Package for fair and simple taxation’, European Commission (n.d.), https://bit.ly/3NK5den. European Commission, ‘Europe’s digital decade: Commission sets the course towards a digitally empowered Europe by 2030’, European Commission (9 March 2021), https://ec.europa.eu/commission/presscorner/detail/en/ IP_21_983. Ibid. Ibid.

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measures and recommendations with which to tackle the widening skills gap that has been created by the emergence of new technologies. More particularly, it calls for the enhancement of digital skills and competences in the EU and for Member States to take measures to ensure that women are equally represented in digital studies and careers. (viii) Proposed Artificial Intelligence Act (AIA) On 21 April 2021, the Commission published its proposal for a Regulation on Artificial Intelligence.172 The instrument aims to address the risks of AI, ensuring algorithmic transparency and accountability, and promoting legal clarity in AI-based applications in the EU. As Recital 36 notes: AI systems used in employment, workers’ management and access to self-employment, notably for the recruitment and selection of persons, for making decisions on promotion and termination and for task allocation, monitoring or evaluation of persons in work-related contractual relationships . . . may appreciably impact the future career prospects and livelihoods of these persons. . . . Throughout the recruitment process and in the evaluation, promotion, or retention of persons in work-related contractual relationships, such systems may perpetuate historical patterns of discrimination, for example against women, certain age groups, persons with disabilities, or persons of certain racial or ethnic origins or sexual orientation. AI systems used to monitor the performance and behaviour of these persons may also impact their rights to data protection and privacy.

To address the potential negative effects of AI systems in the world of work, the proposed Regulation classifies them as ‘high risk’ and subjects them to higher-level safeguards. These cover not just those who are engaged under an employment contract but also platform workers and the self-employed. The employers who use such systems must be transparent about the criteria used in their management and monitoring algorithms and allow for the possibility of human oversight, ensuring that the final decisions impacting workers are taken by humans. Even though the proposed instrument constitutes a step in the right direction, it has been criticised for being inadequate in its protection of platform and other casual workers.173 While the proposed AIA provides for human oversight, it does not establish measures to protect managers who override algorithmic commands from any negative implications of their decision. Furthermore, conformity with the Guidelines is only subject to self-assessment by the provider rather than assessment through an independent body that would ensure oversight of compliance with the rules. Finally, the proposed instrument approves the use of AI systems for the monitoring and organisation of work so long as they comply with the procedural requirements set out in its text. As De Stefano notes, this approach could prove ‘deeply problematic’,174 especially considering that certain Member States have already introduced stricter legislation limiting or banning the use of digital tools to monitor and control workers.175 As he says, in this respect the instrument ‘risks functioning as a “ceiling” rather than a “floor” for labour protection’.176 172

173

174 175

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Proposal for a Regulation of the European Parliament and of the Council Laying Down Harmonised Rules on Artificial Intelligence (Artificial Intelligence Act) and Amending Certain Union Legislative Acts, COM(2021) 206 final. V. De Stefano, ‘The EU proposed regulation on AI: A threat to labour protection?’, Regulating for Globalization (21 April 2021), https://bit.ly/3CMHFPM. Ibid. A. Aloisi and E. Gramano, ‘Artificial intelligence is watching you at work: Digital surveillance, employee monitoring, and regulatory issues in the EU context’, CLLPJ, 41(1) (2019), 95. Ibid.

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V CONCLUSION

In a world where work is becoming increasingly digitalised and commodified and where humans are treated as a service,177 it is vital to revisit the EU framework to ensure that it promotes economic development through fair competition. The advent of the ‘collaborative economy’ might represent an ‘entrepreneurial renaissance’ for some, but it simultaneously poses serious challenges to EU judges and regulators apropos of labour and social protection. As shadow-economies emerge, online platforms that arguably exercise labourbrokering functions become outlaws in a high-tech Wild West, circumventing labour and social protection legislation and shifting the risks of running a business to workers. As we saw in Section II, work in the ‘gig economy’ is often characterised by unclear legal status, income insecurity, limited access to social insurance benefits, long and unsociable hours, lack of voice and representation, lack of training and managerial support, information asymmetries, and others. The precarious working conditions combined with the cross-border dimension of the digital world make clear the need for supranational legislation. Hence, although the ‘harmonisation v. national regulation’ debate continues,178 it is evident that the heterogeneity of national approaches to the regulation of digital platform work could lead to social dumping and the creation of two-tier, segmented markets within the EU. As the Commission highlighted, where the regulatory framework is weak and patchy across Member States . . . there is a risk of a race to the bottom in standards applying to new forms of work. [The] increasingly divergent and even contradictory national solutions[] create regulatory loopholes when viewed from an EU perspective, leading to inequality in the protection of workers and their living conditions. Eventually it could affect the quality of the workforce, the relative competitiveness of employers, companies and Member States, and the functioning of the EU internal market.179

While the ECJ has yet to definitively pronounce on the issue (Section III), the Commission has taken steps to address the potential negative effects of the new technologies on the EU labour market (Section IV). A series of soft and hard law instruments have been introduced that directly or indirectly boost platform workers’ protection. Indeed, after a long period of inactivity in the social field, the EU is displaying a more social face, moving away from the hard ‘flexicurity agenda’180 and the strong neo-liberal discourses that dominated its polices over the last decades. Instead, the EU is showing its willingness to modernise the labour and social acquis to ensure that the development of the new technologies is human-centred. The recently published proposals for a new (a) Directive on platform work and (b) Guidelines for the application of EU competition law to collective agreements for the self-employed have the potential to address many of the deficiencies of the current framework. As De Stefano and Aloisi note, ‘the time of platform exceptionalism seems to be over. . . . The Commission has adopted a bold posture,

177 178 179 180

Prassl (n. 71). M. Andenas and C. Andersen (eds.), Theory and Practice of Harmonisation (Cheltenham: Edward Elgar, 2012). Impact Assessment (n. 2), 30. A. Davies, ‘Job security and flexicurity’ in A. Bogg, C. Costello, and A. C. L. Davies (eds.), Research Handbook on EU Labour Law (Cheltenham: Edward Elgar, 2016), 217; S. Fredman, ‘Women at work: The broken promise of flexicurity’, ILJ, 33(4) (2004), 299.

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matching to an extent the expectations of the proposal and the positive atmosphere surrounding the European Pillar of Social Rights.’181 However, it remains to be seen how robust the final text of these new instruments will be. In any case, a more sympathetic court, largely attuned to the needs of gig economy workers, might buttress the position of any new legislation emerging from the European Social Pillar.

181

V. De Stefano and A. Aloisi, ‘European Commission takes the lead in regulating platform work’, Social Europe (9 December 2021), https://socialeurope.eu/european-commission-takes-the-lead-in-regulating-platform-work. For other reactions by union, academics, and platforms, see Brave New Europe, ‘Gig Economy Project – Reaction to the platform work directive’, Brave New Europe (9 December 2021), https://braveneweurope.com/gig-economy-projectreaction-to-the-platform-work-directive.

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4 The Impact of Technological Disruption on German Labour Law: Risks and Opportunities Claudia Schubert and Patrick Rieger

I INTRODUCTION

Technological changes and disruptions are constant companions in the working world. As such they are catalysts for the development and change of labour law. Industrialisation and its disastrous working conditions in factories were reasons for the development of labour law as specific legal protection for employees. Digitalisation is often considered a game-changing technology that is having a tremendous effect on the working world and labour law.1 Digitisation falls into line with the computerisation in the 1970s and 1980s, the increasing use of the Internet since the 1990s, and the distribution of mobile electronical devices. So far, the impact of digitalisation on the labour market cannot be fully assessed.2 While there are many speculations about ‘the end of work’, there are also studies that give a more optimistic outlook, expecting only 12 per cent or 25 per cent job losses.3 At least, the current development as well as 1

2

3

For example, loss of workplace. See C. B. Frey and M. Osborne, The Future of Employment: How Susceptible Are Jobs to Computerisation, Working Paper (Oxford: Oxford Martin Programme on Technology and Employment, 2013), 44–5; for Germany, see J. Bowles, ‘Chart of the week: 54% of EU jobs at risk of computerisation’ (24 July 2014), www .bruegel.org/2014/07/chart-of-the-week-54-of-eu-jobs-at-risk-of-computerisation; C. Brzeski and I. Burk, ‘Die Roboter kommen’ (Amsterdam: ING DiBa Economic Research, 30 April 2015), www.erc.de/wp-content/downloads/texte_ tools/ING-DiBa_Economic-Research_Die-Roboter-kommen.pdf, 1, table 1, 59 per cent of jobs threatened; with different priorisation, see C. Brzeski/I. Fechner, ‘Die Roboter kommen (doch nicht?) [The robots are coming (are they not?)]’, ING Economic & Financial Analysis (11 June 2018), https://bit.ly/3YMqrvZ; see also E. Brynjolfsson and A. McAfee, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, 2nd ed. (New York: W. W. Norton, 2016); P. C. Evans and M. Annunziata, Industrial Internet: Pushing the Boundaries of Minds and Machines (New York: General Electric, 2012), https://bit.ly/46ndWKS, 9–12; critical, M. Schietinger, ‘Auswirkungen des digitalen Wandels auf die Arbeitswelt – Befunde aus der Arbeitsforschung jenseits von Mythen und Visionen [Effects of digital change on the world of work – Findings from work research beyond myths and visions]’, Soziales Recht [SR] [Social Law], 10(4) (2020), 152–8. R. Krause, ‘Digitalisierung der Arbeitswelt – Herausforderungen und Regelungsbedarf [Digitisation of the working world – Challenges and need for regulation]’ in Sta¨ndige Deputation des Deutschen Juristentages (ed.), Verhandlungen des 71. Deutschen Juristentages: Essen 2016 [Proceedings of the 71st German Lawyers’ Congress: Essen 2016], Vol. I: Gutachten [Reports] (Munich: C. H. Beck, 2016), B 20–1; S. Pfeiffer and A. Suphan, Der AVIndex. Lebendiges Arbeitsvermo¨gen und Erfahrung als Ressourcen auf dem Weg zu Industrie 4.0 [The AV Index: Lively Working Capacity and Experience as Resources on the Way to Industry 4.0], University of Hohenheim, Chair of Sociology Working Paper 2015#1 (Stuttgart: University of Hohenheim, 2015), www.sabine-pfeiffer.de/files/downloads/ 2015-Pfeiffer-Suphan-draft.pdf, 4, 26. H. Bonin, T. Gregory, and U. Zierahn, U¨bertragung der Studie von Frey/Osborne (2013) auf Deutschland [Transfer of the Study by Frey/Osborne (2013) to Germany], Research Report 455, ZEW Brief Expertise No. 57 (Mannheim: Center for European Economic Research (ZEW) and Federal Ministry of Labor and Social Affairs (BMAS), 2015), https://ftp .zew.de/pub/zew-docs/gutachten/Kurzexpertise_BMAS_ZEW2015.pdf, 14; positive tendency, A. Hammermann and O. Stettes, Bescha¨ftigungseffekte der Digitalisierung [Employment Effects of Digitisation], IW-Trends 3/2015 (Cologne: Institut der deutschen Wirtschaft [Institute of German Economics], 2015), www.iwkoeln.de/fileadmin/ publikationen/2015/243049/IW-Trends_2015-03-05_Hammermann_Stettes.pdf, 91.

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the expectations and plans of the legislator and the social partners in Germany can be described and evaluated. This chapter provides an overview of German labour law and the changes that have occurred owing to technological changes and disruptions caused by digitalisation. For a better understanding of the current development, automation is used as an example of technological change that has been taking place since the 1970s. This can be described as a first step towards the digitalisation of the working world, which has specific effects on the labour market and labour law. The analysis of the impact of digitalisation on German labour law starts with the existing archetypes of employment relationships and the outline of social protection for employees.

II THE ARCHETYPE

A Full-Time Employment Relationship and the Characteristics of German Labour Law Labour law was the answer to the social issue of the nineteenth century. It is the law for personally dependent workers and reacts to their need for social protection,4 in contrast to competition and economic law that strives for open markets and free competition. German labour law originally had a person-related approach, focussing on personally dependent workers,5 but nowadays it follows a contract-based approach.6 The archetype for labour law is the indefinite full-time employment relationship between an employee and (one) employer. However, it was not until 2018 that the legislator codified a legal definition of employment contract in line with the settled case-law in section 611a of the German Civil Code [Bu¨rgerliches Gesetzbuch (BGB)]. The employment contract is a specific form of a contract of service, in contrast to contracts for service. It is an obligation of service by an employee bound to the instructions and under the control of the employer (heteronomy). The right to instruct includes time, place, subject, and execution of work. The employee is not in charge of his or her service, in particular in relation to place and time. The intensity of instructions, however, can vary. Especially, highly skilled workers (e.g. doctors) or workers outside premises (e.g. sales representatives, customer service agents, teleworkers) or workers with flexible working hours determine their work more independently than others.7 In these cases, the integration of workers in the business operations (e.g. shift plans, technical linkage) is a relevant criterion for an employment relationship.8 The workers’ integration (Eingliederung) in the employer’s work organisation (establishment), which is more than a mere coordination of independent contractors, indicates external 4

5

6

7

8

Already A. Hueck and H. C. Nipperdey, Arbeitsrecht [Employment Law], vol. I, 7th ed. (Berlin/Frankfurt: Vahlen, 1963), 25–6; A. Nikisch, Arbeitsrecht [Employment Law], vol. I (Tu¨bingen: Mohr, 1951), 1; A. So¨llner, ‘“From status to contract”: Wandlungen in der Sinndeutung des Arbeitsrechts’, in M. Lieb, U. Noack, and H. P. Westermann (eds.), Festschrift fu¨r Wolfgang Zo¨llner, vol. II, 949–64 (Cologne: C. Heymanns, 1998), 949. Hueck and Nipperdey, Arbeitsrecht, 3, 5; Nikisch, Arbeitsrecht, 3–4; critically E. Jacobi, Grundlehren des Arbeitsrechts [Fundamentals of Labour Law] (Leipzig: Deichert, 1927), 43, 49–50. So¨llner, ‘“From status to contract”’, 949; G. Spinner in F. J. Sa¨cker, R. Rixecker, H. Oetker, and B. Limperg (eds.), Mu¨nchener Kommentar zum BGB [Mu¨Ko-BGB], vol. 5, 8th ed. (Munich: C. H. Beck, 2020), § 611a para. 89. Federal Labour Court [Bundesarbeitsgericht (BAG)]: Judgment 15 March 1978, 5 AZR 819/76, AP BGB § 611 Abha¨ngigkeit Nr. 26; BAG: Judgment 6 May 1998, 5 AZR 247/97, AP BGB § 611 Abha¨ngigkeit Nr. 102 at [1.a]; F. Temming in H. Kiel, S. Lunk, and H. Oetker (eds.), Mu¨nchener Handbuch zum Arbeitsrecht [Mu¨HdB-ArbR], vol. I, 5th ed. (Munich: C. H. Beck, 2021), § 18 para. 27, 31, § 19 paras. 44–5, 50. BAG: Judgment 20 September 2000, 5 AZR 61/99, AP BGB § 611 Rundfunk Nr. 37 at [IV.39]; BAG: Judgment 22 November 2016, 9 AZB 41/16, AP ArbGG 1979 § 2 Nr. 105, at [19]; see Temming in Mu¨HdB-ArbR, § 18 para. 35, § 19 paras. 44-45, 53.

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determination by the employer. In particular, constant supervision (e.g. screen shots, GPS tracking) can indirectly create a personal dependency if it controls the working behaviour. Integration as a legal criterion is not included in the statutory definition, but the factual needs within an organisation provide specific control for the employer over the employee within the meaning of section 611a, paragraph 1 BGB. It leads to a personal dependency for the employee, which is characteristic of the employment contract. Finally, the courts will always take all aspects of the contractual relationship into consideration (as a whole). Under German law, the designation of a contract (e.g. as a contract of service) is legally irrelevant, but the factual circumstances are crucial (s. 611a, para. 1, sentence 6).9 This is comparable to other legal systems in continental Europe, such as France and Italy, but different from English law, even though courts have recently adapted their case-law.10 The relevance of the factual circumstances results from the mandatory social protection of labour law, which cannot be avoided by agreement, in particular not by conscious false labelling of the contract. Methodologically, this is a teleological interpretation of the law, which limits private autonomy and avoids the circumvention of mandatory law. German labour law is part of a social market economy and its present structure was particularly developed after the Second World War. It is not only part of the national economic policy but also guaranteed by the Treaty of the European Union (Art. 3, para. 3 TEU). In a social market economy, law aims to regulate not only product markets but also labour markets. In order to prevent an underbidding competition and a race to the bottom in terms of working conditions, labour law sets minimum labour conditions and strives to preserve the functioning of the market. It compensates the worker for failures of freedom of contract and the specific structural inferiority that comes from personal dependence on the employer. German labour law serves the purpose of socially protecting the employee in its integrity as a person (physical integrity and integrity of personality) and as an economic actor. Besides, it aims at complementary objectives such as non-discrimination and reconciliation of family life and working life. Therefore, the legislation guarantees statutory minimum working conditions. It takes personal and business risks away from the employee, who has no business opportunities and, thus, should not take business risks. Employees receive the salary for the offered work, even if the employer cannot take advantage of it (e.g. lack of orders). They have a right to paid vacation and sickness pay. Employees are protected by regulations on working time and on safe and healthy working conditions. Finally, Germany has a strong protection against unfair dismissal. Social security law supplements this protection. Employees are compulsory members of the statutory pension insurance, health insurance, nursing care insurance, unemployment insurance, and occupational accident insurance. Employer and employee share the insurance contributions, except for the statutory accident insurance, which is financed only by the employer. Moreover, Germany has a characteristic, well-functioning social partnership model that has been a trendsetter for labour conditions in the past and regularly reacts to economic

9

10

BAG: Judgment 20 July 1994, 5 AZR 627/93, NZA 1995, 161, 162–3; Spinner, in Mu¨Ko-BGB, § 611a para. 89; stricter, M. Stoffels, ‘Statusvereinbarungen im Arbeitsrecht [Status agreements in labour law]’, Neue Zeitschrift fu¨r Arbeitsrecht [NZA] [New Journal for Labour Law], (2000), 690–5 at, 694. Compare G. Davidov, M. Freedland, and N. Kountouris, ‘The subjects of labor law: “Employees” and other workers’ in M. W. Finkin and G. Mundlak (eds.), Comparative Labor Law, 115–31 (Cheltenham: Edward Elgar, 2015), 115, 117–8.; C. Schubert, ‘Bescha¨ftigung durch Online-Plattformen im Rechtsvergleich [Employment through online platforms in comparative law]’, Zeitschrift fu¨r Vergleichende Rechtswissenschaft [ZVglRWiss] [Journal of Comparative Law], 118 (2019) 341–74, at 367–9.

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and technological changes much faster than a legislator can. Collective agreements create differentiated standards and tailored working conditions for the specific situation of branches or even companies. Besides, participation of employees at the business unit (through works councils) and at company level (employee representatives on the board) is a relevant aspect for employee protection that has a hundred-year tradition in legislation and an even longer one in practice. B Atypical Employment and Its Regulation Atypical employment – fixed-term employment, part-time employment, and temporary agency – has gained significant importance throughout the last three decades. Mass unemployment and a weak labour market since the late 1980s have led to an increase in this kind of employment.11 The former Federal Minister of Labour and Social Affairs, Norbert Blu¨m, fostered the liberalisation of atypical work and was quoted as saying ‘Befristete Arbeit ist immer noch besser, als unbefristet arbeitslos zu sein [Better temporary employment than no employment at all]’.12 Temporary agency was liberalised once more by lifting the maximum duration of the assignment during the so-called Hartz Reform in 2002.13 In the end, atypical employment reduces entrepreneurial risks and creates jobs, but it is also considered to be second-class employment that is causing labour conditions to deteriorate (lower salary, fewer promotion prospects, non-continued employment, and lower social security benefits). Even if protection under labour and social security law is (generally) comparable, ‘atypical employees’ have a higher risk of poverty, especially in old age. Thus, German and European laws contain specific protection for atypical workers. Nevertheless, nowadays part-time work is also an instrument for reconciling family and professional life in the interest of employees,14 even if a detailed analysis and the impact on pensions might raise doubts about its effectiveness. Employees have a right to permanent or temporary part-time work in general, but are also entitled to paternal leave and nursing time.15

11

12

13

14

15

N. Altmann, D. Bieber, M. Deiß, V. Do¨hl, D. Sauer, and T. Schraysshuen, Vera¨nderung der Arbeitsbedingungen durch neuartige Formen der zwischenbetrieblichen Arbeitsteilung (Zulieferindustrie) [Changes in Working Conditions through New Types of Inter-company Division of Labour (Supplier Industry)] (Munich: ISF Munich [Institute for Social Scientific Research], 1993), 16; A. Sto¨hr, ‘Vertragsbindung und Flexibilita¨t im Arbeitsrecht – rechtshistorisch betrachtet [Contractual obligations and flexibility in labour law – viewed from a legal historical perspective]’, Recht der Arbeit [RdA] [Law of Labour] (2014), 307–16, at 316; compare also Federal Office of Statistics [Statistisches Bundesamt; D-STATIS], ‘Kernerwerbsta¨tige nach einzelnen Erwerbsformen, Ergebnisse des Mikrozensus [Core employees by individual forms of employment, results of the microcensus]’ (2023), www.destatis.de/DE/Themen/ Arbeit/Arbeitsmarkt/Erwerbstaetigkeit/Tabellen/atyp-kernerwerb-erwerbsform-zr.html; H. Rudolph, ‘Befristete Arbeitsvertra¨ge und Zeitarbeit. Quantita¨t und Strukturen “preka¨rer Bescha¨ftigungsformen” [Temporary contracts and temporary employment: Quantity and structures of “precarious forms of employment”]’ in G. Linne and B. Vogel (eds.), Leiharbeit und befristete Bescha¨ftigung [Temporary Work and Temporary Employment], Arbeitspapier [Working Paper] No. 68, 9–26 (Du¨sseldorf: Hans Bo¨ckler Stiftung, 2003), 18. Deutscher Bundestag, Plenarprotokoll (BT-PlPr.) 10/133 (19 April 1985), p. 9883 B, https://dserver.bundestag.de/btp/ 10/10133.pdf. Until 1967 temporary agency work was prohibited. The constitutional court classified this ban as violation of the freedom of profession, German Constitutional Court [Bundesverfassungsgericht (BVerfG)]: Judgment 4 April 1967, 1 BvR 84/65, BVerfGE 21, 261. Only 11 per cent of part-time employees were looking for full-time employment in 2016, according to DSTATIS, Datenreport 2018 (Bonn: Federal Agency for Civic Education/bpb, 2018), 157. Sections 8 and 9a Part-Time and Fixed-Term Employment Law [Teilzeit- und Befristungsgesetz], Federal Paternal Allowance and Paternal Leave Act [Gesetz zum Elterngeld und zur Elternzeit], Nursing Time Act [Pflegezeitgesetz], Family Nursing Time Act [Familienpflegezeitgesetz].

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The core element of the protection of atypical workers is the ban on discrimination concerning general treatments, remuneration, and training in particular, which is included in the statutes on part-time work and fixed-term employment as well as on temporary agency. It is binding for employers and social partners. Non-discrimination, however, does not mean identical treatment; rather, it allows a pro rata temporis reduction of salary and/or vacation for parttime workers.16 To protect fixed-term employees, the employer is limited in the use of temporary contracts. He or she can use fixed-term employment without specific reasons for up to two years only (maximum of three prolongations). Alternatively, the employer can justify fixed-term employment by objective reasons, like substitution or other temporary needs as characteristic of the work, even without a maximum duration or amount of prolongations. This statutory regulation is complemented with an abuse control by the judiciary that strives to avoid chains of employment contracts that transfer entrepreneurial risks to employees. The protection of temporary workers has two dimensions. Firstly, the employment relationship with the agency has the same status as a regular employment contract. Secondly, the contract must specify temporary agency work as the type of occupation and the temporary workers have the right to equal pay and equal treatment in the user undertaking after a period of assignment of nine months. The maximum assignment period is eighteen months. Besides, the works councils represent agency workers in the business units (establishments) of the user undertaking with regard to all working conditions on site. Violations of the statute are subject to fines, and the agency can lose its licence. By law, the employee has an employment contract with the user undertaking if the contract with the agency is ineffective owing to violations of the statute. C Employee, Employee-Like Persons, Self-Employed: The Tripartite Structure of Employment and Its Regulation in German Law German law not only distinguishes between employed and self-employed but recognises a third group, employee-like persons (arbeitnehmera¨hnliche Personen). Such persons work mainly on their own (without staff) but they are not as personally dependent as an employee. They have a main client for whom they spend a large part of their working time.17 That results in an economic dependency and a need for social protection as they lack the market access of the selfemployed.18 Examples are homeworkers, media staff (that are not employees) and teachers in the private sector, commercial agents who work only for one principal, and sometimes workers in the transportation sector.19 16

17 18

19

CJEU: Judgment 23 October 2003, Hilde Scho¨nheit v. Stadt Frankfurt am Main and Silvia Becker v. Land Hessen, C-4/02 and C-5/02, ECLI:EU:C:2003:583 at [90]; CJEU: Judgment 5 November 2014, O¨sterreichischer Gewerkschaftsbund v. Verband O¨sterreichischer Banken und Bankiers, C-476/12, ECLI:EU:C:2014:2332 at [23]. Compare section 12a Collective Agreement Act [Tarifvertragsgesetz]. BAG: Judgment 8 May 2007, 9 AZR 777/06, AP BGB § 611 Arbeitnehmera¨hnlichkeit [Employee-Likeness] Nr. 15; BAG: Judgment 17 January 2006, 9 AZR 61/05, EzA BUrlG § 2 Nr. 6; BAG: Judgment 15 November 2005, 9 AZR 626/04, AP BGB § 611 Arbeitnehmera¨hnlichkeit Nr. 12; BAG: Judgment 21 February 2007, 5 AZB 52/06, AP ArbGG 1979 § 5 Nr. 64; C. Schubert, Der Schutz der arbeitnehmera¨hnlichen Personen [The Protection of Employee-like Persons] (Munich: C. H. Beck, 2004), 55–71; R. Wank, Arbeitnehmer und Selbststa¨ndige [Employees and SelfEmployed] (Munich: C. H. Beck, 1988), 238–41. Schubert, Der Schutz der arbeitnehmera¨hnlichen Personen, 55–71; Wank, Arbeitnehmer und Selbsta¨ndige, 253–325; also compare W. Hromadka, ‘Arbeitnehmer, Arbeitnehmergruppen und Arbeitnehmera¨hnliche im Entwurf eines Arbeitsvertragsgesetzes [Employees, employee groups and employee-like persons in the draft of an employment contract law]’, NZA (2007), 838–42, at 841.

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The legislation has contained first regulations on (such) homework since 1864 and in detail since 1926, but other employee-like persons have been recognised as such since 1924.20 It is under debate if these persons constitute a third form of employment or if they are a subcategory of selfemployed.21 Regardless of qualification, economically dependent workers are only partially included in the scope of labour law, specifically in the Federal Holiday Entitlement Act (Bundesurlaubsgesetz), the Act on Occupational Health and Safety (Arbeitsschutzgesetz), the Young Persons Employment Act (Jugendarbeitsschutzgesetz), the Maternity Protection Act (Mutterschutzgesetz), the Nursing Time Act (Pflegezeitgesetz), the Federal Data Protection Act (Bundesdatenschutzgesetz), and the General Act on Equal Treatment (Allgemeines Gleichbehandlungsgesetz). They have a right to organise collectively and their trade unions can negotiate and conclude collective agreements. However, they are not included in the scope of the Minimum Wage Act (Mindestlohngesetz), do not have protection against unfair dismissals, and are not represented by works councils. Only homeworkers have a protection, which is very similar to the social protection for employees,22 even if the dismissal protection is limited to a longer notice period. Thus, the legal position of such economically dependent workers remains inconsistent, partly incidental, and is not a very persuasive part of German law. However, the protection of economically dependent workers is a step towards a differentiated legal system for the economy.

III THE CHANGING NATURE OF WORK

Digitalisation is a process of technological change that will change the working world, its jobs, its work organization, and even the structures within economy. It has not yet been clarified in detail to what extent the working world, particularly in Germany, will be affected. The technical evolution since the 1970s, containing the development and application of microelectronics, shows some parallels and is a suitable background against which to highlight the distinctions of the present development.23 There were technological disruptions that influenced work itself, such as the introduction of industrial robots and machine automation (computer numerical control [CNC] technology), and of personal computers and telework. This changed human resources (HR) management as it introduced HR information systems, making employees redundant and creating new jobs, changing work organisation,24 and increasing the amount of processing of data.

20

21

22

23

24

Compare H. Potthoff, Arbeitsrecht: Das Ringen um werdendes Recht [Labour Law: The Struggle for Emerging Law] (Berlin: Mauritius, 1928), 28–9. On the subcategory of self-employed, see N. Neuvians, Die arbeitnehmera¨hnliche Person [The Employee-Like Person] (Berlin: Duncker and Humblot, 2002), 35, 232–3; Wank, Arbeitnehmer und Selbsta¨ndige, 236–7; on an alternative form of employment, see W. Hromadka, ‘Arbeitnehmerbegriff und Arbeitsrecht – Zur Diskussion um die “neue Selbsta¨ndigkeit” [Employee concept and labour law – On the discussion about the “new self-employment”]’, NZA (1997), 569–80 at, 576; Schubert, Der Schutz der arbeitnehmera¨hnlichen Personen, 18–20. See sections 18 and 19 Homework Act [Heimarbeitsgesetz], homework committee for fixing minimum remuneration and other working conditions. Those changes were also considered to be disruptive, W. Mu¨llner, ‘Arbeitsrecht fu¨r eine neue Arbeitswelt [Labour law for a new world of work]’, Zeitschrift fu¨r Rechtspolitik [ZRP] [Journal for Legal Policy] (1987), 322–5, at 322. E.g. contracts with employee-like persons and external service providers instead of employees, P. Lorig, ‘Werkvertra¨ge – Die neue Lohndumping Strategie?! [Contracts for work – The new wage dumping strategy?!]’ (2012), www.rosalux.de/ publikation/id/5689/werkvertraege-die-neue-lohndumping-strategie, 5; U. Mayer, ‘Rechtsprobleme bei der Personalpolitik mit Selbststa¨ndigen [Legal problems in personnel policy with the self-employed]’, Arbeit und Recht [AuR] [Work and Law] (1990), 213–21, at 213–14; U. Zachert, ‘Die Zersto¨rung des Normalarbeitsverha¨ltnisses [The destruction of the normal employment relationship]’, AuR, (1988), 129–37, at 135.

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Even if digitalisation has a much greater effect, this former period of technological change also had significant and (up to a certain extent) comparable effects: new requirements for the protection of health and safety, increase of data protection, loss of jobs, need for vocational (re-)training and education. In retrospect, this was the beginning of the era of lifelong learning, as education and training are key factors for (technological) change management.25 Well-trained employees face fewer risks caused by technological changes and their salary does not reduce.26 Descriptions of the technological change and its effect on the workplace, as well as the differing work requirements, work processes, and business organisation, were part of a detailed social and economic analysis. In the course of this technology change, many jobs in production were outdated27 or redundant as work processes became more effective through technical evolution.28 The jobs of employees without training became rather monotonous and their wages decreased.29 In general, the number of jobs for unqualified employees declined30 and the labour market started to be divided into jobs for highly trained and educated employees and jobs for others.31 Even if the technological change – as repeatedly pointed out – had no effects on employment,32 there was at least a need for new qualifications. The effects on the labour market, however, overlapped with other transformations that were not exclusively caused by technological change. One important aspect was the introduction of lean and just-in-time production (following the example of Japanese companies).33 The second aspect was the increasing globalisation, which caused tough competition with low-wage-countries. The subsequent structural change in the economy resulted in an increase in the size of the service sector in relation to the production sector,34 leading to a significant unemployment rate, particularly in the years of

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31 32

33 34

Though this term was already used earlier, e.g. G. Ku¨hn, ‘Eigenverantwortung, Motivation, Lernverhalten und ¨ berlegungen [Personal responsibility, motivation, learning behaviour and learning performance – Lernleistung – U Considerations]’, Zeitschrift fu¨r Bildungsforschung [ZfB] [Journal for Educational Research], 4 (1973), 25–8, at 28. Compare H. Hofbauer, ‘Untersuchung des IAB u¨ber die Wirksamkeit der beruflichen Weiterbildung [Investigation of the IAB on the effectiveness of vocational training]’, Mitteilungen aus der Arbeitsmarkt- und Berufsforschung [MittAB] [Communications from Labour Market and Vocational Research], 3 (1981), 246–62, at 252–3; H. Nierhaus, ‘Weiterbildung fu¨r die 80er Jahre [Further education for the 1980s]’, Berufsbildung in Wissenschaft und Praxis – Sonderheft [BWP-SE] [Vocational Training in Science and Practice – Special Issue], A6835F (1980), 27–31, at 29. Examples at W. Dostal and K. Ko¨stner, ‘Mikroprozessoren – Auswirkungen auf Arbeitskra¨fte? [Microprocessors – Effects on workers?]’, MittAB, 2 (1977), 243–51, at 250. Examples at W. Dostal, A.-W. Kamp, M. Lahner, and W. P. Seessle, ‘Flexible Fertigungssysteme und Arbeitsplatzstrukturen [Flexible manufacturing systems and workplace structures]’, MittAB, 2 (1982), 182–91, at 182–5. S. Damm-Ru¨ger and U. Degen, ‘Produktion und Qualifikation – empirische Forschungsergebnisse u¨ber die Entwicklung von Qualifikationsanforderungen in der Industrie [Production and qualification – Empirical research results on the development of qualification requirements in industry]’, Berufsbildung in Wissenschaft und Praxis [BWP], 3 (1978), 21–4, at 23; W. Dauth, S. Findeisen, J. Su¨dekum, and N. Wo¨ßner, German Robots – The Impact of Industrial Robots on Workers, IAB Discussion Paper 30/2017 (Nuremberg: IAB [Institute for Employment Research of the German Federal Employment Agency], 2017), 41. H. Gartner and H. Stu¨ber, Arbeitsplatzverluste wurden durch neue Arbeitspla¨tze immer wieder ausgeglichen [Job Losses Have Been Repeatedly Offset by New Jobs], IAB Kurzbericht [Summary Report] 13/2019 (Nuremberg: IAB, 2019), 4; A. Reinberg, ‘Der qualifikatorische Strukturwandel auf dem deutschen Arbeitsmarkt – Entwicklungen, Perspektiven und Bestimmungsgru¨nde [The structural change in qualifications on the German labour market – Developments, perspectives and determining factors]’, MittAB, 4 (1999), 434–43, at 435–7. Altmann et al., Vera¨nderung der Arbeitsbedingungen, 16. On computerisation in Germany, Gartner and Stu¨ber, Arbeitsplatzverluste, 8; in general, Frey and Osborne, The Future of Employment, 12–13. The automobile industry is a typical example, Altmann et al., Vera¨nderung der Arbeitsbedingungen, 9–14. F. Dietz, ‘Strukturwandel auf dem Arbeitsmarkt [Structural change on the labour market]’, MittAB, 1 (1988), 116–52, at 134.

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(global) recession.35 Thus, the legal reactions to mass unemployment in Germany were not specifically related to technological changes. Digitalisation is not only a continuation of computerisation but a dynamic leap. Personal computers are smaller, more mobile, have a much higher capacity at low cost, and are ubiquitous. However, the Internet and its acceleration are additional drivers creating a qualitative and quantitative change of technology as one can link computers within and across companies. The intensity and the pace of data transfer and data processing have increased enormously. This allows a massive decentralisation with consequences for work organisation, in particular mobile work, for the (international) composition of the workforce but also for outsourcing and for platforms and other digital networks of freelancers. This development is combined with a more flexible and dynamic organisation of work processes and company organisation (e.g. agile working, matrix organisation), which are not caused by technological change but supported by it. Besides, more enabling technologies, assistance systems, and human–machine interaction (e.g. exoskeleton, care robots) are in place that can lower physical strains for workers. Sensor technologies, big data, and smart technology (artificial intelligence [AI]) not only create new products, services, and work processes; for employees, they also mean an increase in personal data processing and transparency, which affects their right to privacy and to informational selfdetermination. Furthermore, technology enables more efficient production and can partly replace workers. The Federal Ministry as well as commercial associations and consultants expect significant effects on productivity. Technology has and will also change work towards more knowledge-based employment. As in the period of automation, there will be a loss of jobs for unskilled employees as well as probably further polarisation of the labour market. In contrast, the trade unions expect a partial upgrading of work and qualifications.36 This requires at least an adequate (re-)training of employees. The Federal Ministry of Labour and Social Affairs regards the development as incremental in Germany, in contrast to the USA, where the changes are more disruptive.37 Present research shows that to date there has been no massive technical substitution of the work force or polarisation of the labour market at the national level.38 Technical solutions are not fully developed and adaption of work processes is often difficult, time-consuming, and costly. Companies are careful with investments, even though one can see significant differences between small and medium-sized enterprises (SMEs) and large companies, which have pilot projects and demonstration factories.39 Nevertheless, the loss of jobs is a constant companion of technological progress.40 It cannot be predicted to what extent employment in Germany will be 35

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J. Hinrichs and E. Giebel-Felten, Die Entwicklung des Arbeitsmarktes 1962–2001 [The Development of the Labour Market 1962–2001], KAS Arbeitspapier [Working Paper] 82 (Sankt Augustin: Konrad Adenauer Stiftung, 2002), https://bit.ly/42ZHITa, 6, 28. IG Metall Bezirksleitung NRW, Ganzheitlich zu Arbeit 4.0 [Holistic to Work 4.0] (n.d.), www.arbeit2020.de/fileadmin/ Arbeit2020/4.1_Broschueren/IG_Metall-Ganzheitlich_zu_Arbeit_4.0.pdf; thereto Schietinger, ‘Auswirkungen des digitalen Wandels auf die Arbeitswelt’, 152, 154. Federal Ministry of Labour and Social Affairs [Bundesministerium fu¨r Arbeit und Soziales (BMAS)], Weißbuch Arbeit 4.0 [White Paper Work 4.0] (2016), www.bmas.de/SharedDocs/Downloads/DE/PDF-Publikationen/a883weissbuch.pdf?__blob=publicationFile&v=1, 24. J. Falkenberg, T. Haipeter, M. Krzywdzinski, M. Kuhlmann, M. Schietinger, and A. Virgillito, Digitalisierung in Industriebetrieben [Digitalisation in Industrial Companies], Forschungsfo¨rderung Report [Research Funding Report] Report 6 (Du¨sseldorf: Hans Bo¨ckler Stiftung, 2020), boeckler.de/pdf/p_fofoe_report_006_2020.pdf, 7, 24; Schietinger, ‘Auswirkungen des digitalen Wandels auf die Arbeitswelt’, 152, 154. Schietinger, ‘Auswirkungen des digitalen Wandels auf die Arbeitswelt’, 152, 156. G. Zika, C. Schneemann, A. Grossmann et al., BMAS-Prognose ‘Digitalisierte Arbeitswelt’ [BMAS Prognosis ‘Digitised Working World’], IAB Forschungsbericht [Research Report] 5/2019 (Nuremberg: IAB, 2019), 34; G. Bosch, ‘“Jobless growth”? Die Auswirkungen der neuen Informations- und Kommunikationstechnologien auf

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affected. The calculations vary and depend on key assumptions (e.g. loss or adaption of professions) and figures.41 The structural change in the economy continues with the size of the service sector increasing in relation to the production sector (tertiarisation).42 Again, technological change is not the only factor bringing about such change, as Germany, like many countries, is simultaneously facing a change of the globalised economy accelerated by digitalisation, but at the same time slowed by the Covid-19 pandemic in recent years. Similarly, strengthening nationalism has already had a decelerating effect on globalisation. Finally, the current Russian war against Ukraine demonstrates the fragility of global markets and the vulnerability of national economies. All these aspects are having serious effects on the German national economy. At the same time, demographic changes are affecting the working world and resulting in a significant shortage of labour, especially skilled workers.43 Finally, digital platforms and their network effect are a significant factor in a digital economy. They are relevant for product and service markets as well as decentral organisation of work and services. Platforms are contractors of and for service, but they are also brokers for freelancers. In this context, labour law issues concerning couriers and drivers (e.g. Uber, Lyft, Foodora, Deliveroo) have been prominently discussed in the literature worldwide. Platforms can address a huge number of contractors both worldwide and at a regional level.44 If a platform concludes a service contract (e.g. Clickworker, Textbroker, Testbirds), it is responsible for the performance vis-a`-vis its own contractors. Unlike a temporary work agency, only the platform has the right to issue instruction.45 In comparison, a number of platforms act as a broker and only mediate

41

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die Bescha¨ftigung [The impact of new information and communication technologies on employment]’, Arbeit [Work], 7(4) (1998), 299–315, at 300; H. Hofmann and C. Saul, ‘Qualitative und quantitative Auswirkungen der Informationsgesellschaft auf die Bescha¨ftigung: eine Literaturauswertung [Qualitative and quantitative impacts of the information society on employment: A literature review]’, ifo Schnelldienst, 49(10) (1996), 12–24, at 13. P. Ittermann and J. Niehaus, ‘Industrie 4.0 und Wandel von Industriearbeit – revisited. Forschungsstand und Trendbestimmungen [Industry 4.0 and change in industrial work – revisited. State of research and determination of trends]’ in H. Hirsch-Kreinsen, P. Ittermann, and J. Niehaus (eds.), Digitalisierung industrieller Arbeit. Die Vision 4.0 und ihre soziale Herausforderungen [Digitalisation of Industrial Work: The Vision of Industry 4.0 and Its Social Challenges], 2nd ed., 33–60 (Baden-Baden: Nomos, 2018); Schietinger, ‘Auswirkungen des digitalen Wandels auf die Arbeitswelt’, 152, 154. M. I. Wolter, A. Mo¨nnig, M. Hummel et al., Wirtschaft 4.0 und die Folgen fu¨r Arbeitsmarkt und O¨konomie [Economy 4.0 and the Consequences for the Labour Market and the Economy], IAB Forschungsbericht [Research Report] 13/ 2016 (Nuremberg: IAB, 2016), 62; H. Jacobsen, ‘Strukturwandel der Arbeit im Tertiarisierungsprozess [Structural change of work in the tertiarisation process]’ in F. Bo¨hle, G. G. Voß, and G. Wachtler (eds.), Handbuch Arbeitssoziologie [Handbook of Sociology of Work], Vol. 1: Work, Structures and Processes, 233–62 (Berlin: Springer, 2010), 233–46. M. Hummel, F. Bernadt, M. Kalinowski et al., Qualifikations- und Berufsprojektion bis 2040 nach Bundesla¨ndern: Demografie und Strukturwandel pra¨gen weiterhin die regionale Entwicklung der Arbeitsma¨rkte [Qualifications and Occupations Projection up to 2040 by Federal State: Demographics and Structural Change Continue to Shape the Regional Development of the Labour Market], IAB Kurzbericht [Summary Report] 1/2021 (Nuremberg: IAB, 2021), https://doku.iab.de/kurzber/2021/kb2021-01.pdf, 4–7. J. M. Leimeister, S. Zogaj, and I. Blohm, ‘Crowdwork – digitale Wertscho¨pfung in der Wolke [Crowdwork – Digital value creation in the cloud]’ in C. Brenner (ed.), Crowdwork – zuru¨ck in die Zukunft [Crowdwork – Back to the Future], 9–41 (Frankfurt: Bund, 2014), 9, 17; I. Blohm, J. M. Leimeister, and S. Zogaj, ‘Crowdsourcing und Crowd Work – ein Zukunftsmodell der IT-gestu¨tzten Arbeitsorganisation? [Crowdsourcing and crowd work – A future model of IT-supported work organisation?]’ in W. Brenner and T. Hess (eds.), Wirtschaftsinformatik in Wissenschaft und Praxis – Festschrift fu¨r Hubert O¨sterle [Business Informatics in Science and Practice – Commemorative Publication for Hubert O¨sterle], 51–64 (Berlin: Springer Gabler, 2014), 51, 54. B. Waas, ‘Crowdwork in Germany’ in B. Waas, W. B. Liebman, A. Lyubarsky, and K. Kezuka (eds.), Crowdwork – A Comparative Law Perspective, 142–86 (Frankfurt: Bund, 2017), 142, 143–5.

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contracts with clients (e.g. Amazon Mechanical Turk, Helpling, Freelancer).46 Nevertheless, sometimes contractors receive a significant number of instructions and have to fulfil preconditions imposed by the platform.47 This raises doubt as to whether the client or the platform is the actual contractor.48 In any event, the orders are very limited and precise. The worker does not need any further instruction throughout the work process. So far, the number of persons working for such platforms has been only an estimation or extrapolation. A 2017 survey on behalf of the Federal Ministry of Labour and Social Affairs concluded that 0.27 per cent of the population worked in the gig economy, 0.61 per cent worked on platforms, and 0.85 per cent received work assignments via the Internet or an app.49 Most of them worked in non-digital jobs (e.g. cleaning, transportation, care) that were mediated via platform.50 A survey by the Leibniz Centre for European Economic Research also shows that the gig economy is not yet widespread.51 Up to now, we cannot consider the gig economy a new wave of Taylorism. Platform work has been a crucial issue in academic literature in Germany as in many countries. Contrary to the intensive discussion in labour law literature, to date there are only a few court decisions concerning digital platforms. The most important one is a judgment of the Federal Labour Court in December 2020 (see Section V.A).52 Nevertheless, digitalisation leads to more flexibilisation and decentralisation. Under these circumstances and even during computerisation, flexible types of employment become more relevant53 and atypical employment relationships increase. Employers have been starting to use employee-like persons and external service providers instead of employees.54 Consequently, costs are reduced, in particular the amount of social security contributions.55 Even though the number of personnel affected so far represents only a small part of the working population, this is already relevant and will become even more important.

IV THE PROTOTYPES

Analysis of the (potential) impact of digitalisation on the working world started about eight years ago. The Federal Ministry of Labour and Social Affairs published its White Paper in 2015, followed by a Green Paper in 2016. Deutscher Juristentag [German Legal Colloquium] put it on the agenda in 2016. All this was done with the participation of social partners, work scientists, and 46

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50 51

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W. Da¨ubler, ‘Digitalisierung und Arbeitsrecht [Digitisation and labour law]’, Soziales Recht Sonderausgabe [Social Law Special Issue] [SR-SE] (July 2016), 2–44, at 7–8; critical Waas, ‘Crowdwork in Germany’, 145–6. Compare for Uber’s business model Employment Tribunal: Judgment 28 October 2016, Aslam, Farrar and Others v. Uber BV, Uber London Ltd, Uber Britannia Ltd, Case 2202550/2015; California Labor Commission: Judgment 16 June 2015, Uber Technologies, Inc. v. Berwick, Case Number: CGC–15–546378. Compare for English labour law Uber BV et al. v. Aslam et al. [2018] EWCA Civ [2019] ICR 845. H. Bonin and U. Rinne, Omnibusbefragung zur Verbesserung der Datenlage neuer Bescha¨ftigungsformen [Omnibus Survey to Improve the Data Situation of New Forms of Employment], IZA Report 80 (Bonn: IZA [Institute of Labor Economics], 2017), 11. Ibid. J. Ohnemus, D. Erdsiek, and S. Viete, Nutzung von Crowdworking durch Unternehmen: Ergebnisse einer ZEWUnternehmensbefragung [Use of Crowdworking by Companies: Results of a ZEW Company Survey], BMASForschungsbericht [BMAS Research Report] 473 (Berlin: BMAS, 2016), 5–8. BAG: Judgment 1 December 2020, 9 AZR 102/20, NJW 2021, 1551; Previous instance: State Labour Court [Landesarbeitsgericht (LAG)] Mu¨nchen: Judgment 4 December 2019, 8 Sa 146/19, NZA 2020, 316. On computerization, Altmann et al., Vera¨nderung der Arbeitsbedingungen, 16; Sto¨hr, ‘Vertragsbindung und Flexibilita¨t im Arbeitsrecht’, 316. Lorig, ‘Werkvertra¨ge – Die neue Lohndumping Strategie?!’, 5; Mayer, ‘Rechtsprobleme bei der Personalpolitik mit Selbststa¨ndigen’, 213–14; Zachert, ‘Die Zersto¨rung des Normalarbeitsverha¨ltnisses’, 135. Hinrichs and Giebel-Felten, Die Entwicklung des Arbeitsmarktes 1962–2001, 21–4.

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labour lawyers. In 2019, the Federal Ministry of Labour and Social Affairs presented a mid-term report that evaluated responses to the Green Paper and outlined legislative actions. In 2020, the Ministry outlined key points for future regulations of platform work, namely facilitating the assessment of the employment status, strengthening collective bargaining, and including platform workers in the pension scheme.56 Although it had already started drafting legislative proposals, no significant changes have been adopted yet. The new government agreed to support the expected European legislation and set back national legislation. The national process has not touched or even changed the terminology and general structure of German labour and social security law. However, the Federal Ministry and social partners have identified a number of areas in need of action that concurrently address opportunities and risks of digitalisation. Those fields are: (A) enhancing employees’ personal autonomy over the time and place of their work while improving occupational safety; (B) employee data protection; (C) continuing education and prevention of job losses; and (D) improvement of codetermination and protection of social partnership. For the purpose of comparison, the evaluation of the present proposals takes the development during the period of computerisation into account. A Enhancing Employees’ Personal Autonomy Over the Time and Place of Their Work While Improving Occupational Safety The enhancement of employees’ personal autonomy through digitalisation is an opportunity, as technology allows for more location-independent working and is therefore a prototype that serves a different understanding of work–life balance.57 Although providing childcare while working at a home office is rather an illusion than a proper concept, a greater autonomy in terms of time and place creates more flexibility. This serves the changing attitude towards working life and the reconciliation of work and private life. The Federal Ministry of Labour and Social Affairs recorded in its mid-term report that it aims to introduce a right to home office and mobile work, a right to use digital enabling technology, and a right to a working time account as a longterm account that facilitates more autonomy of the employee over working time. Despite this ambitious agenda, no legal adjustments had been made to date. Even the positive experience during the Covid-19 pandemic has not accelerated the legislation yet. In retrospect, the technological change in the 1970s was the beginning of work with display screen units. Though the development of this technique led to the possibility of telework and thereby gave more time sovereignty to employees, it also created new risks for health and safety. Thus, the employer’s liability insurance associations (Berufsgenossenschaften) drew up new safety regulations.58 Social partners concluded collective agreements and regulated working hours, health checks, and other aspects of working with display screens.59 Works councils also tried to conclude agreements on work with display screen equipment, but were successful only if 56

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BMAS, Eckpunkte des BMAS – Faire Arbeit in der Plattformo¨konomie [Cornerstones of BMAS – Fair Work in the Platform Economy] (2020), https://bit.ly/431TcW3, 2. Krause, ‘Digitalisierung der Arbeitswelt – Herausforderungen und Regelungsbedarf’, B 20–1; also compare BMAS, Weißbuch Arbeit 4.0, 115. Safety rules for computer workstations in offices, Administrative Professions Organisation [Verwaltungsberufs genossenschaft (VBG)], ZH 1/618. E.g. Collective agreement on the introduction and use of computer-controlled text systems (in the printing industry), DGB Bundesvorstand [DGB Federal Board], Tarifbericht [Tariff Report] Nr. 3 (1978), 13–17; Collective agreement for workers and employees of the Deutsche Bahn on the work on display devices with explanations, DGB Bundesvorstand, Tarifbericht Nr. 7 (1982), Anlage [Annex] IV.

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the employer agreed voluntarily. They had no right of co-determination in this new technique in general or regarding health protection.60 Only if there was a change in the business (new work method, new production process) could the works council force the employer (by mediation) to conclude an agreement on the compensation of economic disadvantages.61 The statutory response to the technological change was not limited to labour law. Certainly, the European Community reacted to the new working conditions and adopted a directive on display screen equipment in 1990, which was implemented into German law in 1996. As a result, works councils gained a right of co-determination regarding health protection.62 Even though display screen equipment (and the Internet) enabled telework at this time, it took another twenty years until the legislator introduced a (first!) definition of telework in 2016 and clarified that all health and safety regulations for display screen equipment also apply to teleworkers. Digitalisation enhances the opportunities for homework and mobile work as effective mobile devices enable communication, data transfer, and data processing, reducing the need to work on premises for a significant number of activities. Nevertheless, before the Covid-19 pandemic, employers allowed working from home only to a very limited extent. Trade unions and labour lawyers have already called for a right to work from home and to mobile work. There are some collective agreements with trade unions or works councils, but they do not necessarily contain such a right. However, a legislative proposal for a right to home office prepared by the Federal Ministry of Labour and Social Affairs was not passed in the last legislative term because of the disagreement between the then governing parties. No new attempts to adopt such a right have been made in the current term. Yet, the role of the works councils was strengthened by the adoption of a right of co-determination in the organisation of mobile work.63 The improvement in the legal position of works councils is less than it appears as they were already involved in the relevant issues (e.g. health and safety protection, technical supervision, working time). Only during the Covid-19 pandemic were employers obligated by law to offer home-based work to reduce work-related contact for some months. The pandemic may have had a more disruptive effect than forty years of technological change.64 Concurrently, there is a need to strengthen occupational safety. The reform of the health and safety regulation improved the protection of employees in 2016, but compliance with the legal standard cannot be effectively inspected by the administration as there is no right to access private homes where remote work is conducted.65 Furthermore, the use of home offices during the Covid-19 pandemic demonstrated that the employer can have an economic interest that goes beyond health protection. This may involve saving office space and energy costs.66 Thus, it has to 60 61 62 63 64

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BAG: Judgment 6 December 1983, 1 ABR 43/81, NJW 1984, 1476. BAG: Judgment 26 October 1982, 1 ABR 11/81, AP BetrVG 1972 § 111 Nr. 10. BAG: Judgment 2 April 1996, 1 ABR 47/95, AP BetrVG 1972 § 87 Nr. 5. BGBl, I 2021, p. 1762. Compare C. Frodermann, P. Grunau, G.-C. Haas, and D. Mu¨ller, Homeoffice in Zeiten von Corona: Nutzung, Hindernisse und Zukunftswu¨nsche [Home Office in Times of Corona: Use, Obstacles and Wishes for the Future], IABKurzbericht [IAB Summary Report] 5/2021 (Nuremberg: IAB, 2021), https://doku.iab.de/kurzber/2021/kb2021-05.pdf, 5–6 for some of the reduced hurdles; C. Frodermann, P. Grunau, T. Haepp et al., Online-Befragung von Bescha¨ftigten: Wie Corona den Arbeitsalltag vera¨ndert hat [Online Survey of Employees: How Corona Has Changed Everyday Work], IAB-Kurzbericht 13/2020 (Nuremberg: IAB, 2020), https://doku.iab.de/kurzber/2020/ kb1320.pdf, 5. P. Aligbe, ‘Arbeitsschutzrechtliche Bestimmungen bei Telearbeitspla¨tzen [Occupational health and safety provisions for teleworkplaces]’, Arbeitsrecht Aktuell [ArbRAktuell] (2016), 132, 135. T. Lange, Krempelt Homeoffice den Bu¨romarkt um? [Is the Home Office Turning the Office Market Upside Down? ], Research-Publikation der DZ BANK AG, http://docs.dpaq.de/16691-dz_bank_research_b_romarkt.pdf, 4; Frankfurter Allgemeine, ‘Sind Bu¨ros ein Auslaufmodell? [Are offices becoming obsolete?]’, FAZ.NET (9 March 2020), https://bit.ly/44nodEY.

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be clarified under which conditions the employee can even reject the instruction to work from home. Finally, a home office reality can in fact lead to the risks of a functioning workplace being shifted to the employee, even though they are assigned to the employer by law. Thus, the scope of occupational accident insurance when working from home has been expanded.67 Furthermore, the social protection of employees must be adjusted accordingly. Regardless of home office and mobile work, digitalisation increases the employer’s access to the employee via mobile devices and the (expressed or unspoken) expectation of response. This blurs time boundaries of work. Despite the existing working time regulation, there is a need for adjustment to the specific requirements of home office and mobile work.68 The employers’ association but also labour lawyers call for flexibility.69 The rest period of eleven (uninterrupted) hours and its strict interpretation limits the opportunity for autonomy for both sides. They argue for a more flexible distribution of work during the day and the week. Thus, a slight reduction of the obligatory rest period to nine hours or a slight adaption of the maximum working hours could be a solution, even if the national legal system must stay in line with the EU Working Time Directive.70 In opposition, trade unions want to maintain the existing working time law and restrict the access of the employer. Some employers have already introduced a policy for workers to disconnect, which avoids blurring boundaries between working life and private life.71 Furthermore, there is an initiative at national and EU level for a mandatory right to disconnect.72 Regardless of the result, even an adjustment of working time law to the specific need for flexibility does not change the need for more effective control of working time law and relevant sanctions. German labour inspection is not effective as administrative control: inspections are rare, and fines are (comparatively) small. In addition, Germany has long been behind schedule with the implementation of the EU Working Time Directive regarding the recording of working time.73 Recently, the Federal Labour Court was implementing the directive through 67 68

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BGBl, I 2021, p. 1762. Krause, ‘Digitalisierung der Arbeitswelt – Herausforderungen und Regelungsbedarf’, B 20–1; also compare BMAS, Weißbuch Arbeit 4.0, 115. Confederation of German Employers’ Associations [Bundesvereinigung der Deutschen Arbeitgeberverba¨nde (BDA)], Neue Arbeit braucht verla¨sslichen Rahmen, nicht neue Regulierung! – Bewertung der Handlungsempfehlungen aus dem Zukunftsdialog des Bundesarbeitsministeriums: ‘Neue Arbeit, Neue Sicherheit’ [New Work Needs a Reliable Framework, Not New Regulation! – Evaluation of the Recommendations for Action from the Future Dialogue of the Federal Ministry of Labour: ‘New Work, New Security’] (Berlin: BDA, 2019), 2; German Association of Management Consultancies [Bundesverband Deutscher Unternehmensberater (BDU)], German Association for the Digital Economy [Bundesverband Digitale Wirtschaft (BVDW)], German Association of Dialoge Marketing [Deutscher Dialogmarketing Verband (DDV)], Joint Association of Communication Agencies [Gesamtverband Kommunikationsagenturen (GWA)], Association of German Women Entrepreneurs [Verband deutscher Unternehmerinnen (VdU)], Positionspapier der Verba¨nde BDU, BVDW, DDV, GWA, und VdU zum Arbeitszeitgesetz [Position Paper of the Associations BDU, BVDW, DDV, GWA, and VdU on the Working Hours Act] (2020), www.bvdw.org/themen/publikationen/detail/artikel/positionspapier-der-verbaende-bdu-bvdw-ddv-gwaund-vdu-zum-arbeitszeitgesetz/. Krause, ‘Digitalisierung der Arbeitswelt – Herausforderungen und Regelungsbedarf’, B 20–1, B 39–48; also compare BMAS, Weißbuch Arbeit 4.0, 116–27. M. Kaufmann, ‘Deutsche Konzerne ka¨mpfen gegen den Handy-Wahn [German corporations are fighting the mobile phone craze]’, SPIEGEL (17 February 2014), www.spiegel.de/karriere/erreichbar-nach-dienstschluss-massnahmender-konzerne-a-954029.html. European Parliament, 2019/2181(INL), European Parliament resolution of 21 January 2021 with recommendations to the Commission on the right to disconnect (2021). CJEU: Judgment 14 May 2019, Federacio´n de Servicios de Comisiones Obreras [CCOO] v. Deutsche Bank SAE, C-55/ 18, ECLI:EU:C:2019:402 at [60]; J. Heuschmid, ‘Neujustierung des Arbeitszeitrechts und des Systems der Arbeitszeiterfassung durch den EuGH [Readjustment of working time law and the system of recording working hours by the ECJ]’, Neue Juristische Wochenschrift [NJW] [New Legal Weekly] (2019), 1853–4 at, 1853.

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a broad interpretation of section 3, paragraph 1 of the Occupational Health and Safety Act (Arbeitsschutzgesetz).74 B Employee Data Protection The increasing use of automatic data processing, especially in HR management but also in administration, has necessitated a strong protection of personal data in general and in the employment relationship in particular.75 In 1977, the Data Protection Act (Bundesdatenschutzgesetz) was adopted at federal level. Though it covered the employment relationship, it lacked specific regulations for employees. The courts have filled this gap and have shaped general principles for data protection in the employment relationship, in line with the Data Protection Act and the basic rights in the German Constitution (Grundgesetz).76 According to this, a personnel information system was lawful as long as it was necessary for the employment relationship. The standing caselaw was the benchmark for the new regulation of data protection law in 2009.77 Prior to the development of case-law and in the absence of specific regulations, works councils tried to regulate specific data protection issues for the business unit and/or the company. In particular, section 87, paragraph 1 no. 6 of the Works Council Constitution Act (Betriebsverfassungsgesetz) grants a right of co-determination if the employer introduces a technical device that allows monitoring of the behaviour or performance of the employee. According to the case-law, the employer need not have the intention to monitor employees with the device; it is sufficient if it can be used for that.78 Jurisdiction extended this right to personnel information systems, which are able to process collected data even if such data are not collected automatically by the system but manually.79 The introduction of and any change to the data processing tool, including a new version of the software, is subject to co-determination. The General Data Protection Regulation of the European Union (GDPR) from 2016 adjusted the employee data protection. The German legislator has used the opening clause in Article 88 GDPR. Parliament has reformed the specific regulations for the employment relationship in the Data Protection Act and codified the existing principles of the case-law.80 The lawfulness of data processing related to the employment relationship has to be assessed mainly on the basis of the statutory permissions therein, in particular the permissions for data processing in the context of establishment, implementation, and termination of the employment relationship. In addition, data processing is lawful on the basis of permission in a collective agreement, which is in line with Article 88 GDPR. Even the employee’s consent is sufficient for lawful data processing, whilst such consent is rarely necessary as most processing is covered by statutory permissions.81 Besides, the employee’s consent can be considered involuntary and thus invalid, and can be withdrawn at any time.82 74 75

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BAG: Judgment 13 September 2022, 1 ABR 22/21. P. Gola, ‘Zur Entwicklung des Datenschutzrechts im Jahre 1982 [On the development of data protection law in 1982]’, NJW (1983), 915, 919. ¨ berwachung [Monitoring] Nr. 14; BAG: BAG: Judgment 11 March 1986, 1 ABR 12/84, AP BetrVG 1972 § 87 U Judgment 22 October 1986, 5 AZR 660/85, AP BDSG § 23 Nr. 2. BT-Drs. 16/13657, Recommendation of the Committee on Home Affairs on the Federal Government’s draft law (2009), 20. BAG: Judgment 9 September 1975, 1 ABR 20/74, BAGE 27, 256. ¨ berwachung [Monitoring] Nr. 9. BAG: Judgment 14 September 1984, 1 ABR 23/82, AP BetrVG 1972 § 87 U BT-Drs. 16/13657 (n. 77), 20. P. Gola in P. Gola and D. Heckmann (eds.), Bundesdatenschutzgesetz [Federal Data Protection Act], 13th ed. (Mu¨nchen: C. H. Beck, 2019), § 26 para. 135. Compare BAG: Judgment 11 December 2014, 8 AZR 1010/13, BAGE 150, 195.

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In 2020 the Federal Ministry of Labour and Social Affairs installed an advisory board discussing the necessity and the potential content of a new data protection law. This legislative project is controversial among the social partners. While employers’ associations do not recognise a need for an employee data protection law,83 trade unions are calling for new legislation.84 Therefore, the German Trade Union Confederation has even published a draft for an employee data protection law.85 Given the new challenges imposed by AI and the existing complexity of data protection law, further adjustments are likely to be necessary to meet new challenges, although data protection law is flexible and allows for adaptions. In January 2022, an independent and multidisciplinary expert group presented recommendations for the improvement of employee data protection.86 It calls for a fair balance of employees’ and employers’ interests with regard to their fundamental right, legal security, and effective legal enforcement. For this reason, it strongly recommends regulating the application of AI in the employment context. Besides the proposed regulation on harmonised rules for AI is a European action for the protection of fundamental rights.87 It includes AI systems used for the selection and promotion of natural persons in a working context under the rules for high-risk AI systems. C Continuing Education and Prevention of Job Losses Political actors as well as social partners recognise the need for vocational (re-)training and education caused by technological changes – this has been the case since the late 1970s and especially in times of digitalisation. During computerisation, this need was answered by the legislation but also by social partners. At the federal level, the Vocational Training Act (Berufsbildungsgesetz) provided a general framework for vocational training, whereas the Employment Promotion Act (Arbeitsfo¨rderungsgesetz) obliged the Federal Employment Agency to promote continuing education and (re-)training. Though (re-)training primarily strives to prevent the loss of jobs, it was also regarded as a way to reduce unemployment rates88 and has been increasingly used since the mid-1970s.89 The federal states also used

83 84

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BDA, Neue Arbeit braucht verla¨sslichen Rahmen, nicht neue Regulierung!, 2. German Trade Union Confederation [Deutscher Gewerkschaftsbund (DGB)], Beschlu¨sse des 21. Ordentlichen DGB Bundeskongress v. 13. – 17. Mai 2018 [Resolutions of the 21st Ordinary DGB Federal Congress v. 13–17 May 2018] (2018), 49. DGB, Entwurf eines Bescha¨ftigtendatenschutzgesetzes [Draft of an Employee Data Protection Law] (2022), www .dgb.de/uber-uns/dgb-heute/recht/++co++d8c37b52-88e2-11ec-acce-001a4a160123. BMAS, Bericht des unabha¨ngigen, interdisziplina¨ren Beirats zum Bescha¨ftigtendatenschutz [Report of the Independent, Interdisciplinary Advisory Board on Employee Data Protection] (January 2022), https://bit.ly/436Tw69. Proposal for a regulation of the European Parliament and of the Council laying down harmonised rules for AI (Artificial Intelligence Act) and amending certain union legislative acts, COM (2021) 206 final. D. Blaschke, H.-E. Plath, and E. Nagel, ‘Konzepte und Probleme der Evaluation aktiver Arbeitsmarktpolitik am Beispiel Fortbildung und Umschulung [Concepts and problems of evaluating active labour market policy using the example of further training and retraining]’, MittAB (1992), 381–405, at 381; E. Sauter, ‘Berufliche Weiterbildung und Arbeitslosigkeit: Entwicklung, Probleme und Perspektiven o¨ffentlich gefo¨rderter beruflicher Weiterbildung [Vocational further training and unemployment: Development, problems and perspectives of publicly funded further vocational training]’, Berufsbildung in Wissenschaft und Praxis [BWP] [Vocational Training in Science and Practice] (1982), 22, 22–3. Compare D. Garlichs and F. Maier, ‘Die arbeitsmarktpolitische Wirksamkeit der beruflichen Weiterbildung [The effectiveness of vocational training in terms of labor market policy]’ in F. W. Scharpf, M. Brockmann, M. Groser, F. Hegner, and G. Schmid (eds.), Aktive Arbeitsmarktpolitik: Erfahrungen und neue Wege [Active Labour Market Policy: Experiences and New Approaches] (Frankfurt: Campus, 1982), 11; A. Schmid, S. Kro¨mmelbein, W. Klems, G. Gaß, and S. Angerhausen, ‘Neue Wege der Arbeitsmarktpolitik fu¨r Langzeitarbeitslose [New ways of labor market policy for the long-term unemployed]’, MittAB (1992), 323–32, at 325.

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their competence for education related to unemployment. They boosted trainings and introduced new apprenticeships and university courses (in particular on data processing).90 Social partners not only concentrated on protection against unfair dismissals (through collective agreements for corporate rationalisation measures91 or reduction of working hours92) but also concluded agreements on education and training of employees. These collective agreements obliged employers to actively take care of further training of employees, not only in the case of downsizing.93 Besides, the Works Council Constitution Act (Betriebsverfassungsgesetz) was amended by section 92. Works councils have a right to information and consultation on workforce planning and training. However, (re-)training and its success always depend, firstly, on the training strategy of the employer (including educational leave and finance) and, secondly, on the willingness of the employees to take part in the education.94 If it results in a new job, the employee also has to be ready to work in that position later on.95 Thus, the success of those agreements and the (re-)training depend on the motivation of the employees. In conclusion, overcoming disruptive technological changes depends on the attitude of both employer and employee. The participation of the works councils did not change that significantly. In 2019, the Federal Ministry drew up a National Skills Strategy (Nationale Weiterbildungsstrategie) in cooperation with the federal states and social partners. It aims at a review and at specific measures for all participants and strives for new opportunities for workers, jobseekers, and companies within the changing working world. Even before that, the Act on Qualification Opportunities (Qualifizierungschancengesetz) introduced a right to qualification consultation that has to be fulfilled by the employment agency. It also established (re-)trainings subsidised by the state (regardless of type and size of the company). Continuing education should start as a preventive measure before actual or impending unemployment. It should be determined not by the acquisition of certificates but by individual competencies. Following the National Skills Strategy, the parliament adopted the Act on Continuing Education (Arbeit-von-morgen-Gesetz) in May 2020, which provides for strengthening of vocational training in and for enterprises but also for individual competencies.96 Unemployed persons have a right to gain a professional qualification (with respect to personal aptitude and labour market). The Act raises state subsidies for qualification, extends the possibility to grant bonus payments for completed professional qualifications, facilitates the application for (re-)trainings, and aims to expand the use of transfer companies for qualification.97 90

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For details, see J. Schlo¨mp, ‘Arbeitnehmerweiterbildung in Nordrhein-Westfalen – Zur verfassungsrechtlichen Kontrolle des gesetzgeberischen Gestaltungs- und Beurteilungsermessens [Further training for employees in North Rhine-Westphalia - On the constitutional control of the legislative discretionary design and assessment]’, NZA (1986), 814–6 at, 814; see also D. Blume, T. Clauß, S. Deyle, and D. Meyer, ‘Die derzeitige Struktur des Bildungsangebots im Bereich der Datenverarbeitung [The current structure of the educational offer in the field of data processing]’, BWP (1977), 18–21, 19. F. Bohle and B. Lutz, Rationalisierungsschutzabkommen [Rationalisation Protection Agreement] (Munich: ISF, 1974), 16–18; Wank, in Mu¨HdB-ArbR, § 110 para. 74. R. Bispinck, ‘60 Jahre Tarifvertragsgesetz – Stationen der Tarifpolitik von 1949 bis 2009 [60 years of the Collective Bargaining Act - Stations of collective bargaining from 1949 to 2009]’ in R. Bispinck and T. Schulten (eds.), Zukunft der Tarifautonomie 60 Jahre Tarifvertragsgesetz: Bilanz und Ausblick [Future of Collective Bargaining Autonomy 60 Years of the Collective Bargaining Agreement Act: Balance Sheet and Outlook], 20–35 (Hamburg: VSA, 2010), 26. V. Rieble, ‘Qualifizierungstarifvertra¨ge [Qualification collective agreements]’ in H. Oetker, U. Preis, and V. Rieble (eds.), 50 Jahre Bundesarbeitsgericht [50 Years Federal Labour Court], 831–58 (Munich: C. H. Beck, 2004), 837–8. ¨ berlegungen [Personal responsiG. Ku¨hn, ‘Eigenverantwortung, Motivation, Lernverhalten und Lernleistung – U bility, motivation, learning behavior and learning performance – Considerations]’, ZfB (1973), 25–8, at 26. Rieble, ‘Qualifizierungstarifvertra¨ge’, 847. BGBl. I 2020, 1044. BT-Drs. 19/17740 – reasoning of the Draft law of the CDU/CSU and SPD parliamentary groups (2020), 29, 46, 51.

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Simultaneously, the European social partners have concluded a framework agreement on digitalisation.98 It has a procedural approach and aims at a consensual transition undertaken and accounted by social partners. The agreement strives for continuous learning provided by the companies to meet the need for upskilling and reskilling of employees. The process includes a joint exploration of opportunities and challenges, a joint assessment and adoption of strategies for digital transformation, as well as a joint adoption of suitable measures and a monitoring procedure. D Protection of Social Partners and Improvement of Co-determination Social partners are important and publicly respected actors. They play an important part in the discussion of the consequences of technological change and its impact on the working world at national level. The Federal Ministry of Labour and Social Affairs (rightly) states the need to strengthen the scope of collective agreements, but these proposals are not influenced by digitalisation and will not be addressed in this chapter. This makes the necessary access of trade unions to employees, guaranteed by Article 9, paragraph 3 of the German Constitution, all the more important.99 The manner of access to employees is concretised in the case-law, but the Federal Ministry intends to provide trade unions with digital access to the workforce in addition to this.100 The federal employers’ association disagrees and refers to the case-law that has already allowed access to employees via email.101 This requires that the trade union has a mailing list of employees or may use the employers’ mailing list. It is most likely that this aspect will not be regulated by legislation but left to the courts for concretisation and for the social partners to conclude agreements.102 Digitalisation is not only changing working life; at the same time, it is a risk and an opportunity for employee representation by works councils. The increasing decentralisation through mobile and remote work is resulting in a cooperation that is less close in comparison to collaboratively working in an establishment. However, German works council law is adaptable. It uses the reference value ‘Betrieb’ (establishment). Even before digitalisation, it was necessary to allocate sales representatives, customer service workers, or other mobile workers to premises in order to give the works council the necessary competence. The concept of Betrieb in German law has been flexible enough to cover the development during the last hundred years and does not need to be adjusted to digitalisation. To ensure effective representation of employees in respect of changes at the workplace and in work processes, it is advisable to extend the existing right of co-determination to include onerous burdens on employees caused by changes in jobs, operations, or the working environment. Yet, in order to grant works councils such a right of co-determination, the changes must be 98

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European Social Partners Framework Agreement on Digitalisation (22 June 2020), https://ec.europa.eu/social/main .jsp?catId=521&langId=en&agreementId=5665. BVerfG: Judgment 14 November 1995, 1 BvR 601/92, BVerfGE 93, 352; BAG: Judgment 28 February 2006, 1 AZR 460/04, BAGE 2007, 137 at [31]. BMAS, Ergebnisbericht – Handlungsempfehlungen aus dem Zukunftsdialog ‘Neue Arbeit – Neue Sicherheit’ [Result Report – Recommendations for Action from the Future Dialogue ‘New Work – New Security’] (2019), 29; SPD, ¨ NDNIS 90/DIE GRU ¨ NEN, and FDP, Mehr Fortschritt wagen [Dare More Progress], Koalitionsvertrag BU [Coalition Agreement], https://bit.ly/3rhMgXX, 71. BDA, Neue Arbeit braucht verla¨sslichen Rahmen, nicht neue Regulierung!, 2; BAG: Judgment 20 January 2009, 1 AZR 515/08, BAGE 129, 145. E.g. Social partner agreement on digital access rights between German Rubber Industry Employers’ Association [Arbeitgeberverband der Deutschen Kautschukindustrie; ADK] and the Industrial Union Mining, Chemical and Energy [Industriegewerkschaft Bergbau, Chemie und Energie (IGBCE)] (22 April 2021), https://bit.ly/3D7mJD7.

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in obvious contrast to the results of research on humane working conditions (section 91 Works Council Constitution Act, Betriebsverfassungsgesetz). An extension to all conflicts over humane working conditions would allow works councils a more active role.103 Furthermore, the election and decision-making of works councils could profit from digitalisation, the latter in particular through digital sessions suitable for the management or board of the company. However, trade unions opposed this because the employer might generally restrict travel for meetings on grounds of cost. The Covid-19 pandemic led to an amendment of the Works Council Constitution Act that temporarily allowed video and telephone conferencing for decision-making (section 129 Works Council Constitution Act). The meetings are not to be recorded, and it must be ensured that no third party can take notice of them. The Federal Ministry of Labour and Social Affairs regarded the digitalisation of works council sessions as reasonable and – following a modernisation of the Working Council Act – it is now permanently established in law.104 Additionally, the Act simplifies works council elections and enables the conclusion of company agreements using a qualified electronic signature.105

V ‘UBERISATION’

Discussion about the legal position of workers in the gig or platform economy started in 2015 and covers three main aspects: (A) the inclusion of workers in the term ‘employee’ and, thus, in the protection provided by labour law; (B) minimum standards through collective agreements; and (C) legislative protection through genuine minimum standards or additional social security. A Labour Protection of Platform Workers as Employees? Persons who render services for platforms or use them as brokers can have varying working conditions. It could be their side job or after-school job; it could be their main job. Sometimes, full inclusion in labour law protection has been encouraged.106 However, the varying working conditions and the lack of personal dependency do not justify this approach. The Federal Ministry of Labour and Social Affairs has not intended to change the basic terms of labour law, but it strives for a tailor-made addition to the existing protection for self-employed persons without staff and for economically dependent workers.107 In its first judgment related to platform workers, the Federal Labour Court has confirmed the individual and case-related approach. Therefore, it ruled that the classification of platform workers as employees depends on individual circumstances.108 It is not the designation but the factual circumstances of the case that are crucial in order to prevent circumvention of mandatory labour law. It is significant for platform workers that they do not have a duty to work but they do conclude a framework agreement. Every assignment is a service contract within this framework 103 104 105 106

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See Krause, ‘Digitalisierung der Arbeitswelt – Herausforderungen und Regelungsbedarf’, B 60–1. BGBl. I 2021, 1762. BMAS, Ergebnisbericht, 30. Beschlu¨sse des 71. DJT, Abteilung Arbeits- und Sozialrecht, Verhandlungen des 71. Deutschen Juristentages [Resolutions of the 71st DJT, Department of Labor and Social Law, proceedings of the 71st German Lawyers’ Congress], vol. II/2 (Munich: C. H. Beck, 2016), L 185; H. Hanau, ‘Scho¨ne digitale Arbeitswelt? [Beautiful digital working world?]’, NJW (2016), 2613–17, at 2615. Compare BMAS, Weißbuch Arbeit 4.0, 175, 176 (for a regulation based on the protection of home work); BMAS, Ergebnisbericht, 30 (for an inclusion of platform workers in statutory occupational accident and pension insurance as well as more responsibility of platforms for working conditions). BAG: Judgment 1 December 2020, 9 AZR 102/20, NJW 2021, 1551.

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contract.109 This does not regularly constitute an employment relationship, unless the working conditions indirectly create a duty to work and a personal dependency.110 The volume of work and the (ir)regularity of work do not indicate such duty; neither does working for more than one principal.111 Rating systems can create a duty to work, but there is no such duty if the assessment is limited to the quality of work and customer satisfaction.112 Only if the rating system or the work organisation provides an incentive for continuous work can a duty to work be assumed.113 If the platform uses shift schedules, which only contribute to an organised cooperation, this is not sufficient for the assumption of an employment relationship. However, if the platform pays a bonus for regular work or gives access to more profitable orders only to regularly working persons or – in contrast – deducts payment or blocks the account of irregular working persons, there is an obligation to work and an employment relationship.114 Furthermore, the business model of the platform should be taken into account. If the platform (e.g. for drivers and couriers) contracts itself with restaurants and/or offices for service, it needs a sufficient workforce at all times.115 Thus, at least a significant part of the workers have to render services on a regular basis. Consequently, it is very likely that the platform needs to engage a group of regular employees with a group of changing self-employed persons. The Federal Labour Court, however, based its decision on three arguments: (1) the platform account of the worker was personalised and not transferable; (2) there were almost no qualification requirements for the tasks; and (3) only full-time employment led to a decent income.116 Such an approach is too broad and includes a significant number of workers who are not really obliged to work, even though they are not free of incentives to work. This will include a significant number of workers within the scope of labour law who were previously considered self-employed persons. In future decisions the court could refine and complement its case-law on framework agreements. A single contract within a framework agreement can be a service contract but also an employment contract. Usually, the principal will not give any instructions during execution as an order must be precise and can be carried out without further instructions. The relevant aspect for classification as an employment contract is the control of the principal and, in particular, the integration of the worker in the principal’s organisation.117 To date, German courts have not taken GPS tracking into account as an indicator.118 Indeed, GPS tracking is not a clear indicator for an employment relationship. Although the principal can track where the person providing 109 110 111

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As example BAG: Judgment 1 December 2020, 9 AZR 102/20, NJW 2021, 1551. BAG: Judgment 1 December 2020, 9 AZR 102/20, NJW 2021, 1551 Rn. 42–3. Compare BAG: Judgment 14 February 1974, 5 AZR 298/71, AP BGB § 611 Abha¨ngigkeit [Dependency] Nr. 12 at [II.3.a]. See C. Schubert, ‘Crowdworker – Arbeitnehmer, arbeitnehmera¨hnliche Person oder Selbsta¨ndiger [Crowdworker – Employee, employee-like person or self-employed]’, RdA (2020), 248–55 at, 250. BAG: Judgment 1 December 2020, 9 AZR 102/20, NJW 2021, 1551 Rn. 36, 49–50. Compare J. Pacha, Crowdwork (Munich: ZAAR, 2018), 165; C. Schubert, ‘Bescha¨ftigung durch Online-Plattformen im Rechtsvergleich [Employment through online platforms in a legal comparison]’, ZVglRWiss (2019), 341–74 at, 369–70; Schubert, ‘Crowdworker’, 250. Schubert, ‘Bescha¨ftigung durch Online-Plattformen’, 369–70; Schubert, ‘Crowdworker’, 250. BAG: Judgment 1 December 2020, 9 AZR 102/20, NJW 2021, 1551 Rn. 36, 46–8. For this criterion BAG: Judgment 20 September 1994, 5 AZR627/93, AP BGB § 611 Abha¨ngigkeit [Dependence] Nr. 73; BAG: Judgment 7 February 2007, 5 AZR 270/06, AP BGB § 611 Abha¨ngigkeit [Dependency] Nr. 118 at [13]; U. Preis, in R. Mu¨ller-Glo¨ge, U. Preis, and I. Schmidt (eds.), Erfurter Kommentar zum Arbeitsrecht [Erfurt Commentary on Labour Law], 20th ed. (Munich: C. H. Beck, 2020), § 611a para. 46; Temming, in Mu¨HdB-ArbR, § 18 para. 35; Schubert, ‘Crowdworker’, 251–52 Compare LAG Mu¨nchen: Judgment 4 December 2019 – 8 Sa 146/19; different Cours de Cassation, Chambre sociale: Judgment 28 November 2018, 17–20.079, arreˆt no. 1737, ECLI:FR:CCASS:2018:SO01737; Cours de Cassation, Chambre sociale: Judgment 4 March 2020, 19–13.316, arreˆt no. 374, ECLI:FR:CCASS:SO00374.

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service for them is located, they cannot issue instruction or exercise control because of that, and it does not indicate whether the person is integrated into the business organisation.119 Rather, it is designed for use by customers who want to trace the arrival of a courier or driver, for example. Of greater significance is the obligation to wait for orders at a specific location; this can result in integration into the platform’s business and be more than a mere coordination of a number of self-employed persons. Finally, it has to be taken into account whether the worker is obliged to perform the contract personally or whether he/she can deploy their own personnel. An employment contract always presumes personal performance.120 German labour law literature predominantly does not regard platform workers as employees.121 They are employee-like persons if they work almost without staff mainly for one principal and earn most of their income through those orders. A side job is not enough. Not every platform worker will meet those criteria; those that don’t remain self-employed persons for the legal system.122 The future legal situation for platform workers will be influenced by the proposed directive on improving working conditions in platform work.123 Article 4 of the proposed directive contains a legal presumption of employment status; however, it is a rebuttable presumption that will not change the relevant criteria within the member states but will facilitate the enforcement of labour law. At least, the promotion of transparency, fairness, and accountability of algorithmic management and transparency of platform work for social security institutions is an important step forward for platform workers. B Organising Platform Workers and the Right to Conclude Collective Agreements Trade unions, especially the trade union of the metal industry (IG Metall), are taking initiatives for the social protection of platform workers. Traditionally, trade unions are focussed on employees, as they have traditionally limited themselves to organising them. Only in some branches, such as the media sector, do trade unions organise employees as well as employee-like persons. However, IG Metall changed its statutes and extended its organisation to employee-like persons (see Section II.C) in 2015;124 it can, thus, conclude collective agreements for workers in the platform economy. Among its activities, IG Metall collects information and runs a website, Fair Crowd Work, which gives legal information and assessments of platforms. It also organises workshops for workers in cooperation with platforms and concluded an agreement with the German association for platform work (Deutscher Crowdworking Verband) on the establishment of an ombuds office for workers. 119 120 121

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123 124

Schubert, ‘Crowdworker’, 252. See BAG: Judgment 12 December 2001 – 5 AZR 253/00, NZA 2002, 787. Da¨ubler, ‘Digitalisierung und Arbeitsrecht’, 32, 37–8; O. Deinert, ‘Neuregelung des Fremdpersonaleinsatzes im Betrieb [New regulation of the use of external personnel in the company]’, RdA (2017), 65–82, at 68; Krause, ‘Digitalisierung der Arbeitswelt – Herausforderungen und Regelungsbedarf’, B 105; C. Schubert, ‘Neue Bescha¨ftigungsformen in der digitalen Wirtschaft – Ru¨ckzug des Arbeitsrechts? [New forms of employment in the digital economy – Withdrawal of labour law?]’, RdA (2018), 200–6 at, 203–4; Schubert, ‘Crowdworker’, 252; Waas, ‘Crowdwork in Germany’, 150–7. K. Bourazeri, ‘Neue Bescha¨ftigungsformen in der digitalen Wirtschaft am Beispiel soloselbststa¨ndiger Crowdworker [New forms of employment in the digital economy using the example of self-employed crowdworkers]’, NZA (2019), 741–6, at 745; Da¨ubler, ‘Digitalisierung und Arbeitsrecht’, 32, 37–8; Krause, ‘Digitalisierung der Arbeitswelt – Herausforderungen und Regelungsbedarf’, B 105; Schubert, ‘Neue Bescha¨ftigungsformen in der digitalen Wirtschaft’, 204; Schubert, ‘Crowdworker’, 252; Waas, ‘Crowdwork in Germany’, 150–7. COM (2021) 762 final. IG Metall board, Satzungsa¨nderungen auf dem 23. Ordentlichen Gewerkschaftstag v. 18.–24. Oktober 2015 [Amendments to the Articles of Association at the 23rd Ordinary Union Congress of 18–24 October 2015] (2015), 14; the changes came into effect on 1 January 2016.

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From a legal point of view, the right to collective bargaining is very controversial. German law equally protects employees and employee-like persons through the constitutionally guaranteed freedom to form a coalition, which includes the right to collective bargaining.125 This is specified in section 12a of the Collective Agreements Act (Tarifvertragsgesetz). Even though there are only a few collective agreements for employee-like persons,126 they are in principle legal and valid. However, it is disputed whether the European ban on cartels in Article 101 of the Treaty of the Functioning of the EU (TFEU) affects such collective agreements. Some lawyers presume that the right to collective bargaining in Article 28 of the Charter of Fundamental Rights in the EU (CFREU) covers such workers and creates an exemption from the cartel ban.127 For the same result, some refer to Articles 15 and 21 of the CFREU.128 However, the Court of Justice of the EU (CJEU) has not extended its jurisdiction over collective agreements of employees to economically dependent workers (employee-like persons) yet.129 Furthermore, the CJEU has in the past gradually eliminated national exemptions from the ban on cartels. That complicates the recognition of further exemptions, but Article 101, paragraph 3 of the TFEU nominates criteria for the inapplicability of the ban on cartels. The regulation does not focus on working conditions and social protection, but Article 3, paragraph 3 of the TEU defines the EU as a social market economy that works for social progress and promotes social justice and social protection. Since Article 101, paragraph 3 TFEU reflects the other aspects of Article 3, paragraph 3 TEU in its wording, it cannot disregard the further objectives of the EU as a supranational organisation.130

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BAG: Judgment 15 November 1963, 1 ABR 5/63, AP TVG § 2 Nr. 14; BAG: Judgment 15 February 2005, 9 AZR 51/04, AP TVG § 12a Nr. 6. B. Reinecke and S. Rachor, in W. Da¨ubler (ed.), Tarifvertragsgesetz [Collective Bargaining Act], 4th ed. (BadenBaden: Nomos, 2016), § 12a para. 9; Wissenschaftlicher Dienst des Bundestages [Research Service of the Bundestag], Tarifvertragliche Regelungen fu¨r arbeitnehmera¨hnliche Personen nach dem Tarifvertragsgesetz [Collective Agreement Regulations for Employees Similar to the Collective Agreement Law] (2016) WD 6 – 3000 – 123/16, p. 6. E. Brameshuber, ‘Kollektivvertra¨ge fu¨r Arbeitnehmera¨hnliche [Collective agreements for similar employees]’ in E. Brameshuber, M. Friedrich, and B. Karl (eds.), Festschrift Franz Marhold, 433–46 (Vienna: Manz, 2020), 437; P. Loi, ‘Independent workers between labour law protection and competition law’ in E. Brameshuber, M. Friedrich, and B. Karl (eds.), Festschrift Franz Marhold, 625–36 (Vienna: Manz, 2020), 635; also with reference to the actually changed world of work (for Art. 5 European Social Charter) ECSR: Decision on the merits 12 September 2018, ICTU v. Irish Competition Authority, 123/2016 at [37]. C. Schubert, ‘Tarifvertra¨ge zum Schutz von Crowdworkern trotz Kartellverbot? [Collective agreements to protect crowdworkers despite the ban on cartels?]’ in O. Deinert, J. Heuschmid, M. Kittner, and M. Schmidt (eds.), Demokratisierung der Wirtschaft durch Arbeitsrecht: Festschrift fu¨r Thomas Klebe [Democratization of the Economy Through Labour Law: Festschrift for Thomas Kleber], 351–6 (Frankfurt: Bund, 2018), 355–6. CJEU: Judgment 4 December 2014, FNV, C-413/13, ECLI:EU:C:2014:2411 at [31]; assuming a restriction to bogus self-employed, M. Fuchs, ‘Tarifvertra¨ge Selbststa¨ndiger und europa¨isches Wettbewerbsrecht [Collective agreements for self-employed people and European competition law]’, Zeitschrift fu¨r europa¨isches Sozial- und Arbeitsrecht [ZESAR] [Journal for European Social and Labour Law] (2016), 297–306, at 302–3; J. Goldmann, ‘Tarifvertra¨ge fu¨r selbsta¨ndige Dienstleistungsanbieter als Verstoß gegen EU-Kartellrecht? [Collective agreements for self-employed service providers as a violation of EU antitrust law?]’, Europa¨ische Zeitschrift fu¨r Arbeitsrecht [EuZA] [European Journal of Labour Law] (2015), 509–18, at 517–8; V. Rieble, ‘EuGH: Kartellkontrolle von Tarifvertra¨gen [ECJ: Antitrust control of collective agreements]’, Zeitschrift fu¨r Wettbewerbsrecht [ZWeR] [Journal of Competition Law], 14(2) (2016), 165–77, at 169–76; different opinion, F. Bayreuther, Sicherung der Leistungsbedingungen von (Solo-)Selbsta¨ndigen, Crowdworkern und anderen Plattformbescha¨ftigten [Securing the Performance Conditions of (Solo-)Self-Employed Persons, Crowd Workers and Other Platform Employees] (Frankfurt: Bundg, 2018), 97; J. Heuschmid and D. Hlava, ‘Keine Anwendung des europa¨ischen Kartellrechts auf TV, die Regelungen fu¨r Selbststa¨ndige enthalten [No application of European antitrust law to TV that contains regulations for the self-employed]’, AuR (2015), 193–5, at 194–5. C. Schubert, ‘Sicherung der Mindestvergu¨tung von Soloselbsta¨ndigen in den Grenzen des Unionsrechts [Securing the minimum remuneration of solo self-employed within the limits of Union law]’ in W. Brose, S. Greiner, C. Rolfs et al. (eds.), Grundlagen des Arbeits- und Sozialrechts: Festschrift fu¨r Ulrich Preis [Basics of Labour and Social Law: Festschrift for Ulrich Preis], 1211–24 (Munich: C. H. Beck, 2021); compare also I. Lianos, N. Countouris, and V. de

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In August 2020, the European Commission launched an initiative on the collective bargaining of self-employed persons. It aims to identify vulnerable groups of self-employed persons who are not covered by the prohibition of cartels. The Commission has published draft guidelines on the application of EU competition law to collective agreements regarding the working conditions of solo self-employed persons.131 It aims to clarify that Article 101 of the TFEU does not apply to collective agreements of solo self-employed persons who (1) are economically dependent, (2) work side-by-side with employees, or (3) are platform workers. Additionally, the Commission has clarified its enforcement priorities. It will not take up cases if collective agreements for solo self-employed persons are pursuant to national or EU legislation. Such guidelines are fragile as they are not binding and cannot prevent a different interpretation by the CJEU. A strong legal response is needed for the improvement of the EU as a social market economy and for the recognition of social rights. C Legislative Protection by Genuine Minimum Standards or Additional Social Security Legislative responses are still under debate. To the extent that platform workers are not employees, the protection of economically dependent workers has to be complemented by additional minimum standards, especially for wages.132 Such workers are personally independent and organise their work on their own terms. Thus, many labour law regulations are inappropriate as they presume integration in the business organisation of an employer. Such workers must take care of personal insurance that has to be financed. Statutory minimum standards will also reduce wage competition between employees and economically dependent workers. However, the freedom of services within the EU (Article 56 TFEU) and the Service Directive (Article 16 Directive 2006/123/EC) will not allow for statutory restrictions in national law that protects solo self-employed persons who are not economically dependent.133 The Federal Ministry of Labour and Social Affairs also aims to provide social insurance coverage for the self-employed without staff (solo self-employed) in case of illness and old age. Although these plans have not been implemented in the last legislative period, it is likely that the self-employed will be included in social insurance for old age in this period lasting until September 2025. The inclusion of the self-employed is a widespread political objective. Health insurance at fair contributions and basic pension insurance can represent significant

131

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Stefano, ‘Re-thinking the competition law/labour law interaction: Promoting a fairer labour market’, European Labour Law Journal [ELLJ], 10(3) (2019), 291–333, at 324–31; for an analogy to Art. 101 Abs. 3 TFEU, F. J. Sa¨cker, ¨ berlegungen zur Anwendung von Art. 101 Abs. 3 AEUV [Solo self‘Soloselbsta¨ndige und Wettbewerbsrecht – U employed and competition law – Considerations on the application of Article 101 (3) TFEU]’ in G. Bachmann, S. Grundmann, A. Mengel, and K. Krolop (eds.), 1435–45 Festschrift fu¨r Christiane Windbichler (Munich: C. H. Beck, 2020), 1433, 1442–5. Communication from the Commission – Approval of the content of a draft for a Communication from the Commission – Guidelines on the application of EU competition law to collective agreements regarding the working conditions of solo self-employed persons, 2022/C 123/01. Compare, for a supplement of the Minimum Wage Act, J. Heuschmid and D. Hlava, Entwurf eines Gesetzes u¨ber Mindestentgeltbedingungen fu¨r Selbsta¨ndige ohne Arbeitnehmer [Draft Law on Minimum Wage Conditions for the Self-Employed without Employees], HSI-Working Paper Nr. 12 (2018), www.boeckler.de/pdf/p_hsi_wp_12.pdf; for minimum wages see also O. Deinert, E. Maksimek, and A. Sutterer-Kipping, Die Rechtspolitik des Sozial- und Arbeitsrechts [The Legal Policy of Social and Labour Law] (Frankfurt: Bund, 2019), 368–70; for industry-specific remuneration rates, Bayreuther, Sicherung der Leistungsbedingungen, 38–45. Schubert, ‘Sicherung der Mindestvergu¨tung von Soloselbsta¨ndigen’; compare also F. Bayreuther, ‘Das Architektenhonorar-Urteil des EuGH und die Absicherung der Leistungsbedingungen wirtschaftlich schwacher Selbsta¨ndiger [The ECJ’s ruling on architects’ fees and safeguarding the performance conditions of economically weak self-employed]’, ZESAR (2020), 99–105, at 102–3.

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social progress for self-employed platform workers. To date, competition and insurance costs have prevented comprehensive social security for such workers. In the future, the rise of the platform economy and the associated global competition with other self-employed persons will force them even more to avoid these costs. Many platform workers cannot afford additional social security against unemployment and for old age. Health insurance contributions are not calculated on the basis of the actual income of the self-employed but on the basis of a notional minimum income, resulting in a contribution rate that is already too high for many self-employed persons. By contrast, the contribution to the statutory pension insurance is income-dependent, but the low income of the self-employed will result in pensions below the level of the basic income. Thus, contributions to the pension insurance are pointless for many solo self-employed, as long as they receive a tax-based basic allowance.134 Given the increasing importance of atypical forms of employment, new forms of social security must be established. It must be taken into account that the existing system complicates the transition from self-employment to employment,135 although this is common practice.136 In particular, the dualism of employment with full social protection and self-employment without mandatory social security must be reconsidered since the underlying assumptions are no longer viable.137 The self-employed can be in need of social security. On the other hand, this also applies to the constitutional justification of the burden of social security contributions on employees, which no longer seems tenable in view of the declining level of benefits, especially in terms of pension insurance.138 Solo self-employed persons could be included in the statutory pension insurance, but this might not be sufficient. There is a general need for adequate pension insurance that mainly must prevent the need for a publicly financed basic security. This calls for a general statutory pension insurance for the selfemployed.139 Besides, all contribution rates for social security must take into account the income of the self-employed. Such changes would also affect the competition between self-employed and employees,140 particularly in the low-wage sector. Therefore, it has to be ensured that the atypical forms of employment will primarily be used for business reasons and not to reduce costs.

VI QUO VADIS?

Digitalisation is an ongoing process only the beginning results of which can be discerned. So far, it has not been disruptive but rather evolutionary in Germany. It overlaps with additional developments such as the coincident processes of globalisation and re-nationalisation. 134

135 136 137

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L. Schmitt, ‘Soziale Sicherung Selbststa¨ndiger [Social security for the self-employed]’, Die Sozialgerichtsbarkeit [SGb] [Social Jurisdiction] (2018) 541–8, at 544; on the lack of pension insurance for self-employed, K. Brenke and M. Bezonska, Solo-Selbsta¨ndige in Deutschland – Strukturen und Erwerbsverla¨ufe [Solo Self-Employed in Germany Structures and Career Paths], BMAS Forschungsbericht 465 (Berlin: DIW, 2016), 54. Schmitt, ‘Soziale Sicherung Selbststa¨ndiger’, 544. Brenke and Bezonska, Solo-Selbsta¨ndige in Deutschland, 49. R. Schlegel, ‘Wen soll das Sozialrecht schu¨tzen? – Zur Zukunft des Arbeitnehmer- und Bescha¨ftigtenbegriffs im Sozialrecht [Who should the social law protect? – On the future of the concept of employee and employee in social law]’, Neue Zeitschrift fu¨r Sozialrecht [NZS] [New Journal for Social Law] (2020), 421–9, at 426–8; R. Kreikebohm, ‘Kommt die Erwerbsta¨tigenversicherung? [Is employment insurance coming?]’, NZS (2010), 184–9, at 189. R. Vor in R. Schlegel and T. Voelzke (series eds.), juris PraxisKommentar [juris Practice Commentary], C. Skipka and J. Winkler (eds.), SGB VI Gesetzliche Rentenversicherung [Social Security Code VI Statutory Pension Insurance], 2nd ed. (Saarbru¨cken: Juris, 2013), § 1 para. 21. U. Preis and F. Temming, ‘Die Einbeziehung von Selbststa¨ndigen in die gesetzliche Rentenversicherung [The inclusion of the self-employed in the statutory pension insurance]’, Vierteljahreszeitschrift fu¨r Sozialrecht [VSSR] [Quarterly Journal for Social Law] (2017), 283–322, 293, at 297–8. M. Fock, C. Fuchsloch, C. Mecke, and E. Merz, ‘Sozialrecht 4.0 [Social law 4.0]’, SGb (2018), 591–9 at, 597–8.

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Digitalisation has been accelerated by the Covid-19 pandemic and may be slowed down again by the coming economic crisis. Irrespective of these uncertainties, political actors as well as social partners and researchers have started early with the analysis and proposals for adjustments. From a historical point of view, trade unions and employers’ associations have had significant active roles in the German economic system, and their current actions maintain their role for the present and the future. The traditional parallel existence of legislative regulation and self-regulation by the social partners continues. The legal development is evolutionary and reflects the experiences from the time of computerisation. The government strives to involve employers and employees in the necessary change process, on the one hand, and to strengthen employees’ representatives and social partners, on the other. In terms of content, the empowerment of employees through technology and, at the same time, their protection from technology, along with the promotion of further training, are crucial for the development of labour law. Platform workers will certainly not be fully integrated into labour law, but their economic protection and social security have to be improved. Digitalisation could accelerate changes in the social security system to protect the selfemployed and employee-like persons, but the difficulties in financing could pose significant obstacles. The success of the measures outlined will depend on (1) the further effects of digitalisation; (2) a coherent assessment of the situation by the social partners and the legislation, to allow specific, targeted, and positive action to be taken; and (3) the participation of employers and employees, which have to put the transformation into practice. This progress could take place within the next one or two decades.

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5 Austria: The Corporatist Perspective on Technological Disruption Franz Marhold and Peter C. Scho¨ffmann

I THE ARCHETYPE

Access to Austrian employment law is dependent on whether an individual can be regarded as an ‘employee’. Essentially, the idiosyncratic protection provided by employment law is awarded based on a binary option: the subordinate ‘employee’ in contrast to the self-employed person. Intermediary categories – such as the ‘quasi-subordinate’ status – are mere exceptions, although with increasing importance. Austrian law does not provide a given notion of the ‘employee’. The Austrian Civil Code came into force in 1812, when special protection for employees was not considered necessary. Later on, section 1151 was amended.1 It distinguishes between ‘service contracts’ (Dienstvertra¨ge) and ‘work contracts’ (Werkvertra¨ge). Whereas service contracts are aimed at providing work capacity for a certain amount of time, the work contract obliges a person to produce a certain result.2 Employment contracts are a subcategory of service contracts, namely those that are performed in subordination or – to remain in line with Austrian terminology – ‘personal dependence’ (perso¨nliche Abha¨ngigkeit). In contrast to recent German legislation,3 the notion of subordination in Austria is still based on doctrine and case-law. It encompasses a certain array of features. Generally, the following are considered decisive: the employee’s integration into an employer’s organisation, their obligations to render services personally as opposed to using a substitute, the managerial authority over the employee, as well as the employers’ supervision and disciplinary authority.4 However, these features shall be understood as an evolving concept. As the employment contract is not aimed at a specific result (as opposed to the work contract), the employer’s directives – where, when, and how work shall be performed – are essential to give the employee’s service obligation concrete shape. Nevertheless, this authority is not without limit. Normal working time cannot be determined unilaterally by the employer but is subject to a mandatory agreement between the parties of the employment contract (see § 19 c Working Time Act).5 Without the employee’s prior consent, the employer cannot even demand overtime work.6

1 2 3 4

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As amended by the Imperial Gazette of 21 March 1916 (No. 69). W. Posch, Contract Law in Austria (Amsterdam: Wolters Kluwer, 2015), para. 524ff. Compare with § 611a German Civil Code, Federal Gazette I of 21 February 2017, at 258. N. Melzer-Azodanloo, Labour Law in Austria (Amsterdam: Wolters Kluwer, 2018), para. 52; see also T. Tomandl, Wesensmerkmale des Arbeitsvertrages [Essential Features of the Employment Contract] (Vienna: Springer, 1971), 66ff. Arbeitszeitgesetz [Working Hours Act], Federal Gazette of 11 December 1969 (No. 461) as amended by Federal Gazette I of 24 April 1997 (No. 46). Except for cases where overtime work is essential to prevent imminent danger and so forth.

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Likewise, the employer’s competence to reassign the employee is limited by means of individual as well as collective labour law. Economic dependence does not play any role in assessing subordination. If anything, it can be considered indicative. However, economically dependent persons without subordination are subject to partial application of some laws that are considered to be less aimed at their subordination than at their (characteristic) economic vulnerability. If a person performs a service contract and is neither subordinated nor economically dependent, Austrian employment law cannot apply at all. All features constituting subordination are encompassed by a so-called flexible system. It allows us to depart from a system where labour law is applicable only if all conditions are met. As long as features indicating personal dependence outweigh opposing indicators, an employment relationship is to be assumed, regardless of whether certain features remain less distinct. Therefore, the notion of the employee in Austrian employment law is very much open to development as the features indicating the employee’s subordination are not exhaustive but interrelate flexibly. A Borderlines between Typical and Atypical Employment Traditionally, the notion of the ‘atypical’ employment relationship encompasses fixed-term employment, part-time employment, and temporary agency work. Unless expressly stipulated, employment contracts are concluded for an indefinite period. Fixed-term contracts are permissible. They make up around 8 per cent of all employment contracts in Austria with no significant changes in the past decade.7 Generally, no special conditions have to be met to conclude a fixed-term contract. However, in order to comply with EU legislation,8 consecutive short-term contracts shall be prevented as they undermine basic guarantees of employment law: especially the protection against dismissal.9 Therefore, consecutive short-term contracts demand an objective reason, such as seasonal work or training purposes.10 A recent development enhanced by crowd work and other digital phenomena is so-called micro-tasking. It splits a certain task into several smaller tasks and distributes them to a large number of people. Usually this occurs when a certain task cannot be fulfilled on an automated basis and such. The question arises whether the duration of a contractual relationship can influence its qualification as an employment relationship or not. This question is not entirely new to Austrian employment law doctrine. The concept of very short employment contracts has been known for a long time; as the example of day labourers shows. It may be argued that subordination cannot be established when the employment is very short as control measures cannot be implemented and disciplinary actions do not pose a threat, as the employment will end soon anyway. 7

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Compare with Eurostat, ‘Part-time employment and temporary contracts – annual data’, https://data.europa.eu/data/ datasets/jaziwgz3wgoopsvtcod7qg?locale=en. That is, prevention of abuse arising from the use of successive fixed-term employment contracts as set out in clause 5 of the framework agreement on fixed-term work of the Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC [European Trade Union Confederation], UNICE [Union of Industrial and Employers’ Confederations of Europe], and CEEP [European Centre of Employers and Enterprises providing Public Services], OJ L 175, 43–8. See further M. Fuchs and F. Marhold, Europa¨isches Arbeitsrecht [European Labor Law], 6th ed. (Vienna: Verlag Austria, 2020), 199ff. There is no legislation explicitly regulating consecutive fixed-term contracts, but the principles were largely developed through case-law.

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Nevertheless, many authors maintain that the employment contract is not categorically ruled out when the work provided does not exceed a certain duration.11 In fact, regarding mandatory social insurance, the Federal Administrative Court established that even a service lasting for thirty minutes could constitute subordinate employment.12 Part-time work is another form of atypical work that is prevalent in Austria. On a statutory basis, full-time employment in Austria equals a forty-hour working week. However, many collective bargaining agreements often provide for a shortened working week of thirty-eight and a half hours or even shorter.13 Any amount of working time beneath the statutory amount or the one set out by the applicable collective bargaining agreement is considered part-time work. Despite its common occurrence in the Austrian labour market for a long time, part-time work was not codified until the late 1990s.14 With a share slightly above a quarter of the Austrian workforce, part-time employment is widespread compared to the rest of the twenty-seven countries making up the European Union (EU).15 An Austrian peculiarity are the special premiums for work in excess of the stipulated weekly amount of working hours in the context of part-time work. If any employee exceeds the statutory normal weekly working hours, they are entitled to an overtime premium of 50 per cent. However, part-time employees who exceed their (lower) stipulated weekly working time get a premium of 25 per cent. Temporary agency work is of increasing importance in Austria. The Temporary Agency Work Act16 provides special protection to the affected employees by ensuring equal treatment towards the permanent workforce and a catalogue of special guarantees.17 Recent developments concern the precise definition of temporary agency work. It is disputed whether ‘payrolling’ is subject to the Temporary Agency Work Act. Payrolling describes a situation in which employees perform work for a company but this company is technically not the employer; it rather contracts another company to formally perform this role (i.e. run the payroll). More precisely, it was discussed whether the company conducting the payroll acts as the employer (and assigns them to a user undertaking) or whether the payroll company just brokers the employment contract between the employee and the user undertaking. It may be argued that the payroll-company’s client is the actual employer.18 However, the Austrian Supreme Court (Oberster Gerichtshof) ruled that in fact the provider of the payroll is the employer and the employees are hired out to the client. Therefore, the employment relationship is subject to the Temporary Agency Work Act.19

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See M. Risak, ‘Crowdwork’, Zeitschrift fu¨r Arbeits- und Sozialrecht [ZAS] [Journal for Labour and Social Law], 1 (2015), 11–19, at 17f, https://bit.ly/3rqyBgU. Federal Administrative Court 28 August 2018, W126 2133913–1. E.g. the collective bargaining agreement for care workers (Kollektivvertrag der Sozialwirtschaft) will reduce the normal weekly working hours to thirty-seven hours by 2022. See § 19d Working Time Act (Arbeitszeitgesetz), Federal Gazette of 11 December 1969 (No. 461) as amended by Federal Gazette I of 22 December 2018 (No. 100). Compare with Eurostat, ‘Part-time employment rate’, https://short.wu.ac.at/9gyu. Arbeitskra¨fteu¨berlassungsgesetz [Temporary Employment Act], Federal Gazette I of 23 March 1988 (No. 196) as amended by Federal Gazette I of 19 July 2022 (No. 111). E.g. certain clauses – that are generally permissible in employment contracts – are ruled out for temporary agency workers, such as non-compete covenants. See F. Scho¨rghofer, Grenzfa¨lle der Arbeitskra¨fteu¨berlassung [Borderline Cases of Labor Leasing] (Vienna: Manz, 2015), 111ff. Austrian Supreme Court 8 ObA 51/17h (2018), ECLI:AT:OGH0002:2018:008OBA00051.17H.0529.000.

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B Quasi-subordinate Workers As mentioned at the start of Section I, Austrian employment law – from the outset – distinguishes between (subordinate) employment and independent work. At first glance, Austrian employment law follows an ‘all or nothing’ approach regarding the application of labour law. However, it is recognised that this does not always lead to an appropriate result, especially in situations in which the legal protection is not focussed on the employees’ personal dependence but rather on their economic one. This typically applies in situations in which independent workers do not operate in a market by themselves. In many cases they perform their tasks for a limited number of contractors or at times even for a single contractor. As pointed out earlier, economically dependent persons do not qualify as employees if they are not personally dependent as well. Technically, they are self-employed with a special need for protection. They can thus be regarded as quasi-subordinate workers; several employment laws are applicable for them, such as the Employee’s Liability Act20 and the Temporary Agency Work Act. Some employment law acts refer to ‘independent workers’ as defined by the General Social Security Act. Austria has mandatory social insurance for both employees and self-employed persons. Whereas quasi-dependent workers (and regular employees) are insured under the General Social Security Act, independent workers are insured under the Act on Social Insurance for Persons Engaged in Trade and Commerce. Each group is also administered by a different social security agency. The distinction between quasi-dependent and independent workers can be difficult. The General Social Security Act states that quasi-dependent workers can be regarded as such if they provide their services essentially by themselves and do not have significant operating resources on their own. If one of these conditions is not met, the person shall be considered an independent worker. The definition of the quasi-dependent worker in social security law is similar but not identical to that of employment law. In employment law the two features do not necessarily have to be fulfilled simultaneously.21 One act that refers to social security law is the Maternity Protection Act.22 It states that quasidependent workers (as defined by the General Social Insurance Act) are subject to the prohibition of employment during the last eight weeks prior to the presumed date of confinement and the eight weeks following childbirth. The definition set out by social security law is also relevant when it comes to the employer’s obligation to notify regarding the essential elements of the employment contract. C Quasi-dependent Workers in the Context of Collective Bargaining Thus, quasi-dependent workers are subject to some provisions of individual labour law. However, collective labour law has an outstanding importance in Austrian labour relations with a collective bargaining coverage of 98 per cent.23 In this context it is disputed whether quasidependent workers are subject to the Labour Organisation Act, which codifies Austrian collective labour law. 20

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Dienstnehmerhaftpflichtgesetz [Employee Liability Act], Federal Gazette of 31 March 1965 (No. 80) as amended by Federal Gazette of 31 March 2021 (No. 61). For extensive analysis, see F. Marhold, ‘Austria’ in C. Schubert (ed.), Economically Dependent Workers, 9–23 (Munich: C. H. Beck, 2022). §§ 3 and 5 of the Maternity Protection Act (Mutterschutzgesetz), Federal Gazette of 31 May 1979 (No. 221) as amended by Federal Gazette I of 30 June 2022 (No. 87). ‘Collective bargaining coverage’, OECD.Stat, https://stats.oecd.org/Index.aspx?DataSetCode=CBC.

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Many authors do not clearly distinguish their assessment of the current legal situation from their preferred legal policy. For one thing, it is correct that the current provisions defining the scope of applications are not self-evident.24 However, there are no reliable indications that the legislator aimed at including quasi-dependent workers as well.25 Moreover, even if one considers that quasi-dependent workers should be covered by collective labour law, EU anti-trust law poses a certain (yet surmountable)26 obstacle.27 There are a few particular exceptions: The Journalist Act defines the permanent freelancer (sta¨ndiger freier Mitarbeiter) as a journalist who contributes to the content of a media company or service on a permanent basis, essentially by themselves and without having their own entrepreneurial structures. They are – by definition – no subordinate employee. However, their competent trade union is entitled to conclude a so-called comprehensive contract (Gesamtvertrag) to stipulate their fee conditions. For example, a comprehensive contract was concluded between the Verband ¨ sterreichischer Zeitung (Austrian Association of Newspapers) and the Austrian Trade Unions O ¨ sterreichische Gewerkschaftsbund). As it governs minimum wage provisions, it can Federation (O be seen – in a broader sense – as a collective bargaining agreement. A similar comprehensive contract is permissible for so-called home workers (Heimarbeiter), who are not considered subordinate employees either. Demanding that quasi-subordinate workers should be subject to Austrian collective labour law is mostly aimed at the right to collective bargain. In Austria, collective bargaining agreements are a rather powerful tool. They have binding legal effect, contrary to other countries where respective clauses have to be incorporated into the individual employment contract. Therefore, the legal capacity to conclude such contracts is strictly limited to certain legal entities. Some legal entities acquire this capacity without any other conditions attached; others have to meet certain criteria. Primarily, the Chamber of Commerce (on behalf of the employers) and the Chamber of Labour (on behalf of the employees) can conclude collective bargaining agreements without further ado. Both differ from other institutions in that they are based on mandatory membership. Membership of the Chamber of Commerce is conferred on all holders of a commercial licence. Apart from the two chambers, the most important parties concluding collective bargaining agreements are voluntary professional associations. However, they have the capacity to collectively bargain only when they are conferred the right to do so. The competent authority to decide whether such capacity shall be conferred or not is the Federal Labour Relations Authority (Bundeseinigungsamt), currently a subsidiary authority of the Ministry of Labour, Youth and Families. The most important professional association is the Austrian Trade Union Federation and its seven subdivisions. However, there are professional associations on behalf of the employers as well, such as the Federation of Austrian Industry or the Austrian Association of Insurance Companies. In most cases, collective bargaining agreements are concluded between the 24

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E.g. U. Runggaldier in T. Tomandl and M. Risak (eds.), Arbeitsverfassungsgesetz [Labour Consitution Act], issue 15 (2019), § 1 para. 8. G.-P. Reissner in M. Neumayr and G.-P. Reissner (eds.), Zeller Kommentar zum Arbeitsrecht [Zeller Commentary on Labour Law], 3rd ed. (Vienna: Manz, 2018), § 105 ArbVG para. 11; for further references to doctrine and case-law, see M. Friedrich, ‘Vidaflex, eine Gewerkschaft fu¨r Ein-Personen-Unternehmen und Kleinunternehmen [Vidaflex, a trade union for one-person companies and small businesses]’, Arbeits- und SozialrechtlicheKartei [Labor and Social Law Index] (2019), 122 fn 16 and 17. E. Brameshuber, ‘Kollektivvertra¨ge fu¨r Arbeitnehmera¨hnliche [Collective agreements for similar employees]’ in E. Brameshuber, M. Friedrich, and B. Karl (eds.), Festschrift Franz Marhold, 433–45 (Vienna: Manz, 2020), 437f. R. Mosler in S. Gahleitner and R. Mosler (eds.), Arbeitsverfassungsgesetz [Labour Constitution Act], 6th ed. (Vienna: ¨ GB Verlag, 2020), § 1 para. 13 referring to the Albany ruling (ECJ 21 September 1999, C-67/96). O

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Chamber of Commerce and the trade union(s). As pointed out, trade union membership is voluntary. However, even those employees who are not members are subject to the respective collective bargaining agreement owing to the so-called outsider effect (Außenseiterwirkung). As we can see, the collective bargaining capacity is strongly regulated. In 2017 Vida, the trade union in the service sector, founded vidaFlex, a – self-proclaimed – trade union aimed at representing (essentially) single-person companies and micro-companies with up to four employees. Although vidaFlex also concerns itself with uncovering bogus self-employment, one of its biggest goals is the representation of actual self-employed persons. In this case, collective bargaining would be aimed at improving the conditions between them and their contractors and, therefore, between two self-employed parties. This poses a twofold problem: vidaFlex cannot obtain permission to conclude collective bargaining agreements where an employer is the opposing party. As vidaFlex is a voluntary professional association, it is not capable of concluding collective bargaining agreements ipso iure. It has to acquire the right to do so from the Federal Labour Relations Authority. In order for the authority to confer this capacity, the Labour Organisation Act demands that the association in question consists exclusively either of employees or of employers. A mixed association is not permissible, as its independence from the opposing social partner cannot be guaranteed. It is debatable whether micro-companies can be considered economically dependent from other companies. However, they themselves are companies. Furthermore, they cannot be independent of the opposing social partner, namely employers, if they are employers themselves as micro-companies – which, by definition, they are. Furthermore, it also poses a risk to its ‘parent association’, the Vida trade union. As vidaFlex is a subsidiary of the Vida trade union,28 this might lead to a dilution of Vida’s independence. Since Vida gained its capacity to conclude collective bargaining agreements as an employees’ representative, it cannot offer representation to employers as well, even if they are micro employers. Whether desirable or not, granting the capacity for collective bargaining to quasi-dependent workers is not without potential pitfalls. In 2020 Austria celebrated 100 years of codification of the right to collective bargaining.29 Despite reforms, collective labour law still clings to a stark contrast between the opposing social parties. According to the conventional understanding of industrial relations, an intermediary category does not fit into the picture. Consequently, it is not enough to simply amend the scope of application; a reconsideration of the work relationship and how it should be organised is imperative. D Quasi-dependent Workers in the Context of Co-determination in the Establishment Another important instrument of collective labour lawmaking are works agreements. A works agreement is a written agreement between the owner of the establishment (usually the employer) and the works council (as the staff’s representative). Like the collective bargaining agreement, the works agreement is legally binding without further prerequisites. However, collective bargaining agreements can be concluded regarding any right or obligation arising from the employment relationship, while works agreements can be concluded only regarding topics that are specifically defined by the Labour Organisation Act to be content of such. Frequent topics are operational control within the establishment, processing of employees’ 28 29

Friedrich, ‘Vidaflex’, 127. Compare with E. Felten and R. Mosler, ‘100 Jahre Kollektivvertragsrecht [100 years of collective bargaining law]’, Das Recht der Arbeit [DRdA] [The Right of Work], 2 (2020), 91–103.

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data, allocation of working time, and reimbursement of expenses. Again, as the Labour Organisation Act does not encompass quasi-dependent workers, such workers cannot be subject to works agreements.30 Works agreements are subject to either mandatory or optional co-determination. In cases of optional co-determination, the owner of the establishment can agree on a certain measure with the works council. However, they can also either agree on a certain subject individually with each of their employees or simply (unilaterally) instruct them to do so. This applies, for instance, to so-called general internal rules of the establishment. They cover various rules regarding working clothes, rules for the use of the establishment’s facilities, or how the employer shall be notified regarding sick leave. In contrast, mandatory co-determination has as a prerequisite condition the works council’s approval. In certain – but not all – cases, approval can be enforced and replaced by a court decision. Mandatory co-determination essentially is reserved for issues that are prone to interfering with employees’ privacy. Most notably, this applies to measures that affect human dignity by monitoring employees’ behaviour and especially their performance. It should be emphasised that codetermination in this case is possible only in cases where human dignity is affected. If a certain monitoring does not even have an effect on human dignity (which is assumed in cases of simple systems to monitor working time), co-determination is not mandatory. If human dignity is not just affected but actually infringed, co-determination is not permissible at all as it will not alter the unlawful nature of the monitoring. Recent cases of monitoring that infringed human dignity included the recording of working time by identifying the individual employee by their fingerprint31 and the Global Positioning System (GPS) tracking of company cars even when the employees used them (as contractually agreed) for private purposes.32 As quasi-dependent workers (such as any other person apart from subordinate employees) evade the scope of application of the Labour Organisation Act, they do not enjoy the protection. Works council members can count on special legal protection that comes with it. First and foremost, this includes a special protection against dismissals.33 This provides them with greater bargaining power, namely to compel the owner of the establishment to make (further) concessions or to veto the proposed measure altogether. As the Austrian Civil Code also provides for the protection of personal rights, quasisubordinate workers are not completely unprotected. Monitoring that infringes human dignity cannot be put into place against any employee or other self-employed contractor. However, as quasi-subordinate workers lack bargaining power, they often will not have the necessary remedy to demand less-invasive measures. Nonetheless, what should be borne in mind is that the notion of subordination also encompasses the concept of whether the employee performs their task under the employer’s supervision. So, if employers closely monitor certain persons who are contractually obliged to perform tasks in their establishment, this could – by itself – indicate that these persons shall be qualified as subordinate employees, thus enjoying the full protection of the Labour Organisation Act and so on and so forth. We will focus on this later on.

30 31 32 33

Austrian Supreme Court 11 May 1988, 9 ObA 165/87. Austrian Supreme Court 20 December 2006, 9 ObA 109/06d. Austrian Supreme Court 22 January 2020, 9 ObA 120/19s. Dismissals (may it be with notice or even a termination without notice for cause) are permissible only with the approval of the court.

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One other topic that can be covered by a works agreement is the so-called social programme (Sozialplan). It is a special works agreement predominantly drawn up in cases of establishment closure or (severe) operational changes. It is aimed at cushioning social hardship that is inherent with, for example, redundancies. Usually it comprises clauses such as voluntary termination benefits (severance payment), pledge of re-employment in case of economic recovery, funding for labour foundations (independent legal entities that finance [re-]training measures), and so on. It is also intensively discussed to what extent former employees can be subject to social programmes.34 Evidently, works agreements cannot exceed the personal scope of the Labour Organisation Act. As the latter applies only to (subordinate) employees, works agreements presuppose the status of an employee as well. Nevertheless, the effectiveness of social programmes depends on integrating those who left the employment relationship (and – from a formal point of view – the personal scope of the Labour Organisation Act) as well. Technically, the bargaining partners on the establishment level have no legislative power outside the establishment itself. Owing to these practical considerations, the Austrian Supreme Court extends the potential scope of application to former employees. This opinion is supported by other provisions of the Labour Organisation Act that extend the work council’s term of office in case of a closure of the establishment (§ 62a Labour Organisation Act). Eventually this would hold true, not just in the case of redundancies but also if the employment relationship were to be altered in such a way that employees no longer qualified as such and would instead be considered quasidependent workers. This would allow the social partners to provide certain benefits to outsourced persons. A possible field of application could be a company that ceases to produce a certain good in its establishment, but sources the work via a platform.

II THE CHANGING NATURE OF WORK: EVASION OF THE EMPLOYMENT RELATIONSHIP

As we have seen so far, modern developments affect the borderline between employment and independent services. They affect certain persons who transcend the border of employment law and get referred to contractual relationships that offer far less protection. However, some developments remain inside the scope of labour law, yet not conforming with the traditional concept of employment. The employment relationship becomes evasive and does so (at least) in a threefold way: regarding the time aspect (e.g. flexible working hours), the location aspect (e.g. mobile work), and the resource aspect (e.g. bring your own device [BYOD]). A Flexible Working Time The extent of working time usually is subject to an (at least tacit) agreement. If nothing else is stipulated explicitly, a full-time working agreement is considered to be concluded.35 In effect, 34

35

See F. Marhold, ‘Zur Regelungsbefugnis der Betriebspartner [On the regulatory authority of operating partners]’, ZAS (1991), 95–106; M. Reiner in P. Jabornegg and R. Resch (eds.), Arbeitsverfassungsgesetz [Labour Constitution Act], issue 58 (2020), § 97 para. 182; R. Geist, ‘Zur Geltung von Betriebsvereinbarungen fu¨r Nicht-Arbeitnehmer [On the validity of company agreements for non-employees]’ in E. Felten and B. Trost (eds.), 50 Jahre Institut fu¨r Arbeitsrecht und Sozialrecht der Johannes Kepler Universita¨t Linz [50 Years [of the] Institute for Labor Law and Social ¨ GB Verlag, 2017), 37. Law of the Johannes Kepler University Linz] (Berlin: O R. Rebhahn in Neumayr and Reissner, Zeller Kommentar, § 1151 para. 188.

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part-time work has to be stipulated explicitly, though not (necessarily) in written form. The Supreme Court found that agreements in which the employer is not obliged to provide for a minimum working time, but may unilaterally determine the scope of daily or weekly normal working hours, are contrary to accepted principles of morality and shall therefore be considered unlawful.36 From a legislative perspective, part-time work was – for a long time – unchartered territory. Initially, the Working Hours Act was perceived as a public law instrument that ensures the health and safety of employees. Contract law provisions had no part in this until an amendment in 199237 included rules regarding the distribution of working time, rules regarding ‘extra work’,38 and a special ban on discrimination against part-time employees.39 Soon after, the obligation to agree on the extent and distribution of working hours was extended to all employment relationships.40 The employer’s authority to determine the distribution of working time was severely limited. The employer is allowed to (unilaterally) change the distribution of working time only if this is justified by objective reasons based on the type of work performed and if the employee is informed about a change at least two weeks in advance. This right to alter the contractual specifications also has to be reserved for the employer in the employment contract itself. The change is rendered unlawful if the employee’s interests are not duly considered. The obligation to agree on the extent and distribution of working hours effectively rules out any concepts of work-on-demand. Contrary to many other EU legislations, on-demand contracts or so-called zero-hours contracts are obviously unlawful under Austrian employment law. However, if such an agreement has been concluded, the employment contract cannot be deemed null and void in its entirety. Rather – according to general civil law principles – socalled supplementary interpretation of the contract shall be applied. Therefore, it will be considered what the parties would have agreed upon within the legal framework. This will usually lead to the assumption of a full-time employment.41 Even before contractual regulations were incorporated into the Working Hours Act, ondemand contracts were deemed against good morale (and therefore unlawful). Reasons for this can be found in the risk distribution between the parties to the employment contract. With a typical employment relationship, the opportunities to profit as well as the economic risks are assigned to the employer. This risk distribution is considered to be a characteristic feature of the employment relationship. On-demand work, conversely, shifts the risks towards the employee without allowing them to capitalise on possible profits. It neglects the employee’s typical economic dependency.42

36

37 38

39

40 41 42

W. Schrammel in A. Fenyve, F. Kerschner, and A. Vonkilch (eds.), Klang Kommentar [Sound Commentary], 3rd ed. (Vienna: Verlag Austria, 2012), § 1153 para. 54. Federal Gazette of 29 December 1992 (No. 833). Extra work is work performed in excess of the contractually stipulated amount of working hours but within the margin of normal working hours (eight hours daily, forty hours weekly). For the development of working time regulation in Austria, see P. C. Scho¨ffmann, Schein und Zeit [Appearance and time], juridikum [Jurisdiction] (2019), 131. Federal Gazette I of 24 April 1997 (No. 46). For further consideration see Schrammel in Fenyve, Kerschner, and Vonkilch, Klang Kommentar, § 1153 para. 55. Rebhahn in Neumayr and Reissner, Zeller Kommentar, § 1151 para. 115 referring to M. Reiner, ‘Der OGH, das Arbeitsrecht und das Unternehmerrisiko: Ein erster Befund [The Supreme Court, labor law and entrepreneurial risk: A first finding]’, ZAS (2008), 203.

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B Stand-By Duty and On-Call Duty: Constant Availability v. the Right to Disconnect Yet, the Working Hours Act does provide certain options for creating a more flexible employment environment. This usually entails an extension of the normal working hours. The Austrian Working Time Act provides a normal working time of eight hours per day and forty hours per week. If the employee exceeds those thresholds, they are eligible for an overtime premium of at least 50 per cent. However, the working time may not exceed twelve hours of daily working time and sixty hours of weekly working time. The Working Time Act foresees different instruments to extend normal working time, such as different (and usually more flexible) distributions of normal working time. As a consequence, fewer overtime premiums have to be paid. Another instrument is the so-called stand-by duty (Arbeitsbereitschaft). Stand-by duty is defined as periods of time when the employees are assigned to a certain location, where they have to keep ready and take up work immediately when demanded. Stand-by-time is considered working time. However, as actual tasks are not performed, it is considered less strenuous. Therefore, it is accepted that a reduced wage can be stipulated. This concept must be distinguished from on-call duty (Rufbereitschaft). During on-call duty the employees can freely choose their whereabouts. They have to make sure that they can be reached and take up work within a certain period of time. On-call duty itself does not fall under the notion of working time. However, it is permissible only a certain number of times within a given period (generally ten times a month). The period of being on-call is usually paid, although that is not mandatory. Even though on-call duty is considered free time, the employer can (reasonably) demand certain restrictions in the employee’s behaviour, such as an alcohol ban or restrictions on the employee’s location (e.g. they have to ensure that they can reach the work location within a given time frame). The demarcation between stand-by duty and on-call duty is vague: The more intense the employee’s restrictions and especially the shorter their required response time, the more likely it is that it shall be qualified as stand-by duty. However, another question arises on the other side of the spectrum: What is the distinction between on-call duty and free time? On-call duty was designed to allow employees to stay at home (or wherever they want to spend their free time), then get to their usual workplace and start working. Does it also fall under on-call duty if the employer stipulates that their employee just regularly checks their phone for emails and so forth? It can be argued that in this case certain restrictions, such as the limit of ten times per month, do not apply.43 In any case, the employee has a definitive right not to be available during the minimum rest period of eleven hours (eight hours in exceptional cases). Therefore, Austrian legislation was never in need of an explicit right to disconnect. It has always been guaranteed by minimum rest periods.44 C Aspects of Mobile Work As in many other countries, mobile work (and especially home office work) is a rising phenomenon, particularly now owing to the Covid-19 crisis. The debate regarding the use of employees’ property in the context of work gained momentum during the Covid-19 lockdowns as many employees performed their work from home using private computers, phones, and so forth. In 43 44

So does M. Risak, ‘Digitalisierung der Arbeitswelt [Digitization of the working world]’, DRdA (2017), 331, 334. Compare with Risak, ‘Digitalisierung der Arbeitswelt’, 334.

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response to this growing demand, the Austrian legislator passed a basic legal framework for home office work in April 2021.45 The amendment includes rules for employment law as well as clarifications regarding accident insurance coverage and provides for certain tax benefits (e.g. purchase of office furniture by employees). The amendment was criticised for its narrow scope of application. Pursuant to section 2 paragraph 1 of the Employment Contract Law Amendment Act (ArbeitsvertragsrechtsAnpassungsgesetz [AVRAG]), home office work falls under the new provisions only if the work is performed in the employee’s own residence (or that of a close relative). Therefore, these provisions do not cover working in the notorious Viennese coffee house or a co-working space. This does not imply that such working arrangements are prohibited, only that the employees are at risk of missing certain safeguards or tax benefits.46 Before the amendment, it was widely disputed as to whether either the employer or the employee can unilaterally demand home office work on the basis of so-called secondary contractual obligations.47 The amendment made it clear that even partial home office work requires mutual agreement in writing. Furthermore, the rules on terminating the home office agreement did not receive undivided approval. The first draft48 stipulated that a termination by either party is permitted only with due cause, while still having to observe a notice period of one month. Some heavily criticised this approach since due cause – which by definition implies that any continuation of a given contract is deemed unacceptable – authorises immediate termination. However, the legislator adhered to the draft but provided for a possible deviating agreement between the parties (§ 2 para. 4 AVRAG).49 The amendment also tackles the question of whether or to what extent rules regarding health and safety can apply. The Health and Safety at Work Act50 is the central codification of technical measures to protect employees. Most provisions (at least implicitly) apply to employment within a workplace (Arbeitssta¨tte). It was disputed whether the employee’s private residence is considered a workplace according to this act.51 It is plausible that occupational health and safety standards do not apply to home office work as employers can guarantee health and safety only in an establishment where they control the equipment and facilities. The amendment introduced section 4 paragraph 10 of the Health and Safety at Work Act. This provision makes clear that the act technically applies to home office work as well, but the labour inspectorate has no authority to enter the employee’s private residence, unless the employee demands an inspection. Home office work can also affect another (important) aspect of the employee’s health and safety: working time recording. Generally, it is the employer’s duty to keep records of hours worked. However, it can be agreed between the parties to the employment contract that the employee shall keep working time records themselves. In this case, the employer shall instruct 45 46

47

48 49

50

51

Federal Gazette I of 31 March 2021 (No. 61). In detail see T. Dullinger in S. Ko¨ck (ed.), Der Homeoffice-Kommentar [The Home Office Commentary] (Vienna: Manz, 2021), § 2h AVRAG paras. 24–36. The term secondary contractual obligations refers to a mutual obligation to protect the interests of the contractual partner. Ministerial proposal No. 94, 27th legislative session of the Austrian National Council. Compare with expert opinion during the parliamentary assessment procedure P. C. Scho¨ffmann and I. Kager, 14/SN94/ME 27th legislative session of the Austrian National Council. ArbeitnehmerInnenschutzgesetz [Employee Protection Act], Federal Gazette of 17 June 1994 (No. 135) as amended by Federal Gazette I of 27 July 2022 (No. 115). For further details see M. Risak, ‘Arbeitsrecht 4.0 [Labour law 4.0]’, Journal fu¨r Arbeits- und Sozialrecht [Journal of Labour and Social Law] (2017), 12, 28.

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them how to keep proper records. Records shall include not only the duration of the time worked but also the beginning and the end of the working time and all the breaks. However, if the employee can determine the distribution of their working hours and their place of work largely autonomously or perform the larger part of their activities in their home, they shall record only the duration of daily working hours. This exception potentially (however, not necessarily) also applies to home office work.52 Whether this reduction of recording obligations complies with EU legislation is largely disputed. In the CCOO case the European Court of Justice (ECJ) held that the right of every worker to a limitation of maximum working hours and to daily and weekly rest periods is enshrined in the Charter of Fundamental Rights and that Directive 2003/88 ensures respect for that fundamental right.53 The ECJ emphasises that Member States have to guarantee that the minimum rest periods and the maximum working hours are effectively observed. Therefore, it can be necessary to implement a system enabling the duration of time worked each day by each worker to be measured. These records are aimed both at putting employees into the position to claim their rights via-a`-vis the employer and at enabling employment inspectorates to investigate and impose penalties conferred by national law.54 Some authors55 argue that even reduced working time recordings comply with EU law as they still allow employees to claim their rights regarding the limitation of maximum working hours and the observation of minimum rest periods. However, it neglects the requirement that the employment inspectorate must be able to exercise its powers, as the ECJ explicitly laid down.56 Furthermore, measuring the duration of daily working time provides virtually no insight into whether minimum rest periods have been observed. It is rather implausible to expect that employees can guarantee minimum rest periods by themselves when – as the ECJ rightly points out – the employees’ position of weakness is taken into account,57 and since the amount of work performed in the home office usually increases.58 Reduced recording obligations for employees who can either work largely autonomously or perform the larger part of their activities in their home should therefore be deemed unlawful. D Bring Your Own Device: Who Provides the Operating Equipment? According to a conventional understanding of the employment relationship, a certain distribution of resources applies: employees provide their (wo)manpower, but it is the employer who provides the necessary equipment and facilities.59 However, more and more frequently it is the employees who are required to provide their own equipment (usually mobile phones, notebooks). Certain effects should be borne in mind. If an employee uses their own device, the employer usually cannot control how efficiently it is used or 52

53 54 55

56

57 58

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E. Bartmann in S. Ko¨ck (ed.), Der Homeoffice-Kommentar [The Home Office Commentary] (Vienna: Manz, 2021), part 2, paras. 31–6. Case C-55/18 CCOO v. Deutsche Bank [2018] ECLI:EU:C:2019:402, para. 31. Ibid., para. 60. K. Burger-Ehrnhofer and M. J. Glowacka, ‘EuGH zur Arbeitszeiterfassung [ECJ on the recording of working hours]’, Arbeits- und SozialrechtsKartei [Labour and Social Law Index] (2018), 242, 245. W. Mazal, ‘Neue Arbeitszeitaufzeichnung: Wahrheit statt Scho¨nung [New recording of working hours: Truth instead of refinement]’, ecolex (2019), 656, 657. Case C-55/18 CCOO v. Deutsche Bank [2018] ECLI:EU:C:2019:402, paras. 44–5. D. Niksova, ‘Arbeitszeitaufzeichnungen als unionsrechtliche Pflicht [Working time records as a legal obligation under Union law]’, DRdA (2020), 236, 242. Compare with Rebhahn in Neumayer and Reissner, Zeller Kommentar, § 1151 ABGB para. 114.

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whether the employee even uses working time to browse the Internet on their private phone. At first glance, this leads to employers losing their possibilities to supervise their employees. Of course, a loss of control can also affect the concept of subordination. However, this will usually not lead to a major modification of the employment relationship. Nevertheless, it means that the employer will not be able to assure that the employees’ capacities are put to best use. As we have discussed, EU legislation and its transposition into Austrian law demand that employers effectively create an environment that guarantees working time limitation. Working with private devices can lower employees’ barrier to checking their phones during their free time. This increases the risk of violating maximum working time or minimum rest periods.60 Unless otherwise agreed upon, the employer also shall carry all costs incurred from the use of the private device during the work performance. This includes, for example, the mobile bill or the petrol for the use of the private car. The employer is also liable for damages to the private device as part of its so-called risk liability (Risikohaftung) pursuant to section 1014 of the Austrian Civil Code. Even in cases of the employee’s contributory negligence, the employer’s liability will usually not be excluded, just reduced.

III THE PROTOTYPES

What we discussed in the previous section can be seen as different aspects of flexibility within the framework of the employment relationship. This affects different features, such as when work is performed, where it is performed, and with whose resources it is performed. In this section we will look into a different kind of flexibility: one that potentially transcends (some would say evades) the concept of the employment relationship with all its accompanying protective legislation and so forth. These questions gained importance when new parties emerged on the traditional employment landscape. In particular, this applies to intermittent agents, commonly referred to as platforms and the like. The most popular example of crowd work in Austria probably is food delivery, as provided by Mjam (a local subsidiary of Delivery Hero) and Uber Eats, and transportation services such as Uber and Bolt. The question of whether there are contractual relationships between these agents and how such relationships could be qualified has serious implications. To begin with, there is an employment law perspective: it usually entails minimum wages and other rights deriving from employment acts and collective bargaining agreements. There is a collective bargaining agreement applicable for bike couriers that would also apply for food deliveries.61 However, the application of a collective bargaining agreement presupposes that the people in question can be qualified as employees. If they fall within the scope of the collective bargaining agreement, this not only entails individual rights for the employees (minimum wage) but can also lead to administrative fines if the employer does not comply with these provisions. In addition, social security implications ought to be observed: The employer has to register the employees with the social security authority. If the employer fails to comply, it has to pay arrears of social security contributions and will be fined for the reporting violation. In severe cases, the public authority takes further steps, such as a ban from public tenders or a withdrawal of commercial licences, which effectively can lead to a closure of business. 60

61

Compare with M. Huger and H. G. Laimer, ‘BYOD und Arbeitsrecht [BYOD and labour law]’, ecolex (2014), 303, 304. It forsees a monthly minimum wage of EUR 1,593.33 (fourteen times per year).

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Looking at the different (legal) relationships, it should be borne in mind that case-law regarding this question is virtually non-existent in Austria. This is owing to Austrian civil procedure. Appeals to the Austrian Supreme Court are permissible only if the legal question at stake is of fundamental importance. However, legal issues that require a case-by-case assessment are – per definitionem – not of fundamental importance. Whether an employment relationship can be assumed, usually, is a case-by-case assessment. This effectively means that there is no relevant case-law and, moreover, a well-developed case-law on this issue cannot be expected any time soon. However, doctrine has dealt extensively with the concept of crowd work. Usually, it is assumed that there is no legal relationship between the crowd worker and the crowd sourcer (customer). Instead, the customer (i.e. the person ordering food or a ride) enters into a contract with the platform. In most cases, this can be qualified as a work contract (Werkvertrag). As already explained, this is a contract where a person undertakes to produce a certain result (e.g. supplying a specified good) in exchange for remuneration. This result could be a pizza being delivered or a transportation from A to B. As usual with work contracts, the contractor uses agents to fulfil the contract on their behalf. The question arises as to what kind of contractual relationship the contractor (the platform) and the agent (the crowd worker) have entered into. Most likely, this will either be a work contract itself or an employment contract.62 A precise attribution predominantly depends on whether it is a contractual relationship that ends with supply or one that is aimed at a continuing obligation. In Austrian civil law we can find a strict separation between these two kinds of contract. They also entail very different consequences as only a continuing contractual obligation can be qualified as an employment contract. However, it can be challenging in the course of applying the law: If a chain of contracts is fulfilled in succession, it is only a fine line to differentiate this from a single continuing contract. To give an example: The riders who deliver pizza in the streets of Vienna could fulfil several contracts per day or they could constantly perform a single contractual obligation, delivering (an undefined amount of) pizza. Only in the latter case can an employment contract be assumed and solely if the second feature is present too: subordination. The first problem will usually be solved by determining the parties’ intention. Could the platform actually establish a sustainable business model, virtually without long-term planning, or are future gigs an integral part of working for the respective platform? If a continuing contractual obligation (a so-called service contract) can be assumed, then – in a next step – it will be assessed whether the contract is fulfilled in subordination. As explained earlier, several indicators will be assessed within a flexible system. If we look at different food delivery services, some features can be noted: for instance, usually the riders are not obliged to fulfil their gigs in person; they can use a substitute. However, as Austrian courts emphasise, it hardly matters what the contract says; what is important is how the contract is actually performed. If the rider has actually no chance to nominate a substitute, it provides an argument for assuming actual employment. Moreover, platforms sometimes define how work shall be performed in a very precise manner. Some use self-titled ‘guides’ or ‘manuals’ that demand a certain behaviour and appearance. This clearly indicates the platform’s managerial authority, which is typical of employers. As we have also discussed earlier, the degree of integration into a company’s organisation matters. If riders have to use a certain app and fit into a certain hierarchy (some platforms have 62

Compare with Risak, ‘Crowdwork’, 17.

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‘rider captains’), this clearly indicates an organisation that riders have to fit into. Of course, their performance is also closely monitored (most notably through GPS tracking), which again provides an argument for assuming an employment relationship.63 In an overall assessment, crowd workers certainly can be qualified as – but not necessarily are – employees. Of course, this result depends on several features of the contract. However, the flexible system allows accounting for different developments. Work itself underwent major changes since the introduction of the relevant provisions in the Austrian Civil Code more than 100 years ago. Mutual working time arrangements (without even thinking about flexible working time), protection against reassignments, and mobile working were inconceivable back then. The evolving work environment granted many employees greater independence. This has nothing to do with algorithms and such, but can be observed since the 1990s. Yet no one can seriously argue that half of Austria’s workforce dropped out of the protection provided by employment law. Eventually, not only the work environment itself is in constant change but also the way we comprehend these phenomena from a legal perspective.64

IV ARE REFORMS NECESSARY? GAZING INTO THE CRYSTAL BALL OF LABOUR LAW

Primarily, we need to consider whether reforms are necessary or not, and this depends largely on how new forms of work will be classified. This is yet to be decided by the courts. Furthermore, Austrian labour law is familiar with an intermediary category: the quasi-subordinate person. Hence, there is a remedy to cushion the impact of persons not being covered by the notion of ‘employee’. Of course, along the line – differentiating between employment relationships and other forms of (independent) contract – cases might occur that one can perceive as socially unjust. However, it should be recalled that a legal system making use of abstract notions will never be able to create justice in each and every single case. Whether we broaden or narrow the scope of application, borderline cases will never be solved in a way that sufficiently satisfies everyone. Prophecies of doom and exuberant reform zeal should be met with caution. Discussions regarding the capability of the notion of an ‘employee’ have been the focus of the domestic legal discourse for a long time. Many problems and ideas can be traced back as early as the 1980s and were heavily influenced by a seminal two-part paper by Klaus Firlei.65 The groundwork laid more than thirty years ago still serves as a starting point. Many perceive that technological disruption renders the concept of ‘personal dependence’ less reliable. ‘Economic dependence’ could become a more defining feature of the notion of the employee.66 However, Felten calls for caution and points out that this would lead to a substantial expansion of the protective scope of labour law. Many ‘quasi-subordinate’ workers could become full-fledged 63

64

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For a detailed assessment, see T. Dullinger, ‘Essenszustellung: foordora [Food delivery: foordora]’ in D. Lutz and ¨ GB Verlag, 2017), 186, M. Risak (eds.), Arbeit in der Gig-Economy [Working in the Gig Economy], 186–203 (Vienna: O 195ff. For a similar conclusion regarding German employment law, see R. Wank, ‘Die personellen Grenzen des Europa¨ischen Arbeitsrechts: Arbeitsrecht fu¨r Nicht Arbeitnehmer? [The personal limits of European labour law: Labour law for non-employees?]’, Europa¨ische Zeitschrift fu¨r Arbeitsrecht [European Journal of Labor Law] (2008), 172–95, 181. K. Firlei, ‘Flucht aus dem Arbeitsrecht [Escape from labour law]’, Das Recht der Arbeit [The Right of Work] (1987), 271; K. Firlei, ‘Flucht aus dem Arbeitsrecht (Schluß) [Escape from labour law (conclusion)]’, Das Recht der Arbeit (1987) 411. Compare with R. Mosler, ‘Brauchen wir einen neuen Arbeitnehmer*innenbegriff? [Do we need a new definition of employees?]’, DRdA (2022), 119.

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employees. In turn, this expansion could precipitate a dismantling of many labour rights formerly reserved for the personally dependent to counterbalance the rising costs for employers.67 Some reforms that have already been enacted address new challenges. Digitalisation has given rise to a new dimension of employee monitoring, such as various performance tracking devices. Austrian labour law provides for some protection independently of the EU’s General Data Protection Regulation (GDPR). Basic privacy rights have already been enshrined in the Austrian Civil Code and their enforcement in the employment relationship is also guaranteed by remedies of collective labour law. However, the GDPR has raised awareness among employers and employees alike that privacy is legally enforceable. New technologies pose a challenge not only for companies but also for the workforce, especially when it comes to co-determination in an establishment. High demands are placed on work councils, too, which in Austria are still honorary offices that employees exercise in their free time. We need to face the question of how long this can continue working before some sort of professionalisation becomes imperative.68 Nevertheless, Austrian labour law – at large – is in good shape owing to its open-ended standards,69 such as the flexible system of subordination, and strong collective bargaining both at the firm level and among trade unions and business associations.

67

68

69

E. Felten, ‘Digitale Transformation und Arbeitsrecht [Digital transformation and labor law]’ in E. Felten, G. Kofler, M. Mayrhofer et al. (eds.), Digitale Transformation im Wirtschafts- und Steuerrecht [Digital Transformation in Business and Tax Law] (Vienna: Linde Verlag, 2019), para. 17/29. See T. Mathy, ‘Die “Professionalisierung” der Betriebsratsta¨tigkeit – Verrat oder Verwirklichung des urspru¨nglichen Ideals? [The “professionalisation” of works council activities – betrayal or realisation of the original ideal?]’, DRdA (2019), 306. Compare with G. Davidov, A Purposive Approach to Labour Law (Oxford: Oxford University Press, 2016), 157 ff.

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6 Technological Disruption in Employment and Labour Law in the Netherlands Evert Verhulp

I INTRODUCTION

Since the Dutch debate about the digitisation of labour is often reduced to a debate about how to qualify a contract between a worker and the platform they work through, or work for, the definition of the term ‘employment contract’ deserves a lengthy discussion. This approach means that the other effects of technological changes, such as changes in the organisation of work owing to changing structures of authority, receive far less attention. In Section II, I examine the definition of an employment contract and the obligations associated with employment contracts, partly to distinguish them from contracts for services. I also discuss the incentives for avoiding employment contracts or the associated obligations. As a result, Section II also includes discussions of flexible employment relationships, domestic work, and, of course, contracts for services, each – to the extent possible – in light of technological developments. In Section III, I go more deeply into the effects that technological changes have on the legal design of labour, and I discuss the legal proceedings conducted against platforms in the Netherlands. Sections IV and V deal with the absence of labour regulation for and by platforms, and trade union strategies developed in response to the technological developments. In Section VI I discuss the platform as intermediary or temporary agency and in Section VII I go more deeply into the proposed legislation and other initiatives to regulate platform labour.

II THE ARCHETYPE

A The Definition of an Employment Contract The legal definition of an employment contract in the Netherlands dates back to 1907 and is based on three characteristic components: labour must be performed, in exchange for payment of wages, by the employee in the employer’s employ. The first two components are not so problematic for a qualification of employment contracts. In the case-law, the term ‘labour’ is construed such that it must involve productive labour that is not exclusively aimed at acquiring knowledge, which distinguishes interns from employees.1 The term ‘wages’ distinguishes an employment contract from a volunteer contract, although many volunteers in the Netherlands receive excessive expense allowances. That part of the payment that reimburses more than expenses could be regarded as wages. The lack of an 1

Dutch Supreme Court, 29 October 1982, LJN AC0442 (Hesseling v. St de Ombudsman).

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obligation to pay wages is often used as a supporting argument for not accepting the existence of an employment contract.2 The key component in the definition of an employment contract is the relationship of authority that is created as the employment contract is concluded. The employee enters the employer’s employ and becomes subordinated to that employer as a result. This structure of authority entails responsibilities for the employer. The employer carries the risk of continued payment of wages if the employee is unable to perform the labour, if the reason for not working is at the employer’s expense and risk. This involves not only business risks but also continued payment of wages in the event of illness. In the Netherlands, the employer is obliged to continue paying the employee’s wages during illness for the first two years of incapacity for work. The employer is also obliged to rehabilitate the employee, if possible, by offering suitable employment and to keep records of its efforts. Many employers take out insurance against the risk of continued payment of wages, but they still bear the administrative burden. Concluding an employment contract also entails an obligation for the employer to pay all sorts of contributions, for example employee insurance contributions, such as those payable under the Unemployment Insurance Act and under the occupational disability benefit schemes. A substantial portion of pension contributions – which are often obligatory in the Netherlands – is paid by the employer, and the employer is required to remit taxes for its employees. The various collective bargaining agreements also oblige employers to participate in sectoral schemes requiring them to pay contributions towards training funds, to offer internships and traineeships, and in some cases to continue paying wages in the event of parental leave. Employers are subject to far-reaching obligations pertaining to the conditions under which employees work and to the education and training of employees. Employers are compelled to consider their employees’ personal circumstances. Pursuant to the Flexible Working Act,3 an employee may demand that their employer adjust working hours, the number of hours to be worked, and, under certain circumstances, the workplace, according to the employee’s requirements. An elaborate system of legislation governing the termination of employment has been set up in order to prevent employers from simply evading the obligations imposed on them and to ensure that employees are able to enforce their rights. The system protects against unfair or rash dismissal, but is an impediment to employers who, for example, wish to dismiss underperforming employees. If an employer is able to dismiss an employee after all, it is required to pay the employee one-third of this employee’s monthly salary for every year of service, which is known as a ‘transition payment’. Imposing responsibilities on employers and providing employees with sufficient options for enforcing the rights that employers must offer is often the most efficient route for the government. The government itself tends to be unable to create schemes that are sufficiently in line with employers’ operations and has insufficient means and possibilities to enforce employees’ rights. However, the legislature does realise that employment contracts come with numerous responsibilities and has attempted to accommodate employers who object to this, by permitting some form of flexibility in employment contracts. B Flexible Employment Relationships Some of the objections that employers have raised against the burden placed on employment contracts have been met by the option of concluding flexible employment contracts. For 2 3

The Hague Court of Appeal, 28 April 2020, ECLI:NL:GHDHA:2020:879 (organist). Bulletin of Acts and Decrees 2015/246, https://wetten.overheid.nl/BWBR0011173/2016-01-01/0/informatie.

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instance, a temporary employment contract may be concluded that ends by operation of law, even in cases where an employer would not be permitted to terminate a permanent employment contract, for example if an employee falls ill. The employer avoids the relatively stringent dismissal law by concluding a temporary employment contract. In order to prevent any misuse of temporary employment contracts, and in accordance with Directive 99/70 EU, limits have been imposed on the number and duration of temporary employment contracts that the same parties may conclude. The rule is, briefly, that if more than three successive temporary employment contracts are concluded or if successive temporary employment contracts exceed a period of thirty-six months, a permanent employment contract is created by operation of law. Employers may conclude on-call contracts if they wish to deploy employees at variable hours. It may be agreed for a period of six months that an employee will not receive any wages if that employee does not work, even if this lack of work should be at the employer’s expense and risk. The employee may rely on a legal presumption regarding the scope of the employment contract, which allows the employee to demand payment for that number of hours after these six months. The scope is presumed to be equal to the average number of hours worked per month for the past three months, but the employer may attempt to prove that, on account of special circumstances, the scope should be determined based on a longer, more representative period. If the employee has worked without a fixed number of hours for a year and if the employment contract continues, the employee is entitled to an offer from the employer to work for a fixed number of hours per month or per year. The employer must make the employee an offer based on the average of the past twelve months. Statutory provisions have been in force for this type of on-call contract since 2020, which are intended to better protect on-call employees against arbitrariness. For instance, a call must be made at least four days before the start of the labour; if not, the employee may refuse the call. If a call is not withdrawn at least four days before the work commences, the employee retains the right to wages for the period for which the employee was called. Another way to avoid the rules imposed on an employer under an employment contract is to transfer the employer status. This may be done by putting an employee to work as an agency worker. In that case, the temporary employment agency has recruited and employs the employee and may put the employee to work somewhere else. A special type of placement is the situation where a user company acquires an employee but arranges that the employee enters the employment of another employer, which makes the employee available to the user company. It is often agreed in such cases that the employee cannot be made available to other user companies. This is actually ‘payrolling’. As the employee is not employed by the company that puts the employee to work (the user company), the employee is not subject to the terms of employment applicable at the user company, either. This structure allows employers to have employees work for them at lower costs than the costs they would incur if they were to employ these employees themselves. This means that it is an option for companies with expensive terms of employment in particular. Payrolling surged in the Netherlands in the past few years; approximately 300,000 employees (roughly 4 per cent of the working population) worked on this basis in 2018. The legislature intervened and decided that, as from 2020, employees subject to payroll hiring would be entitled to the terms of employment applicable at the user company.4 Payrolling has lost virtually all of its appeal to this group of employers since 2020 and is now used to a substantially lesser extent.5 4

5

Section 7:692a of the Dutch Civil Code, Act of 29 May 2019, Bulletin of Acts and Decrees 2019/219 (Wet Arbeidsmarkt in Balans (Balanced Labour Market Act)). Het Financieele Dagblad, 10 September 2020.

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A new development is the ‘outsourcing’ or ‘contracting’ of work, where an employer outsources a separable part of its production process to another employer. Examples of litigation in the Netherlands include a chicken slaughterhouse leasing one of its production lines to a Polish entrepreneur, who operates the entire production line with his own staff and sells the finished product back to the owner of the production line,6 and former state postal service PostNL, which outsources the distribution of parcels in distribution centres to a third party as an independent activity.7 PostNL, delivering approximately half of all parcels in the Netherlands, has threequarters of deliveries made by ‘subcontractors’. These subcontractors undertake to deliver all parcels in a specific district or neighbourhood at a predetermined rate.8 The Minister of Social Affairs and Employment has already stated that he considers this outsourcing of core business to be an undesirable practice and that he will explore how this can be prevented.9 However, the problem is that the outsourcing of some activities in the periphery of operations, such as cleaning and catering in the company restaurant, is not considered undesirable and is common practice in the Netherlands. It is hard to draw a distinction between undesirable types of contracting and permissible or common types of contracting. Partly for this reason, the Minister’s intention to regulate matters has not resulted in legislation so far. C Domestic Work A separate category of employees are those who perform work for another private individual’s household. The private individuals who provide the work are hardly able – if they are even to be considered employers – to perform the obligations associated with an employer status. A private individual cannot easily deduct taxes and occupational disability and unemployment insurance contributions from payments they make to another person, pay pension contributions or rehabilitate an employee by offering suitable labour in the event of incapacity for work. That is why several European countries have regulated this labour in a different way from the usual labour, for example by service vouchers in Belgium and by a ‘home services regulation’ in the Netherlands.10 The latter regulation entails that the employer, that is, the private individual who uses the household services, is not required to deduct taxes and that much of the employment protection applicable to regular employees does not apply to those ‘performing services for households’. For instance, dismissal law (section 7:671(1)(d) of the Dutch Civil Code) does not apply and continued payment of wages in the event of illness is required only for a period of six weeks. I will return to this type of labour and the applicable rules in Section IV, because this work in particular is often ‘arranged’ through platforms. D Self-Employed Persons Despite the options of concluding flexible employment contracts or transferring the employer status, it proves to be attractive for employers to have labour performed on the basis of contracts for services rather than employment contracts. In 1997, the Dutch Supreme Court gave 6 7 8 9 10

Den Bosch Court of Appeal, 20 August 2019, ECLI:NL:GHSHE:2020:3098 (chicken slaughterhouse). Overijssel District Court, 7 May 2020, ECLI:NL:RBOVE:2020:1538 (PostNL). De Monitor, 14 September 2020, https://demonitor.kro-ncrv.nl/onderzoeken/pakketbezorgers. Letter to the Dutch House of Representatives, 13 May 2019, https://bit.ly/4720490. Home Services Scheme, www.rijksoverheid.nl/documenten/regelingen/2015/09/30/regeling-dienstverlening-aanhuis; regarding the regulation and similar regulations in other EU countries, see PHS-Quality Project: Quality and Industrial Relations in the Personal and Household Services Sector – VS/2018/0041, https://aias-hsi.uva.nl/en/ projects-a-z/phs-quality/phs-quality-project.html.

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judgment,11 finding that the parties’ intention was indicative of the qualification of the contract. The matter involved a tax law lecturer who was offered an employment contract but who was only willing to perform labour based on a contract for services. When that contract was terminated without observing the rules under labour law, he took the position that he was employed based on an employment contract and sought payment of substantial amounts of money on account of a violation of those rules. His claim was dismissed as it was assumed that no employment contract existed. The impression we get here is that this lecturer was trying to have it both ways and was unsuccessful in his attempt. This judgment gave way to the thought that the parties themselves can decide to qualify a contract as an employment contract, or not. Although the Supreme Court itself in later jurisprudence seems to consider this case-law outdated to a large extent, it was only in November 202012 that the Supreme Court expressly judged that the intent of parties regarding the qualification of the contract of employment is not relevant to the qualification of the contract. This is because an employment contract arises – irrespective of what the parties themselves have in mind – if the requirements imposed by the law are met. Meanwhile, the room that was created in qualifying a contract as a contract for services rather than an obligatory employment contract has been widely used in the Netherlands. Consequently, employers feel a need to avoid employment contracts and some workers also believe an employment contract as a basis for performing labour is a less attractive option, and there is room to avoid an employment contract. First of all, some work is hardly offered in the form of employment contracts. Examples of these are technical or executive positions in the culture sector. Nearly all substitutes – musicians who replace regular musicians in orchestras, for example – work as self-employed persons.13 As an aside, I note that these substitutes are considered ‘false’ self-employed persons under European law, as is evident from case-law of the European Court of Justice.14 From my own observation, I conclude that the desire of some employees to perform labour based on a contract for services is stronger where the labour is a side activity, that is, where it is performed in addition to a regular job or other activities, such as studying. Because of their private lives, employees may also feel compelled to perform labour at greatly varying hours, so much so that this is incompatible with regular employment. Another reason to opt for labour on a self-employed basis is that some groups in the labour market have difficulty finding paid employment. This may be related to discrimination,15 to insufficient education in line with labour market requirements, or to partial incapacity for work.16 For these groups of people, working as a self-employed person is a way to generate income after all. Some employees regard the obligations that employment contracts impose on them as impediments. Many nurses are known to consider working on the basis of an employment contract less attractive since the number of nights they are permitted to work in paid employment is limited, and the applicable collective bargaining agreement caps employees’ salaries. The trade unions consented to this cap to keep the costs of healthcare under control, but the current lack of nursing staff allows self-employed persons to demand higher fees than the wages 11 12 13

14 15

16

Dutch Supreme Court, 14 November 1997, NJ 1998/149 (Groen v. Schoevers). Dutch Supreme Court, 2 November 2020, ECLI:NL:HR:2020:1746 (X/gemeente Amsterdam). SER advisory report 2017/07, Passie gewaardeerd, www.ser.nl/-/media/ser/downloads/adviezen/2017/passiegewaardeerd.pdf. ECJ, 4 December 2014, ECLI:EU:C:2014:2411 (FNV KIEM). R. Florisson and I. Mandl, Platform Work: Types and Implications for Work and Employment – Literature Review, Working Paper WPEF18004 (Dublin: Eurofound, 2018), 48, https://bit.ly/43EGhd3. Niels van Doorn, ‘Platform labor: On the gendered and racialized exploitation of low-income service work in the “ondemand” economy’, Information, Communication & Society, 20(6) (2017), 898–914, https://doi.org/10.1080/1369118X .2017.1294194.

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paid under the collective bargaining agreement. Other studies have also revealed that many selfemployed persons regard the options of working more flexibly as a major benefit of working without an employment relationship. Approximately 65 per cent of self-employed persons state that this freedom is the reason for their desire to work on a self-employed basis.17 Self-employed persons are also able to evade all sorts of administrative work, which is generally experienced as less satisfactory, because they are not subordinates or do not feel as if they are subordinates. What is more, the Dutch government has created a highly favourable tax regime for selfemployed persons in order to encourage entrepreneurship. A study conducted by several ministries18 has found that a self-employed person who earns EUR 25,000 gross per year is left with a net annual amount that is EUR 6,000 higher than an employee with the same gross income. This difference does not become smaller as the income rises: an income of EUR 90,000 gross per year yields a difference of nearly EUR 18,000 net. However, these income differences are partly explained by employees being covered by unemployment, occupational disability, and pension schemes, whereas self-employed persons are not. It is known that self-employed persons tend not to take out such insurance, which means that they run a greater risk of income losses than employees. As this also became apparent during the Covid-19 crisis, separate income schemes were created for self-employed persons.19 Obviously, this substantial income difference is a major incentive for employees to work as self-employed persons. The Dutch Tax and Customs Administration is to enforce employment contracts in the context of taxation and the levy of social security contributions. However, this enforcement has been a problem for years, as large groups of self-employed persons oppose the qualification of their contracts as employment contracts. As a result, this is a highly sensitive political issue. The Ministry of Finance has announced that the tax authority will not enforce taxation regulation for bogus self-employed until 2025.20 The recommendations from the 2018 OECD Economic Survey of the Netherlands21 are aimed at ensuring a more level playing field, particularly in terms of tax treatment, between self-employed persons and other workers. More than 15 per cent of the working population work on the basis of contracts for services by now; in some cases employers prefer self-employed persons over employees where work is to be performed. Especially where the activities are easily split into several duties and little to no instruction is needed for the performance of those duties, the work is offered only to subcontractors and not to employees. Platforms seem to be capitalising on this option. In summary, room was created in the Netherlands to structure employment relationships in ways other than by means of permanent employment contracts, and this room is used to the fullest extent because concluding an employment contract is onerous or financially less attractive to both the employer and the employee. As a result, the percentage of people working on a self-employed basis in the Netherlands is higher than average in the European Union (EU) countries. Exceptions to the rules have been created for employees working for other people’s

17

18 19

20

21

Eindrapport IBO: zelfstandigen zonder personeel [Final Report IBO: Self-Employed without Employees] (2 October 2015), 25, www.rijksoverheid.nl/documenten/rapporten/2015/10/02/eindrapport-ibo-zelfstandigen-zonderpersoneel. Eindrapport IBO, annexes, https://bit.ly/3ruFKNl. Temporary Bridging Scheme for Self-Employed Persons [Tijdelijke overbruggingsregeling zelfstandig ondernemers (Tozo)] https://bit.ly/44yxtXB. Letter of 24 June 2022 of the staatssecretaris van Financie¨n en van de minister van Sociale Zaken en Werkgelegenheid [State Secretary of Finance and of the Minister of Social Affairs and Employment], https://bit.ly/3rx0hkm. OECD, ‘Economic Survey of the Netherlands – 29 June 2023’, www.oecd.org/economy/netherlands-economicsnapshot/.

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households, since private individuals cannot be expected to bear the responsibilities that come with being an employer.

III THE CHANGING NATURE OF WORK: SUBORDINATION AND TECHNICAL INNOVATION

The relationship of authority is the key component in the definition of an employment contract. If there is no authority, there is no employment contract. It is often believed that an employer’s authority is found in the employer’s power to give employees instructions on the work to be performed. I do not believe that this is correct. A high degree of freedom in a worker’s performance of duties does not preclude the existence of an employment contract; nor does the fact that an employer does not have the right to order the employee to perform specific acts.22 Consequently, the fact that employees are increasingly professionals who do not need or accept any substantive control in performing their work does not preclude an assumption that an employment contract exists. The relationship of authority is characterised by a worker forming part of the employer’s organisation and accepting the applicability of the rules issued by the organisation, as well as the customs and practices applicable there.23 This modern approach to relationships of authority is important because the direct authority that employers exercise is waning, and activities are increasingly controlled through apps and other electronic means. This is referred to as ‘algorithmic management’. It remains to be seen whether employees can be subordinate to such systems and whether this entails subordination to their employers.24 The Amsterdam cantonal judges decided that subordination in the sense of employment contracts can also exist if employers leave it to electronic systems to control their employees’ activities. This is not altered by the fact that such systems may not give direct instructions but rather control workers’ behaviour by nudging and through incentives.25 The Amsterdam Court of Appeals supported this view in its decision, deeming Deliveroo to be the employer of the food deliverers it uses for its services.26 This case was taken to the Supreme Court, which delivered its decision on 24 March 2023; it stressed that the deliverers are subordinate to the system and therefore employees.27 Modern employers also prefer to persuade employees to perform work rather than giving direct instructions. In my view, the fact that the system is filled by customers’ feedback and not by the employer does not make much of a difference in terms of attributing the relationship of authority to the employer.28 A modern approach to relationships of authority also entails that subordination exists if a worker is part of the employer’s organisation and is subject to the rules, customs, and practices applicable there. In her Opinion before this case, the Advocate General recommends that the Supreme Court find that the relationship of authority should be construed by taking into account the organisation embedment of the worker.29 When the worker is part of the organisation of the work provider, submitted to its regulations, not distinguishable 22 23 24

25 26 27 28

29

Dutch Supreme Court, 12 September 2014, ECLI:NL:HR:2014:2653, JAR 2014/260 (cooperative of prostitutes). Dutch Supreme Court, 1 May 2015, ECLI:NL:HR:2015:1172 (Kriterion). Valerio De Stefano, ‘Negotiating the Algorithm’: Automation, Artificial Intelligence and Labour Protection, Employment Working Paper No. 246, Employment Policy Department (Geneva: ILO, 2018), 13. Rechtbank Amsterdam, 13 September 2021, ECLI:NL:RBAMS:2021:5029 (FNV/Uber). Amsterdam Court of Appeal, 16 February 2021, ECLI:NL:GHAMS:2021:392 (Deliveroo/FNV). Dutch Supreme Court, 24 March 2023, ECLI:NL:HR:2023:449 (Deliveroo). J. Kloostra, ‘Ondergeschikt aan het algoritme [Subordinate to the algorithm]’, TRA (tijdschrift Recht en Arbeid) [Law & Labour Magazine], 71 (2020), 10–18. Conclusie A-G de Bock, 16 June 2022, ECLI:NL:PHR:2022:578 (Deliveroo).

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from other workers in the organisation, and when the worker is not able to perform the work as a real entrepreneur (setting own prices, advertising own activities, etc.), that worker is deemed to be an employee. What is also relevant is that an entrepreneur markets their own product and independently determines the price of the product, whereas an employee is unable to do so. This modern approach to relationships of authority is more in line with the current organisation of work. The Supreme Court decided that the existence of a relationship of authority depends on a judgement of all relevant aspects of the case, and specified nine elements that have to be taken into account. One of them is the embedment of the worker; another is the exercise of authority by the employer, possibly using digital means such as an app. In the Deliveroo case, an evaluation of the elements led to the conclusion that the workers are subordinate and therefore employees.30 Previously, the advisory committee set up by the Minister of Social Affairs and Employment already recommended that the statutory definition of an employment contract be adjusted to embed the modern interpretation of relationships of authority in the law.31 This modern approach is also far more in line with the European approach to the term ‘subordination’.32 It is generally assumed that an employee’s right to arrange for a replacement in the performance of labour at the employee’s own discretion precludes a relationship of authority. If the employee could evade an instruction given by the employer by sending a replacement, little is left of the employer’s authority. In my opinion, however, the worker’s option of arranging for a replacement does not automatically mean that no employment contract can be assumed to exist.33 It is striking that the contracts that professional clients conclude with their workers are often drafted in such a way as to create a paper reality that can hardly be refuted by the facts. Therefore, although – practically speaking – the provision on replacement is of no use or cannot be of any use in some instances, it does sometimes achieve the purpose that the client intended at law (i.e. to prevent an employment contract from being created or from being assumed to exist in court). In the Pimlico decision, the UK Supreme Court also grappled with a replacement clause and arrived at the opinion that where a worker’s right to arrange for a replacement is limited to workers approved by the ‘client’, that replacement does not preclude an assumption that the worker is required to perform the labour personally and is therefore a subordinate.34 This seems a proper point of departure to me. Only if the worker arranges for a replacement by way of an earnings model will it be difficult to establish personal labour and therefore to assume the existence of an employment contract with the provider of the work.35 After all, if such an earnings model exists, the worker is an entrepreneur. In that case, the entrepreneur earns their income not only by means of personal labour but also by other people’s labour, and the entrepreneur runs a business risk as a result. It is often assumed in the case-law of the lower courts that the possibility of replacement precludes the existence of an employment contract.36 30 31

32

33 34 35

36

See supra note 27. Work Regulation Committee, In wat voor land willen wij werken? [What Kind of Country Do We Want to Work In?] (23 January 2020), 70, www.rijksoverheid.nl/documenten/rapporten/2020/01/23/rapport-in-wat-voor-land-willen-wijwerken. E. Verhulp, The Notion of ‘Employee’ in EU-Law and National Laws: A Thematic Working Paper for The Annual Conference of the European Centre of Expertise (ECE) in the Field of Labour Law, Employment and Labour Market Policies (Frankfurt: Hugo Sinzheimer Institute (HSI), 2017), https://hdl.handle.net/11245.1/a8c0b0b6-084c-45d2-b897 -a5706ee0b2c8. Gelderland District Court, 17 January 2017, ECLI:NL:RBGEL:2017:224 (pilot). UK Supreme Court, 13 June 2018, Judgment in Pimlico Plumbers Ltd v. Smith, (2018) UKSC 29, para. 34. Compare with Amsterdam Court of Appeal, 30 January 2018, ECLI:NL:GHAMS:2018:314 (PostNL Pakketten Benelux B.V.). See, for example, the proceedings of parcel deliverers against PostNL, Limburg District Court, 1 March 2018, ECLI: NL:RBLIM:2018:2029.

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IV THE CHANGING NATURE OF WORK: NEW JOBS AND NEW ORGANISATIONS

It has been discussed already that employers cut up work and offer these separate activities in order to have the labour performed without being required to enter into an employment relationship. This development of the fissured workplace is not a national development.37 Increased digitisation of labour and the application of artificial intelligence allows employers to cut up positions into several duties in a better and simpler way than they could before. Some of the work that bank employees previously performed is now performed by customers themselves, who now make payments through smartphone apps. The remaining activities of desk clerks who used to accept and process payments were split up and offered as packages to be performed as self-employed labour. In some cases these duties may even be performed by people who are not workers, for example where the duties are included in a game.38 This means that we see shifts in the labour market that are mainly caused by digitisation. This affects the organisation of the labour market. The average term of employment contracts is decreasing, whereas the number of flexible employment relationships is increasing.39 In the Dutch labour market the industry used to provide a substantial part of the jobs, but employment opportunities are diminishing there.40 Another large part of the jobs could be found in the business services sector. Especially in the financial services sector, at banks and insurance companies, the number of jobs is still decreasing because of digitalisation.41 This decrease is mainly seen in ‘middle management’ positions, among employees who were responsible for direct customer contact. Many of the activities these employees carried out are now performed by customers themselves through smartphone apps. The Covid-19 crisis seems to have accelerated rather than slowed down the development of jobs being cancelled in the middle labour market – such as positions involving customer contact, for example shop assistants and desk staff – although no clear studies have come to my knowledge. Partly because of the Covid-19 crisis, the number of jobs is on the rise in other sectors, such as online shops and other services performed by platforms. This involves work in such sectors as the transport sector, which includes the transport of goods rather than passenger transport. The transport of goods is a true growth sector in terms of carrying out and delivering orders placed online. This pertains to the delivery of both orders placed with large platforms such as Amazon and Alibaba, and meal and grocery deliveries. These activities, such as grocery shopping and delivering takeaways, were previously not regarded as paid work. The outsourcing of duties that were previously not automatically regarded as work does not stop with parcel delivery and meal delivery. It is a trend that Arlie Hochschild described as ‘the outsourced self’ as early as 201342 and that is about the outsourcing of duties that used to be far more private and were therefore previously performed by people themselves. Examples of these are organising children’s parties, dog walking services and potty training, as well as care for 37

38

39

40 41

42

David Weil, The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It (Cambridge, MA: Harvard University Press, 2019). See Marion Crain, Winifred Poster, and Miriam Cherry, Invisible Labor: Hidden Work in the Contemporary World (Oakland, CA: University of California Press, 2016). P. de Beer and E. Verhulp, Dertig vragen en antwoorden over flexibel werk [Thirty Questions and Answers about Flexible Work] (Amsterdam: University of Amsterdam, Amsterdam Institute for Advanced Labour Studies, 2017), 10, https://pure.uva.nl/ws/files/39049347/Dertig_vragen_en_antwoorden_over_flexibel_werk_DEF.pdf. Employment Structure of Statistics Netherlands 1999–2019, https://bit.ly/3Do51eP. Statistics Netherlands, Structurele afname werknemers in financie¨le sector [Structural Decrease in Employees in the Financial Sector] (17 December 2018), www.cbs.nl/nl-nl/nieuws/2018/51/structurele-afname-werknemers-infinanciele-sector. Arlie Russel Hochschild, The Outsourced Self: Intimate Life in Market Times (New York: Metropolitan Books, 2013).

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parents or other loved ones. The last does not just include activities necessary to obtain medical care but also simply keeping in touch in order to prevent loneliness. The outsourcing of duties that used to be part of the private domain is undeniably on the rise.43 In the context of this book, it should be noted that this also results in an increase in the number of ‘non-professional employers’. I mean to say here that a growing number of private individuals engage other private individuals to perform work. It has been set out earlier that such employers are subject to special – less stringent – employment rules. Typical of many of the activities in which a growth in the number of jobs can be seen or is to be expected is that platforms act as intermediaries. Orders placed online are mostly delivered by organisations that have a minimum amount of work performed by employees and that outsource the delivery work as self-employed labour. The people delivering meals work through one of the ‘order platforms’, such as Uber Eats or Deliveroo, generally as self-employed persons. Platforms such as Helpling act as intermediaries between cleaners and households requiring domestic help. Services for private individuals’ households are offered through all sorts of other platforms, such as babysitting44 and grocery services,45 as well as certain types of ‘keeping people company’.46 Organisations are also changing owing to increasing digitisation. The distinction between sectors is blurring, making the effects of sectoral schemes less explicit. An example here is the increase in grocery shopping in digital shops. The groceries are collected and packed in a distribution centre and then delivered to consumers at home. The question is what sector this virtual supermarket should be considered to be part of. The trade unions took the position that the collective bargaining agreement for supermarkets should also apply to the staff of this digital shop. If this were any different, this digital shop could compete with physical shops as regards terms of employment. However, the digital supermarket stated that this should apply only to a small number of staff and that, for the rest, the rules governing storage, distribution, and transport, or governing information technology, should apply. The employer was successful in legal proceedings on this issue.47 The digital supermarket has now concluded its own collective bargaining agreement with a small trade union for staff working in the distribution centres.

V LEGAL STATUS OF PLATFORM LABOUR: WORKING FOR THE PLATFORM

Before the lower courts in the Netherlands, the type of contract – the parties concluded a contract for services – plays a major role in the qualification of the contract applicable between the parties. Workers commit themselves to a platform that generally goes to great lengths not to regard these workers as employees. Platforms do so, first of all, by designing the contracts being concluded in such a way that no employment contract seems to exist. This practice tempted the London Employment Tribunal into finding: Any organisation (a) running an enterprise at the heart of which is the functioning of carrying people in motor cars from where they are to where they want to be and (b) . . . (c) requiring 43

44 45 46 47

SER [Social and Economic Council], Markt voor persoonlijke dienstverlening in internationaal perspectief [Market for Personal Services in an International Perspective], Exploratory Study 20/06 (The Hague: SER, 2020), 24, www .ser.nl/-/media/ser/downloads/adviezen/2020/markt-persoonlijke_dienstverlening.pdf. See also the references there (especially p. 24). Sitly, www.sitly.nl/over-sitly; Nina.care, https://nannynina.nl/. Picnic, www.picnic.app/nl/. Vertroetel je Ouders [Pamper Your Parents], https://vertroeteljeouders.nl/; Mantelaar [Cloak], www.mantelaar.nl. Amsterdam District Court, 3 December 2019, ECLI:NL:RBAMS:2019:8968 (Picnic).

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drivers and passengers to agree, as a matter of contract, that it does not provide transportation services . . . and (d) resorting in its documentation to fictions, twisted language and even brand new terminology, merits, we think, a degree of scepticism.48

In the Netherlands, it is especially the lower courts that have difficulty keeping such a distance to the contract; they prefer to follow the letter of the contract. In the first Deliveroo case,49 the subdistrict court deemed it relevant that the worker was aware that he had concluded a contract for services and considered this relevant to the qualification of the contract. The court also deemed it relevant that the contract stated that the rider/worker could freely arrange for a replacement in the performance of the work. The question is why a platform worker, who can simply turn off the app or reject a delivery job through the app if they do not wish to perform any labour, would ever feel a need to arrange for a replacement to perform the work. In my opinion, a qualification of a contract between a platform worker and a platform should include an assessment of whether a relationship of authority exists. It is possible that the worker performs labour based on an employment contract, especially if we take the modern relationship of authority as a basis. For performing the work, the worker depends on an app they can turn on or off as they wish, but when the app is turned on, a record is kept of how often the employee accepts an offer of work, and this has consequences for subsequent offers of work. When the worker turns on the app, they become part of the organisation that operates the app, which implies subordination and the existence of an employment contract. A record is also kept of how the worker performs the work, or customers are asked to do so. The platform attaches consequences to the information collected in this way, affecting the possibilities of performing labour. The worker cannot determine the price of their services; the platform (or the app) does this and payment is made to the platform rather than to the worker. In most cases, no actual entrepreneurship is involved. All these components in the relationship between a worker and their platform seem to point towards an employment contract.

VI WORKING THROUGH THE PLATFORM

Among the work platforms that provide services to customers, I distinguish between those where workers do not work at customers’ premises and those where workers do perform the work at customers’ premises. The first group includes well-known platforms such as Uber and Deliveroo. In the case of such platforms, it is hard, if not impossible, to construe an employment relationship between a worker and a customer, owing to the short and intermittent relationship. The question is whether the platforms belonging to the second group are themselves to be regarded as employers or just intermediaries, and whether the relationship created between a platform customer and a worker is to be qualified as an employment contract. A number of legal proceedings are currently pending on this issue. In late October 2020, the largest Dutch trade unions announced that they had served a summons on the Temper platform.50 In its own words, Temper acts as an intermediary to help self-employed persons (and not employees) find work at third parties, especially in the hospitality industry and, since the Covid-19 crisis, also at distribution centres. It is indeed highly doubtful whether it is even possible to work at another party’s hotel or catering establishment or distribution centre as a self-employed person, in particular if we take the ‘modern’ definition of relationships of authority as a basis. The case is still pending. 48 49 50

London Employment Tribunal, 26 October 2016, Case No. 2202550/2015, Aslam, Farrar & Others v. Uber BV. Amsterdam District Court, 23 July 2018, ECLI:NL:RBAMS:2018:5183 (Deliveroo I). Yvette de Vries, ‘FNV en CNV dagen Temper voor de rechter om schijnzelfstandigheid [FNV and CNV take Temper to court for bogus self-employment]’, FNV (22 October 2020), https://bit.ly/3O76pr4.

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In the case of Helpling, a platform that matches cleaners and households, workers clean customers’ homes. Customers pay Helpling an amount per hour, and Helpling pays part of the amount to the cleaners. Helpling contractually excludes employment contracts with cleaners, but is not clear about whether it forms employment contracts between cleaners and customers. In proceedings initiated by the largest Dutch trade union, the Amsterdam District Court ruled that Helpling is not the employer in this structure; rather, the customers are the employers of the cleaners. This is because Helpling does not give any instructions or directions on how cleaners are to perform their duties. In view of the modern interpretation of relationships of authority that I have advocated, it is doubtful whether this is sufficient to assume that no employment contracts exist. According to the court, the relationship of authority is found with customers, who are able to give cleaners instructions and specify where the work is performed. The court is of the opinion that Helpling is engaged in job placement;51 it creates employment contracts between other parties. The Dutch Placement of Personnel by Intermediaries Act regulates job placement; section 3 of the Act prohibits intermediaries from demanding that employees pay for the intermediary services, as a result of which Helpling had to change its earnings model.52 The discission of the Amsterdam District Court was overruled by the Amsterdam Court of Appeals. This Court holds the opinion that Helpling is in fact to be regarded as the employer.53 In this case the platform is to be regarded as an employment agency. This means that the platform is deemed to have concluded employment contracts with cleaners and subsequently makes these people available to third parties (households). This situation occurs where the platform exercises employer duties that go beyond what is necessary for providing labour intermediary services. As a result of the labour law exceptions for employers who have employees perform services for households, as discussed in Section II.C, the burden to be borne by customers/households as employers is not excessive. If the platform is to be regarded as an employer, these exceptions do not apply and the price of the labour increases significantly.

VII WHAT NEXT / QUO VADIS?

The debate on platform labour in the Netherlands seems to focus on the qualification of employment contracts. The Dutch government has not yet taken any specific measures under labour law aimed at platform labour or at another structure of labour in respect of digitisation or the application of artificial intelligence. In view of the limited extent of platform labour in the Netherlands, which is estimated to be 1 per cent of the labour market, the government does not feel a need to take regulatory action immediately. However, the government did set up a Work Regulation Committee in 2018 to advise on labour market developments and on the right structure for the labour market, partly in view of increasing robotisation and digitisation of and in labour. The committee delivered its final report to the government in 2020, paying attention to platform labour but hardly to other types of digitisation of labour.54 An important conclusion of the committee is that it is necessary – also in connection with platform labour – to distinguish more clearly between self-employed persons and employees. The opinion does not contain any recommendations for regulating platform labour, nor any recommendations to 51 52

53 54

Amsterdam District Court, 1 July 2019, ECLI:NL:RBAMS:2019:4546 (Helpling). See, in this regard, E. Verhulp, ‘On the applicability of the Temporary Agency Work Directive to platform labour’ in Olaf Deinert et al. (eds.), Demokratisierung der Wirtschaft durch Arbeitsrecht, festschrift fu¨r Thomas Klebe [Democratisation of the Economy through Labor Law: Commemorative Publication for Thomas Kleber], 397 (Frankfurt: Bund Verlag, 2018). Amsterdam Court of Appeals, 21 September 2021, ECLI:NL:GHAMS:2021:2741 (Helpling). Work Regulation Committee, supra note 31.

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impose rules regarding the digitisation of labour. Meanwhile, at the request of the Dutch House of Representatives, the Social and Economic Council of the Netherlands has also examined the Dutch platform economy.55 Its report was published in October 2020 and contains much information about the platforms, but hardly any policy recommendations. This report, too, emphasises that some platforms use the indistinct dividing line between employment contracts and contracts for services to obtain a competitive advantage and recommends that the lack of clarity be removed. The report of the Social and Economic Council is not clear about how this is to be achieved. The Work Regulation Committee, accepting the modern approach to relationships of authority, recommends that the type of contract selected by the parties should no longer be deemed relevant. The government announced that as of 1 January 2025 accurate taxation of the employment contract will be fully enforced by the Tax Authority, which will affect a large group of self-employed (see Section II.D), and that additional legislation will be issued to enable the Tax Authority to carry out this task. The additional legislation will entail a clarification of the definition of the employment contract, where the embedment of the worker as indication of a relation of authority will be key, in line with the conclusion of the Advocate General in the Deliveroo case (see Section III). The government also announced that a legal presumption of an employment agreement will be introduced for workers earning less than €30 to €35 an hour.56 If implemented, it will affect the position of the platform worker because most platform workers earn less than this threshold. Contrary to what is often believed to be the case, the Dutch Competition Act, ensuing from Article 101 of the Treaty on the Functioning of the European Union, does not automatically preclude the making of arrangements for self-employed persons on remuneration or other terms of employment. The Dutch competition authority permits such arrangements for self-employed persons who are comparable to employees.57 As set out in Section II.D, the Netherlands has many of such self-employed persons. However, the problem with trade unions in the Netherlands is that they have insufficient power to force the platforms to make arrangements. This is partly because workers who are in fact willing to take part in campaigns are not automatically prepared to endorse the demands of regular trade unions. A campaign conducted by Uber drivers made it clear that the drivers are not looking for employment protection, as the regular trade unions are advocating, but they do want a higher percentage of the proceeds.58 The trade unions take the position that employment contracts are the normal situation for performing labour and argue that the use of contracts for services should be reduced. They believe that the current legislation is interpreted too broadly and that platforms wrongly generally use contracts for services. The trade unions take the position that platforms within the meaning of the law are ordinary employers of their workers and attempt to have this position confirmed in legal proceedings. As set out in this chapter, they have had only limited success so far. The uncertainty about the qualification of contracts, including between workers and platforms, is partly resolved by the Supreme Courts Deliveroo decision. Also, the government’s 55

56

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SER, Hoe werkt de platformeconomie? [How Does the Platform Economy Work?], Advisory Report 20/09 (The Hague: SER, 2020), www.ser.nl/-/media/ser/downloads/adviezen/2020/platformeconomie-hoe-werkt.pdf. Letter of the Minister of Social Affairs and Employment, 3 April 2023, p. 17, https://open.overheid.nl/documenten/ ronl-078cd037707d5a6045449d118efb550d9ab00e9e/pdf. ‘Guidelines for rate agreements for self-employed persons without employees, ACM (7 February 2023), www.acm.nl /nl/publicaties/leidraad-tariefafspraken-zzpers-0. Marc Kruyswijk, ‘Staking Uber: “Wij dragen alle risico’s, dat is oneerlijk” [Strike Uber: “We bear all the risks, that’s unfair”]’, Het Parool [The Watchword] (19 March 2019), www.parool.nl/nieuws/staking-uber-wij-dragen-alle-risico -s-dat-is-oneerlijk~b5f6259a/.

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proposals regarding the labour market will, when implemented, clarify the distinction between the employment contract and the contract of services. If the Tax Authority does indeed enforce the taxation of the employment contract, a major incentive to wrongly use a contract of services will be neutralised. But the tendency to avoid an employment contact will only be cancelled when the burden placed on permanent employment contracts is alleviated. If this is not done, the urge to find alternatives will not disappear. These alternatives, such as contracting, are more easily available as a result of technological developments. The more far-reaching technological developments are also changing existing employment relationships. The regulation of algorithmic management under labour law has hardly been considered, and I am not aware of any policy intention to change employers’ organisations or employers. The legal design of employment contracts is flexible and able to encompass many types of labour, but in the end it cannot include any labour that is so fragmented that no employer can be identified or for which the only identifiable employer is hardly, if at all, able to bear the responsibilities that come with being an employer.

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7 The Digitalisation of Labour Law in France Sophie Robin-Olivier

I INTRODUCTION

In 2019, the report of the Global Commission on the Future of Work of the International Labour Organization (ILO), Work for a Brighter Future, called for ‘technology in support of decent work’.1 Affirming that ‘labour is not a commodity; nor is it a robot’, the report insisted on the necessity of making sure that technology is ‘human-centred’ and that a ‘human-in-command’ approach to technology prevails. Whether labour law, as it stands, is sufficiently equipped to reach this goal is a difficult question. The impact of digitalisation has not often been considered from this angle: more often, the recurring question has been whether labour law can provide protection to workers affected by the transformation of work, and work relations, resulting from digitalisation. Another question has been about adapting workers to new technologies, through re-training, namely, in order for them to remain ‘employable’. These aspect of the ‘digitalisation of labour law’ have been central and shared concerns among labour law scholars. For labour law, digitalisation, which includes transformation resulting from technologies such as the Internet, internet platforms, robotics, artificial intelligence (AI), human resources technology (HR-tech), and ‘big data’, has brought back to life the question of the impact of technology on labour law: not a simple evolution but, as at other crucial periods of history, a ground-breaking transformation, a paradigmatic change. This transformation is a threat for workers and for labour law. To be sure, one can see a bright side: ‘advances in technology are not only expanding choices about where and when to work, they are also creating new and better jobs’,2 more accessible jobs, including for older or disabled workers. But the dark side overshadows the bright one: job destructions seem inevitable,3 possibly with a discriminatory impact (women could be more affected, in particular), without there being any certainty that those deprived of their current jobs will be able to grasp the new opportunities created by technological progress. Inequalities could worsen, both within the workforce in developed countries and between developed and developing countries. And the 1 2

3

ILO Global Commission on the Future of Work, Work for a Brighter Future (Geneva: ILO, 2019), 43. Report by the Conseil d’orientation pour l’emploi (COE) [Orientation Council for Employment], Automatisation, nume´risation et emploi [Automation, Digitization and Employment], vol. 1, Les impacts sur le volume, la structure et la localisation de l’emploi [Impacts on the Volume, Structure and Location of Employment] (12 January 2017), www .strategie.gouv.fr/publications/automatisation-numerisation-emploi-tome-1-0, at 21. In France, the COE Automatisation, nume´risation et emploi report, vol. 1 (see n. 2) considers that less than 10 per cent of ‘very exposed’ jobs could disappear: low-skilled manual workers, especially in industry, such as unskilled workers in process industries, material handling, mechanics, maintenance workers, and cashiers. This report also states that for 50 per cent of jobs, work could change profoundly with the development of digitisation and automation technologies, the most likely to change being service jobs such as drivers, hotel and restaurant employees, and home care workers.

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capacity of labour law to ensure protection in this context of global work, and confronted with the black box of algorithms, is uncertain. Ensuring that the opportunities created can be seized by the greatest number, and that the benefits of technological progress are fairly distributed, requires public intervention and, in particular, public policies concerning work and labour law. This is nothing but a very basic observation. The profound transformation of work requires new competences and resources for training. Social policies are needed to facilitate the professional and geographical mobility of workers, their conversion to new work environments, as well as compensation for periods of inactivity and stress-related disease. In this regard, digitalisation does not differ much from previous technological evolutions. However, the digitalisation of social and economic activities has amplified the concern about the capacity of labour law, within its traditional frontiers, to ensure the protection of workers, in particular the most vulnerable. That is one reason why new technologies involved in digitalisation can be considered ‘disruptive’: ‘they call in[to] question the employment contract itself, they replace jobs by fragmented tasks or micro tasks, and pretend to overshadow the employer’s function by algorithms, which [is] supposed to ensure automatic, rather than human, management’.4 Assimilation of ‘platform workers’ with traditional employees, especially, is neither always easy nor sufficient, not only because subordination is sometimes inappropriate to describe the conditions of work of platform workers but also, and more importantly, because granting platform workers the same working conditions as ordinary employees may not actually ensure their protection, given the transformation of the form and conditions of work. At EU level, this category of ‘workers’ may be better protected as ‘business users’ of online intermediation services (which EU Regulation 2019/1150 refers to) or as ‘internet users’ (benefiting from EU Regulation 2015/2120 on an ‘open internet’), for whom a new generation of ‘social’ rights is emerging. In national law, civil and commercial law, or intellectual property law, among other fields, could provide useful resources. A social dimension of the law could be found outside the traditional domain of labour law, which may require that labour law expands beyond its initial perimeter. There is another reason why digitalisation disrupts labour law. It has to do with the inclusion of the digital in the very design of social policies. Algorithms could be used to cross-check large amounts of data in order to facilitate the detection of risks for the health and safety of workers. Sensors inserted on or in objects in production chains could become instruments ensuring the monitoring of working conditions. These are just two examples of the potential transformation of the instruments of labour law. On the other side, this perspective is also one in which the reality of work and work relations is reduced, or limited to, digitalisable information. This aspect of the disruption resulting from digitalisation, although not yet very visible, should not be ignored. Before considering the perspective for future developments (Section IV), this chapter will look back to the traditional frontiers of labour law (Section II) and the transformation of French labour law that digitalisation has triggered so far (Section III).

II THE TRADITIONAL FRONTIERS OF LABOUR LAW

In French law, as in EU law and in most Member States of the European Union, the category of workers benefiting from the protection of labour law includes those who are ‘subordinated’ to an 4

Compare with M. De Vos, Work 4.0 and the Future of Labour Law (22 July 2018), https://papers.ssrn.com/sol3/papers .cfm?abstract_id=3217834, 20.

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employer. In recent times, however, the diversity of the forms of work, and the transformation of work itself have put to the test this definition of the frontier of labour law. It has become more and more obvious that labour law cannot efficiently protect some of the most vulnerable workers unless the conception of ‘subordination’ is stretched, even to the point of tearing. A critique of labour law has emerged, in France as elsewhere, based on the idea that protection designed for subordinated, full-time, permanent employees leaves many workers unprotected. Non-standard work arrangements have thus been a challenge for labour law since the 1980s, and have become a more pressing issue in the last twenty years, with flexibilisation, globalisation,5 and, eventually, digitalisation of the economy. A The Classical Configuration of the Employment Relationship To benefit from the protective rules included in the labour code, a worker must be an employee, bound to an employer by an employment contract. The notion of employee is not defined in the labour code, but was worked out by case-law. Quite classically, French labour law requires legal (not economic) subordination to an employer,6 and a remuneration.7 Depending economically on another person for work does not, except in a few cases mentioned in the labour code (domestic workers, for instance), determine the existence of a work contract. According to the French highest court for civil matters,8 subordination ‘is characterised by the execution [of] work under the authority of an employer who has the power to give orders and directives, to control the[] execution and to sanction the breaches of his subordinate’. It has been made clear that circumventing the application of labour law by choosing a type of contract other than the employment contract does not produce any legal consequences: the existence of a work contract is deduced from facts, and cannot be set aside by contract. It is a public order notion; as the French ‘Cour de cassation’ (the highest court for civil matters) decided,9 ‘the nature of the contract is not determined by the will expressed by the parties or the name given to their agreement, but by the conditions under which the work is provided’.10 B Typical and Atypical Work A large majority of work contracts are standard employment contracts (85 per cent in 2019). But more and more employees (87 per cent in 2019) are initially hired under ‘atypical contracts’, such as fixed-term and/or part-time arrangements, which are becoming shorter and shorter. In France, part-time work, fixed-term contracts, and agency work have been strictly regulated since the 1970s: written contracts are required to include a large number of compulsory clauses, and a series of cumulative conditions must be fulfilled (there must be a specific motive, from among those listed in the labour code, and both the duration and the number of renewals must be limited). 5

6

7 8 9 10

See K. Stone and H. Arthurs (eds.), Rethinking Workplace Regulation: Beyond the Standard Contract of Employment (New York: Russell Sage Foundation, 2013); S. Robin-Olivier, Les contrats de travail flexibles [Flexible Employment Contracts] (Paris: Presses de SciencesPo, 2016); D. Weil, The Fissured Workplace (Cambridge, MA: Harvard University Press, 2014). Subordination was considered the essential element to define an employment contract in a decision of the Court de cassation of 6 July 1931 (Bardou). See Cour de cassation, Social chamber, 13 November 1996, no. 94-13187 (Socie´te´ Ge´ne´rale). Ibid. Cour de cassation, Criminal chamber, 29 October 1985, no. 84–95559 (Gue´gan). Ibid.

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However, French law has evolved since the 1990s to offer more flexibility to employers, following the path of most European countries. More opportunities have been granted to firms to resort to atypical work (through an extension of the list of motives allowing the use of fixed-term contracts, namely). To take only one example, it has become possible since 2017 to conclude collective agreements at branch level, increasing the possibilities to resort to fixed-term contracts (although the requirement of a branch agreement has proved an efficient rampart against flexibilisation). However, this evolution is not without nuance, and some recent measures have initiated a movement backwards. Since 2016, part-time employees who have an agreement or an extended branch agreement benefit from a minimum weekly working time. In the absence of such an agreement, this minimum working time is set by the French labour code at 24 hours per week or, where applicable, at the monthly equivalent (i.e. 104 hours), unless an exception applies (e.g. a branch agreement authorising a different duration; a request of the employee, in order to address a personal situation or to undertake various work activities; for students aged under 26; or a contract with an ‘intermediary association’). In 2019, a bonus-malus system was introduced to limit the use of fixed-term contracts: firms’ unemployment contributions now depend on the proportion of fixed-term contracts among work contracts (compared to the average rate at branch level). This segmentation of the labour market resulting from the variety of work arrangements has often been criticised: the distance between the status of the most privileged, with stable work relationships, on the one hand, and the most precarious, on the other, is seen as an inacceptable inequality. A response lies in the equal treatment principle enshrined in French labour law, which is more extensively conceived than the non-discrimination rule contained in EU directives. On the basis of equal treatment, most of the protective rules of labour law apply, in principle, across the board, to all employees. In addition, French law has introduced what can be considered ‘positive action’ in favour of atypical workers: they benefit from a severance indemnity, at the end of a fixed-term contract, which is meant to facilitate their transition to another job. However, most labour law provisions (which concern, namely, working time arrangements, termination of work contracts, workers’ involvement, and vocational training) have been worked out in consideration of ‘standard’ work arrangements. As a result, they offer only limited protection to the most precarious workers: these workers cannot, in effect, reap the benefits from the regulation of dismissals, and they have a harder time gaining access to leave, vocational training, and institutions representing workers in the workplace. The existence of a gap in terms of protection between the different categories of workers and the discourse on inequality stemming from ‘segmentation’ of the labour market has served to buttress the idea of aligning all employees on one single status (although no ‘single employment contract’ was introduced). This warranted the erosion of some of the rights granted to ‘insiders’, that is, those with standard contracts, in the name of fairness, equality and de-segmentation, and the inclusion of the category of ‘outsiders’. More flexibility in the regime of standard contracts is also a way to render flexible contracts less attractive. In line with these ideas, flexibility has been lodged at the centre of the standard employment relationship: through decentralisation of working time regulation at firm level, for instance, or, more recently (2017), by limiting compensation for unfair dismissals (in order to allow employers to anticipate the cost of terminating work contracts, to limit the financial burden for the employer, and to deter actions in courts). To be sure, ‘flexsecurity’ has not been ignored by French labour law: increased flexibility has gone along with some measures in favour of ‘securing’ the situation of workers, and facilitating

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transitions from one status to another. Among them, most notably, the possibility to terminate a work contract by convention (‘conventional termination’) was introduced in 2008. This facilitates termination and limits psychological and financial damages to the worker, who is entitled to a severance package and has the right to claim unemployment benefits. In addition, as mentioned earlier, part-time contracts must, since 2016, be of a minimum duration of twentyfour hours per week. Where one-third of the company’s workforce is employed part-time, companies now have the obligation to negotiate part-time working arrangements. Moreover, to take into account increased flexibility, and shorter contracts, an individual ‘activity account’ (compte personnel d’activite´) was created in 2016, and modernised in 2020: it is devoted to ensuring a right to training: instead of rights attached to employment and a particular job, rights are now tied to the person, to ensure ‘portability’. C Self-Employment Self-employment has increased in France in the last twenty years, after a long period of decline. This is owing to the development of the service sector, including health services, since agriculture and retail sectors have regressed. In particular, the professions of midwives, nurses, and rehabilitation professionals have increased significantly in line with demographic growth and an ageing population (180,000 independent jobs in 2016). Self-employment has also been fostered by a law created in 2009 that made it easier for individuals to start small businesses under the status of ‘auto-entrepreneur’ (which changed to ‘micro-entrepreneur’ in 2014).11 This very attractive regime has boosted independent work in France. It was indeed meant to facilitate the activity of independent workers and to curb informal/undeclared activities by substantially reducing and simplifying taxes, social contributions, and paperwork. In some sectors, micro-entrepreneurship supplanted traditional forms of self-employment within a few years.12 This is the case for teachers/professors (continuing education, sports and leisure disciplines), arts and entertainment, specialised services dedicated to companies (design, photography, translation, etc.) and individuals (repairers of personal and household goods, therapists, etc.). In 2016, 63 per cent of self-employed persons in these sectors of activity worked as ‘micro-entrepreneurs’. Apart from services, micro-entrepreneurs are also very active in construction (115,000 in 2016, or 31 per cent of self-employed) and retail sales, whether in markets or remote (81,000, or 68 per cent). Distinguishing employment contracts from contracts concluded for the provision of a service has been a central question of labour law for the last thirty years. This has to do with the transformation of work itself, making subordination more subtle (in particular for professionals who make independent decisions, which makes the ‘authority’ of an employer much more difficult to identify). It is also the result of attempts by firms to increase flexibility in the management of their workforce by forcing workers to become ‘entrepreneurs’: it has now become commonplace, in some sectors such as food delivery and passenger transport (taxis), to ask workers to become ‘micro-entrepreneurs’ if they want to obtain a job. This status has undoubtedly facilitated the so-called uberisation of the French economy. In courts, ‘bogus’ self-employment has become an important issue. French courts do not hesitate to reclassify service contracts into employment contracts when a body of evidence 11

12

There were 860,000 micro-entrepreneurs in France in 2016 (National Institute of Statistics and Economic Studies [INSEE]). INSEE Premie`res, no. 1768, 1 August 2019.

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demonstrates subordination. For instance, in a famous case involving a taxi driver, judges considered that the situation of the driver, although formally self-employed, was in fact subordinated to an employer: subordination resulted, in that case, from the economic weakness of the ‘independent’ worker.13 To limit conversions, which are indeed costly for firms (social security contributions are due from the beginning of the work relationship), a provision was included in the labour code in 1993 (now Art. L. 8221-6), indicating that ‘any person registered with the Commercial and Companies Registry or the Commercial Agents Register (whose registers are not for employees) is presumed not to be an employee and not to provide services in a subordinate manner’. However, this presumption is not irrebuttable and can be challenged. The same article of the labour code further provides that the existence of an employment contract can be established when the aforementioned person provides, ‘directly or indirectly, services to a party under conditions that place such service provider under the permanent subordination of the other party’. Needless to say, the notion of ‘permanent subordination’ is hard to define, which has limited the impact of this text. Overall, the existence of subordination has continued to be a difficult line to draw for courts, in all cases, including when workers are registered as independent services providers.

III IMPACT OF ‘DIGITALISATION’ OF WORK

A Problems, Critiques Digitalisation of work and workplaces has prompted many hostile reactions by trade unions, labour lawyers, and labour law specialists, although this is a controversial issue, and not everyone agrees.14 Digital platforms have been a central target of this critique. In its report on collaborative platforms, the General Inspectorate for Social Affairs (IGAS) condemned the development of micro-work for platforms, labelled ‘an advanced form of digital Taylorism and precariousness’.15 Platforms are contested because they organise the achievement of micro-tasks on a global scale, regardless of labour law, at the place where the worker is located. ‘Micro-workers’ (working for Figure Eight or Mechanical Turk, for instance) are described as ‘workers behind the scenes’ or ‘click labourers’, at the disposal of platforms.16 More generally, the impact of new technologies on workers’ health, including stress, depression, and other pathologies resulting from overwork, has been documented ever since information and communication technologies started to transform work and the organisation of work.17 Intensification of the phenomenon can indeed stem from the introduction of AI in processes: algorithms defining precise tasks to be performed in a precise and limited time, under permanent control, are a source of great pressure, for instance in warehouses where preparation of 13 14

15

16 17

Cour de cassation, Social chamber, 19 December 2000, no. 98-40572 (Labbane). In favour of adaptation, rather than resistance, of labour law to digitalisation, see J.-E. Ray, ‘Controˆler la dure´e du travail . . . chez soi [Control working hours . . . at home]’, Droit Social [Social Right] (2022), 21. See also the report of the Conseil d’Etat, Puissance publique et plateformes nume´riques: accompagner l’«ube´risation» [Public Power and Digital Platforms: Supporting ‘Uberisation’] (28 September 2017), https://bit.ly/3JOIzz8. N. Amar and L.-Ch. Viossat, Les plateformes collaboratives, l’emploi et la protection sociale [Collaborative platforms, employment and social protection], Report 2015-121R (Paris: Inspection ge´ne´rale des affaires sociales [General Inspectorate of Social Affairs], May 2016), 68. On the same line, see also A. Casilli, En attendant les robots. Enqueˆte sur le travail du clic [Waiting for Robots: An Inquiry into Digital Labour] (Paris: Seuil, 2019). G. Loiseau, ‘Les micro-travailleurs [Micro-workers]’, Bulletin Joly Travail, 111 (May 2019), 1. See S. Fantoni-Quinton and C. Leborgne-Ingelaere, ‘L’impact des TIC sur la sante´ au travail [The impact of ICT on occupational health]’, JurisClasseur Pe´riodique (JCP) S, 48 (2013), 1452; P. Berjaud, A. Bounedjoum, and M., VanLabeke, ‘Le management 2.0 et la sante´ au travail [Management 2.0 and occupational health]’, JCP G (2015), 549.

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packages is handled. It has been underlined that AI, while facilitating the execution of tasks, also contributes to limit employees’ autonomy and creativity, and constitutes a cause of ‘dehumanisation of work’.18 The European Economic and Social Committee considers it unethical for human beings to be submitted to the power of AI or considered servants of machines imposing tasks, methods, and deadlines. Opinions converge, unsurprisingly, on the necessity to ensure human control over machines rather than the opposite. Precariousness, indecent work conditions, mental health issues, and dehumanisation are indeed major problems, all the more so as the capacity of workers to act collectively to defend their rights is uncertain, especially when they are considered self-employed.19 These are not, however, the only problems that have been identified. The use of AI for hiring, disciplining, and terminating contracts is also seen as a risk for the protection of personal data and a source of discrimination.20 The report of the International Labour Organization’s (ILO) Commission on the Future of Work therefore recommended that states, businesses, and professional organisations ensure that regulations are in place ‘to control the use of data and responsibility for the use of algorithms in the workplace’. Concerning employees’ personal data, the report implies that employees should be informed of the data collected about them, have a right to access said data, and be protected against the data’s misuse. On this particular aspect, French law and EU law can be considered sufficient.21 But on discrimination resulting from machine learning algorithms, French law is lagging behind. Indeed, these algorithms are highly dependent on the data with which the machine is fed, and they reproduce the bias within these sets of data. Thus, discrimination in hiring can be maintained, or even strengthened, by the use of such algorithms, whereas such bias is dissimulated under the apparent neutrality of selections (or processes) made by machines. To address this problem, it has been suggested to embed labour law rules in the construction of algorithms, so that they become compatible with labour law ‘by design’.22 Greater transparency is also called for in the choices that are made when designing algorithms that organise workers’ activity. However, opening the black box of digitalised work is not easy. French law, which requires public administrations to communicate, on request, the rules that have led to an individual decision taken on the basis of algorithmic processing, could provide guidance in this domain. But, as regards algorithms implemented by private companies, the extension of this logic would encounter several obstacles. The disclosure of algorithms concerning labour management could be considered at variance with the protection of business information (trade secrets),23 at least insofar as the matching of workers and tasks is part of the company’s business model. Moreover, French experience has shown that communication of algorithms does not solve the question of their intelligibility. Consequently, the prospect, which remains largely unexplored, of discussion within companies on the role of algorithms (such as for the design of tasks or decisions on 18

19

20

21 22 23

COE, Automatisation, nume´risation et emploi, vol. 3, L’impact sur le travail [The impact on work] (December 2017), www.strategie.gouv.fr/publications/automatisation-numerisation-emploi-tome-3, at 12. On the issue of representation of platform workers, the government asked the former president of the social chamber of the Cour de cassation, J.-Y. Frouin, to prepare a report and work out proposals. The report was issued on 1 December 2020 (www.vie-publique.fr/rapport/277504-reguler-les-plateformes-numeriques-de-travail-rapportfrouin). On this topic, see A. M. Correˆa Harcus, Discrimination in Online Platforms: A Comparative Law Approach to Design, Intermediation and Data Challenges, doctoral thesis (Brussels: Free University of Brussels (ULB), 2020). O. Leclerc, ‘La technologie au service du travail de´cent [Technology for decent work]’, Droit social, 1 (2020), 33–8. Ibid. In France, the Act no. 2018-670 of 30 July 2018 protects business information (trade secrets).

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pay) opens up a new area for workers’ representatives and unions and requires important resources for training. B Evolution of French Law (i) Legislation In France, an Act of 8 August 2016 laid the foundations for a new status of digital self-employed worker applicable to ‘workers using an electronic networking platform’. Articles L. 7341-1 to L. 7341-6 of the labour code inserted into the labour code (part VII) minimum guarantees for the workers concerned. The law created a ‘social responsibility’ of digital platforms (Art. L. 7342-1). The scope of the new rules is defined at Article L. 7341-1 of the Code, which indicates that ‘independent workers’ are covered, under the condition that ‘the platform determines the characteristics of the service provided or the good sold and its price’. New rights granted to workers covered by the law of 2016 include: the right to continuing vocational training, the cost of which is borne by the platform; the right to carry out ‘movements of concerted refusal to provide their services in order to defend their professional claims’ (except in the case of abuse, such collective actions cannot engage the contractual responsibility of workers, or constitute a reason for breaking off their relations with the platforms, or justify measures penalising them in the exercise of their activity); the right to form and join a union in order to pursue their collective interests; and the right to an insurance covering the risk of accidents at work (paid for by the platform). An Act of 24 December 2019 added new rights and new obligations for digital platforms, in particular for the ones active in transport and delivery. For all platform workers, a right to validation of acquired experience was created, and the platform must contribute to the individual accounts for training (under the condition that the turnover resulting from the worker’s activity reaches a certain threshold). All platform workers also ‘have the right to access all data concerning their own activities within the platform and enabling them to be identified’. They have the right not only to access these data but also to transfer them (Art. L 7342-7 of the labour code). For workers who are providing services to transport and delivery platforms, a series of new rights were introduced. Information on a minimum price is required. Under the terms of the new Article L. 1326-2 of the French transport code, when offering a service, platforms must communicate the distance covered and the minimum guaranteed price, after deduction of commission charges. Workers can refuse an offer to provide a service without being subject to any penalty. In particular, Article L. 1326-2 of the transport code prevents the platform from terminating the contractual relationship on the grounds of such refusal (even in the case of several refusals). More generally, any penalty on this ground is excluded. In addition, workers have a right to decide on periods of activity and inactivity. The new Article L. 1326-4 of the transport code guarantees the choice by workers of their ‘active and inactive time slots’, as well as the right to disconnection during the active slots. The law prohibits the platforms from terminating a worker’s contract because of the exercise of these rights. Information on foreseeable income and working time must also be available. Article L. 1326-3 of the transport code provides that the platform must publish on its website ‘in a fair, clear and transparent manner’ indicators relating to the working time and income of platform workers, for the previous calendar year.

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In addition, a charter on ‘social responsibility’ can be adopted by transport and delivery platforms. Under the terms of the new Article L. 7342-9 of the labour code, the platform ‘may’ draw up a charter setting out ‘the conditions and procedures for exercising its social responsibility’ and ‘defining its rights and obligations and those of the workers with whom it is in contact’. Among the provisions that may be included in the charter are: – the conditions for exercising professional activity (in particular, the rules for contacting users and regulating the number of connections), which should guarantee ‘the nonexclusive nature of the relationship between workers and the platform and the freedom for workers to use the platform and to connect or disconnect’; – the modalities aimed at ‘enabling workers to obtain a decent price for their services’; – the modalities for developing professional skills and securing career paths; – measures to improve working conditions and to prevent occupational risks and damages to third parties; – the modalities of information sharing and social dialogue between the platform and workers; – the arrangements for informing workers of changes in the conditions under which they carry out their activity; – the quality of service expected, and the ways the platform controls the activity and the performance of workers, as well as the reasons that may justify the termination of commercial relations (i.e. the contract between the worker and the platform), and the guarantees that the worker enjoys in such cases; – the guarantees of supplementary social protection for workers. With regard to terminations of contract, the law refers to an article of the commercial code that governs the breach of certain commercial contracts (Ar. L. 442-1 of the commercial code) and condemns behaviours consisting in ‘abruptly terminating, even partially, an established commercial relationship, in the absence of written notice, taking into account, in particular, the duration of the commercial relationship, and by referring to standard business practices and inter-professional agreements’. This provision brings awareness to abusive conditions and the need to avoid them in platforms’ charters. The law (new Art. L. 7342-9 of the labour code) also includes a procedure (called ‘homologation’), whereby the charter is reviewed and approved by the labour administration. The platform must consult its workers ‘by any means’ so that it can then send the charter, together with the outcome of the consultation, to the administrative authority for approval. The administration checks whether the charter complies with the provisions of the law, and notifies the approval, or refusal, within four months (otherwise the charter is ‘deemed’ to be approved). Eventually, the charter is published on the platform’s website and attached to workers’ contracts. The initial version of the law also mentioned that, once approved, the charter, and especially the commitments of the platform according to this document, could not be used to establish subordination of the workers to the platform. This would have rendered excessively difficult the reclassification of work contracts into employment contracts. But this provision of the law was declared unconstitutional by the Constitutional court.24 More recently, French legislation continued to reinforce the legal and conventional regime of self-employment within mobility platforms.25 As a trade-off, the new law prevents platforms from 24 25

Decision no. 2019-794 DC, 20 December 2019. Ordonnance no. 2022-492 of 6 April 2022, JO 7 April 2022, no. 82.

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imposing on (self-employed) workers the use of a specific material or equipment and guarantees the right of workers to choose their working hours, to use several platforms simultaneously, or to freely determine their itinerary (code of transport, Art. L. 1326-4). But courts are not deprived of their power to assess the subordination by taking into consideration the conditions under which the activity is carried out or the methods used to set the price. French law has also moved in the direction of fostering representation and social dialogue for independent workers working through platforms (Ordonnance no. 2021-484 of 21 April 2021). An Authority in charge of regulating social dialogue between platforms and self-employed workers was created (Autorite´ des relations sociales des plateformes d’emploi [ARPE]). The law allowed self-employed workers on mobility platforms (drivers of ‘chauffeur-driven tourist vehicles’ and two-wheeled delivery drivers) to elect their representatives in 2022. The first elections took place in May 2022. Out of 120,000 persons that could participate in the election of their representatives, fewer than 3,100 actually participated, which strikes as a rather disappointing outcome. The minister of labour was nonetheless satisfied that ‘the first election of platform workers’ representatives is an unprecedented step forward in the construction of a social dialogue in the delivery and VTC platforms sector. It will allow the actors involved to negotiate a base of agreed rights, on several essential subjects such as occupational health, remuneration or even professional training.’26 Indeed, the elections allowed a list of nine representative organisations for the selfemployed to be established for the 2022–4 period, which are able to negotiate working conditions. Since 2022, the law27 provides for the organisation of mandatory annual negotiations on ‘the methods for determining workers’ income, including the price of their services’, ‘the conditions under which workers carry out their professional activities, and in particular the framework of their working hours as well as the effects of algorithms and changes affecting them on the methods of carrying out their services’, ‘the prevention of professional risks’, and ‘the methods for developing skills’. (ii) Case Law The situation of platform workers was addressed for the first time by the highest court on 28 November 2018 (Take Eat Easy).28 The Court decided that the relationship between the digital platform Take Eat Easy and its workers, delivering food, was an employment contract: platform workers concerned were considered under the subordination of the platform and, consequently, gained access to a series of rights, such as paid leave and social security (including protection in case of work accidents and unemployment benefits). To reach this conclusion, the Court mentioned the existence of a system of geo-localisation, which enables the platform to control and discipline its workers. These elements were considered sufficient, in the case, to prove subordination. A more recent decision, delivered on 4 March 2020, applied the same solution to the case of an Uber taxi driver.29 The driver had called upon the industrial tribunal to reclassify his contractual relationship with the company as an employment contract, after Uber closed his account. The Court of Appeal acceded to his request. The Court of Cassation had to decide whether a driver performing a service for Uber, who filed in the trade registry as a self-employed person, was under 26 27 28 29

E´lisabeth Borne, Minister of Labor, Employment and Integration, 1 March 2022. Resulting from Ordonnance no. 2022-492. Cour de cassation, Social chamber, no. 17-20079. Cour de cassation, Social chamber, no. 19-13316.

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the subordination of that company. The Court noted that self-employment includes the possibility to build up one’s own clientele, freedom to set one’s own rates, and to set the terms and conditions for providing one’s services. Conversely, in the context of an employment contract, subordination is based on ‘the employer’s power to give instructions, to oversee their execution and to sanction non-compliance with the instructions given’. Drivers who use the Uber application do not build up their own clientele, do not freely set their rates, and do not determine the terms and conditions of providing their transportation service, according to the Court: the company imposes the itinerary, and the driver’s fare is adjusted if this itinerary is not followed. Thus, the driver cannot freely choose the route that suits him/her. In addition, if the driver has declined more than three rides, Uber may temporarily disconnect him, and if a certain cancellation rate is exceeded, or if a ‘problematic behaviour’ is reported, the driver may also lose access to his/her account. Lastly, the decision considered that the driver participates in an ‘organised transportation service’30 for which Uber unilaterally determines terms and conditions. All of these elements characterise subordination between Uber and taxi drivers: this is a case of bogus self-employment. That drivers are not obliged to connect to the platform and that their inactivity, irrespective of its duration, does not expose them to any penalty are not taken into consideration when characterising subordination. The characterisation of subordination is needed for the recovery of social security contributions not paid to the general scheme. But it is also debated when assessing the criminal offence of ‘concealment of salaried employment’ (undeclared employment), as shown by the resounding conviction of the company Deliveroo France and three of its directors. The Paris Criminal Court noted, on this occasion, the existence of a ‘fictitious legal cover that did not correspond to the reality of the delivery workers’ professional activities’, causing a prejudice ‘for the undeclared employees themselves’, a ‘double and considerable financial prejudice for the State from the point of view of fiscal and social public order’, and a ‘disturbance . . . to economic public order . . . since the use of undeclared labour generates de facto a situation of unfair competition’.31 In this respect, as the violation of labour law may constitute an act of unfair competition, commercial courts are also sometimes asked to identify the existence of subordination.32 However, these solutions concern only a certain type of platform, and the provision of a precise type of service, coordinated and organised by the platform itself: a service offered by the platform, under its control, to customers that are the platform’s. The case law of the French Cour de cassation applies only in this hypothesis, which corresponds, in particular, to the situation of food delivery and passenger transport platforms. What most recent developments show is that solutions vary, on a case-by-case basis, depending on the specific modes of organisation of work. For instance, as the highest court recently decided,33 it is not sufficient, in order to identify an employment contract between a platform and a driver, to note the absence of freedom of the driver in the choice of his vehicle, an interdependence between the rental and the membership contracts of the platform, the implementation of a geolocation system for each vehicle in order to allow for an optimised and efficient distribution of the trips, the setting of the price of the trips by the company, and the existence of a rating system by the transported customers. 30

31 32 33

‘Organisation of the service by the employer’ is a criterion of subordination. On this notion, see Cour de cassation, Social chamber, 1 December 2005, no. 05-43031. T. corr. Paris, 19 April 2022. See Cour de cassation, Commercial chamber, 12 January 2022, no. 20-11.139. Soc. 13 April 2022, no. 20-14.870.

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In addition, ‘jobbing’ platforms, which open up possibilities for workers to propose services without having any expertise and without coordinating the content or the modalities of the service provided, would probably not be considered employers, according to French case-law. So long as workers have the expertise and competence required, and are not under the direction of the platform, which does not benefit from their work, their ‘self-employment’ status is hardly contestable. Other types of digital platform serve as intermediaries between a worker and a beneficiary, the latter directing the activity of the former. They constitute a different constellation. Through such platforms (Amazon Mechanical Turk or Onespace, for instance), clients can offer mini jobs to providers. But it is the client, not the platform, whose responsibility as employer could be sought. However, this intermediation is not necessarily in conformity with the law. When the worker has no contractual relationship with its client, platforms may fall under the prohibition of for-profit posting of workers (except for temporary work agencies). When a contract exists between the client and the provider, it could be considered an employment contract, and the platform could be considered to be providing placement services: in France, this activity is regulated by the labour code,34 which requires, in particular, that the services be provided at no cost for the worker seeking placement. Recent developments have shed light on the limits of reclassification. In one important case,35 a company was prosecuted together with its director for concealment of salaried employment (undeclared employment). The activity of the company consisted in collecting and processing, on behalf of brands, commercial data collected by ‘clickwalkers’. From an application (app) downloaded on their phone, these ‘clickwalkers’ carried out ‘missions’ on behalf of the company. Questioned on the characterisation of a provision of work, the social chamber of the French highest court for civil matters decided: [T]he individual who agrees, through a digital platform managed by a company, to perform missions consisting in providing data on his consumption habits, collecting information or taking photographs . . . in exchange for gift points or a few euros, does not perform a provision of work under a link of subordination, as long as: he is free to give up the execution of the proposed missions, does not receive any instructions or instructions during their execution, and the company does not have, during the execution of the mission, the power to control the execution of its directives and to sanction the failures, even if the correct execution of the missions is subject to verification by the company.

C Facing Technological Disruption with Existing Legal Instruments To a certain extent, French law already contains concepts and rules that need only be enforced, or extended, in order to solve some of the new issues stemming from digitalisation. ‘Adaption of workers to the evolution of their work’, which the report of the ILO on the future of work, as many others, considers important to face the disruption resulting from AI,36 is one of the basic obligations that French labour law imposes on employers. Specifically, the labour code requires that ‘the dismissal of an employee for an economic reason can only take place when all the training and adaptation efforts have been made’ (L. 1233-4). In addition, ‘employers must 34 35

36

Arts. L. 5321-1 et seq. Cour de cassation, Social chamber, avis, 15 December 2021, no. 21-70.017; Criminal chamber, 5 April 2022, no. 2081.775. ILO, Work for a Brighter Future.

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ensure adaptation of employees to their position’ and take measures in order for employees ‘to maintain their capacity to hold a position, taking into account, in particular, transformations of jobs, technologies and organisations’ (Art. L. 6321-1, para. 2). Employers should provide ‘training courses that contribute to the development of skills, including digital skills’ (Art. L. 6321–1, para. 3). These obligations require that employers prepare workers for the introduction of AI in the firm. Training should be part of the ‘plan for the development of competences’ (Art. L. 6321-1, last para.). Measures aimed at ‘forward-looking management of jobs and skills’ (‘gestion pre´visionnelle des emplois et des compe´tences’), such as ‘interviews on career prospects’ (Art. L. 6315-1 et seq.) or compulsory collective bargaining on ‘management of jobs and career paths’ (in companies employing more than 300 workers) (Art. L. 2242-20), should take into account the impact of AI. As far as information goes on the impact of AI on working conditions, the labour code contains provisions allowing workers’ representatives to resort to an expert: expertise is indeed possible ‘in the event of the introduction of new technologies or when a major project affects health and safety or working conditions’ (Art. L. 2315-94, 2). Use of AI justifies the help of an expert, even if work is made easier as a result. To prevent mental health problems (stress or depression, among others), collective agreements were concluded at the national level in the wake of certain European framework agreements: namely, on stress at work (2 July 2008), and on harassment and violence at work (26 March 2010). They have a role to play when the mental health of workers is threatened by the introduction of AI or another potentially disruptive technology. Contract law, and the provision of the civil code, can also be used to protect platform workers.37 For instance, the relationships between platforms and workers, when they result in contractual provisions that create a ‘significant imbalance’38 in standard contracts,39 can be called into question. The concept of ‘economic violence’40 can also serve to challenge platforms’ exploitation of the ‘state of necessity’ in which some workers find themselves, in order to obtain manifestly excessive advantages from the contract.

IV FUTURE DEVELOPMENTS

A Platform Workers (i) National Labour Law Most of the recent evolutions of French law, focussing on the impact of digitalisation, concern platform workers. These evolutions do not make a clear choice between different available options: reclassification of platform workers as employees (by case-law); better protection of selfemployment, namely for self-employed platform workers (which is the effect of some French legislative developments, in particular concerning representation and social dialogue); or creation of a ‘third status’, specifically designed for platform workers. (Although the National Council on Digitalisation41 considers that this last option is not sustainable, French legislation 37

38 39 40 41

See M. Julien and E. Mazuyer, ‘Le droit du travail a` l’e´preuve des plateformes nume´riques [Labor law put to the test by digital platforms]’, Revue de droit du travail [Labour Law Review] (2018), 189. Civil Code, Art. 1171. Ibid., Art. 1110. Ibid., Art. 1143. Conseil national du nume´rique [National Digital Council], Travail a` l’e`re des plateformes. Mise a` jour requise [Work in the age of platforms. Update required] (July 2020), https://bit.ly/3XJheUQ.

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on digital platforms, adopted in 2016 and 2019, points in this direction.) Combining the different options is another way forward, which is also a path taken by French law: better protection of selfemployed, namely when truly independent work is achieved, and reclassification, in cases when platforms act as employers, as in the fields of food delivery and passenger transport. Concerning the collective defence of the rights and interests of platform workers, new solidarities are emerging, reflected in collective actions (work interruptions, information campaigns, and so on). This evolution shows that digitalisation can result in new types of collective initiative. As mentioned earlier, French law has evolved to support sectoral self-regulation by allowing the transplant of the mechanism of collective bargaining to relationships between platforms and platform workers. All in all, disentangling social protections, including new ‘digital’ rights (transparency concerning the use of AI, right not to be disconnected from the platform, right to disconnect, and so on), and employment contracts seems to be the way forward: the frontiers of labour law should be revisited in order to include new categories of worker (‘solo self-employed’, in the language used by the European Commission42) within the scope of an updated set of protective rules, including procedural rules, such as the right to collective action and collective bargaining. (ii) Transnational Dimension The transnational dimension of platform work must be taken into account. As the ILO report on the future of work indicates, the dispersed nature of the work across national jurisdictions makes it difficult to monitor compliance with applicable labour laws. Therefore, the development of an international governance system for digital labour platforms that sets minimum rights and protections, and requires platforms (and their clients) to respect them, is needed. According to the ILO report, the Maritime Labour Convention (2006), which is, in effect, a global labour code for seafarers, could be a source of inspiration in addressing the challenges of workers, employers, platforms, and clients operating in different jurisdictions. Much remains to be done for this instrument to come to life. But the report of the ILO, based on comparative studies of working conditions on five major micro-task platforms that operate globally (covering 3,500 workers in 75 countries around the world) and on other qualitative surveys,43 is an interesting starting point for the elaboration of an international instrument: it provides an analysis of the working conditions on these micro-task platforms, including pay rates, work availability and intensity, social protection coverage, and work–life balance, and recommends eighteen principles for ensuring decent work on digital labour platforms. B Data Processing and Algorithms Increased data processing capacity has positive sides: the effectiveness of controls carried out by labour administrations can be enhanced, and algorithms that cross-check a large amount of data could enable labour inspection to detect irregularities more effectively than with on-the-spot checks, or to identify risk areas where more in-depth inspection should be given priority.44 42

43

44

Communication from the Commission, Guidelines on the application of Union competition law to collective agreements regarding the working conditions of solo self-employed persons, 2022/C 374/02, OJ C 374, 30 September 2022, at 2. ILO, Digital Labour Platforms and the Future of Work: Towards Decent Work in the Online World (Geneva: ILO, 2018), www.ilo.org/global/publications/books/WCMS_645337/lang--en/index.htm. See ILO Global Commission on the Future of Work, Work for a Brighter Future, supra note 1, at 42.

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Similarly, it has been observed that sensors routinely inserted on or in objects in production chains (usually in the form of radio frequency identification (RFID) chips or barcodes) not only serve to optimise logistics but could also be used by companies and social partners to monitor working conditions and compliance with labour law in supply chains.45 New possibilities to identify violations of labour law rules, through the analysis of the massive data generated by the circulation of objects, would also enable companies to comply with their obligation of due diligence (devoir de vigilance) and could facilitate the claims made by workers’ organisations, in the event that due diligence is not performed.46 Block chain technology could be used to ensure the payment of wages, the portability of migrant workers’ rights, and the payment of social security for platform workers: decentralisation of registers in which information is recorded could make commitments to employees more effective by providing a form of automaticity.47 Work contracts could become ‘smart contracts of employment’. Block chain could also be used to guarantee the payment of non-compete clauses, or of other types of compensation due to workers (severance payment owed to senior executives, for instance). The ILO report on the future of work invites governments as well as employers’ and workers’ organisations to contribute to the incubation, experimentation, and dissemination of digital technologies oriented towards decent work.48 But acknowledging that algorithms are an instrument of labour governance makes it necessary to debate their constitutive rules, the conception of work that they rely on and contribute to creating, and the limited reality of work and work relationships that they are able to capture. Shedding light on these limits is just as necessary as recognising the potential of digital technology for a more efficient enforcement of labour law. This is a highly political issue. That the digital world is only one fragment of the reality must be kept in mind: to be sure, reality can be augmented by digitalisation, but it is only the part of it that can be translated into the digital language that exists in the digital world. Part of the human experience of work can be lost in translation: this is to be remembered, in the assessment of the transformation taking place.

45 46 47 48

Leclerc, ‘La technologie au service du travail de´cent’. Ibid. ILO Global Commission on the Future of Work, Work for a Brighter Future, supra note 1, at 42. Leclerc, ‘La technologie au service du travail de´cent’.

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8 Italian Labour Law: Trends and Developments Put to the Test of Technological Disruption Emanuele Dagnino and Michele Tiraboschi*

I INTRODUCTION

As is the case in many other legal systems, Italian labour law (widely intended) has been traditionally structured around the employment and self-employment divide, taking the standard employment relationship, that is, the open-ended, full-time contract of employment, as a reference. The summa divisio between employees and the self-employed provided the distinction between those covered by – and benefitting from – labour law regulation and those falling outside its scope of application. This distinction was enshrined in the Civil Code (henceforth: c.c.) of 1942 through the definition of prestatore di lavoro subordinato (employee, Art. 2094 c.c.) and contratto d’opera (contract for services, Art. 2222 c.c.). While the employee is the person who ‘agrees to be bound by the obligation of collaborating in the firm, providing intellectual or manual work and employed by and under the direction of the employer’,1 the self-employed worker is defined as ‘a person [who] agrees to be bound by the obligation of providing work or a service in exchange for payment, mostly performing personal work and without any link of subordination’.2 It is this latter notion – namely, that of subordination – that substantiates the distinction between employment and self-employment. While the employee is subject to the employer’s managerial prerogatives when carrying out work (i.e. work is instructed by the employer, eterodirezione), the self-employed worker enjoys autonomy as to how the task or the service agreed upon with the client is provided. Notwithstanding the persistence of this divide, starting from the 1970s, Italian scholars and lawmakers have found that the exclusion of self-employed workers from labour law coverage did not meet the needs of the workers or of the economic system, more generally. In particular, it was so-called lavoratori parasubordinati (quasi-subordinate workers) who – while formally regarded as self-employed workers – were considered deserving of some labour law protections. Since 1973, the category of parasubordinati has become a subject of Italian labour law3 through the extension of a limited number of protections to collaborations characterised by ‘a continuous and coordinated work, provided mainly through personal work, but without any link of subordination’4 (Art. 409 of the Code of Civil Procedure; so-called collaborazioni coordinate e *

1 2 3

4

The chapter is a joint effort of the authors, who together created the introductory and concluding sections, while Section II is attributable to Michele Tiraboschi and Section III to Emanuele Dagnino. Art. 2094, Civil Code. Art. 2222, Civil Code. See G. Davidov, M. Freedland, and N. Kontouris, ‘The subjects of labor law: “Employees” and other workers’ in M. Finkin and G. Mundlak (eds.), Comparative Labor Law, 115–31 (Cheltenham: Edward Elgar, 2015). Art. 409, para. 1, n. 3, Code of Civil Procedure.

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continuative or co.co.co.). Starting from the regulation regarding procedural labour law protections, the safeguards provided to co.co.co. widened in the following years and included social security, insurance against workplace accidents, and occupational safety and health (OSH) regulation. After collaborazioni a progetto (project-based work) – introduced in 20035 to tackle the misuse of co.co.co. (which often replaced the contract of employment) by making the contract of collaboration legitimacy conditional upon the definition of a project and by also providing for more protections regarding the relationship between the client and the workers (i.e. duration, termination of the contract, etc.) – the current scope and coverage of labour law was established in 2015 (Legislative Decree no. 81/2015). While the definitions of employment and self-employment were not amended, the scope of labour law was partially changed, drawing a distinction among quasisubordinate workers, namely those engaging in forms of coordination with the client (co.co.co.) and those whose work is organised by the client (lavoratori etero-organizzati or ‘employer-organised’ workers). Following the repeal of the regulation for project-based work (co.co.pro.), the first category of parasubordinati (‘employer-coordinated’ freelancers) still enjoys limited protections,6 while employer-organised workers are now entitled and are, in principle, subject to the same labour law safeguards laid down for employees (Art. 2 of Legislative Decree no. 81/2015), even if it is not clear yet if they are fully covered by labour laws or only by the provisions that are considered compatible with the autonomous nature of employer-organised work. This review of labour law coverage and scope – which was complemented in the same Legislative Decree just referred to by overhauling the regulation of non-standard employment and atypical work (part-time, fixed-term, agency work, on-call work, voucher-based work) – has been already widely challenged by the technological transformation taking place in the world of work, so that some new regulations and amendments have been introduced in the last few years. Two dynamics have been deemed to be particularly critical by labour scholars, by lawmakers, and, to a limited extent, by courts: – one connected to Industry 4.0 and digitalisation of work, which, besides employment rates, questions labour law adequacy with reference both to the ways of working (information communication technology (ICT)-based mobile work and project work) and to workers’ protection in the transitions between different professional statuses; – the other related to the rise of the platform-economy (so-called uberisation of the economy), which deserves attention in consideration of platform workers’ conditions of work, the challenges it poses to the separation between employment and self-employment, and to labour law coverage. The Covid-19 emergency – which heavily affected Italy – clearly reasserted the importance of these two dynamics. On the one hand, the pandemic led to an unprecedented and unorganised use of remote working, which was expected to result in the spread of ICT-based mobile work, in the context of both employment and self-employment. On the other hand, it shed further light on the economic and social importance of the role of many platform workers – e.g. in the food delivery sector – and the vulnerability they are faced with.

5 6

Arts. 61–9, Law Decree no. 276/2003 (abrogated). It should be noted that, although not very strongly, the labour protections applied to co.coco. have been further extended in recent years. Finally, some important developments are owing to Legislative Decree No. 104/2022 that implemented Directive (EU) 2019/1152 on transparent and predictable working conditions.

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In the following paragraphs, these two dynamics will be analysed, taking into account the impact of technological transformation on the nature of work, the responses already provided by the latest developments in labour law, but also regulation gaps, the need for reform, and the role that unions and the social partners should play in addressing the challenges stemming from the technological revolution. Section II will be devoted to Industry 4.0 and ICT-based mobile work, while Section III will cover the uberisation of work. The paper will conclude with some final remarks.

II DIGITALISATION OF WORK AND WORKING ‘SMART’ IN THE FOURTH INDUSTRIAL REVOLUTION

A Background Beyond the claims of the end of (human) work,7 the Fourth Industrial Revolution is impacting considerably on the labour market as well as on the ways of working, so that labour law is directly affected by the ongoing technological transformation. Digitalisation of work produces both a substitution and a complementarity effect on human work: human work is not only displaced by new technologies but also changed in the way it is provided and, definitely, in its nature.8 In this context, it is not automation – which has been a trend in economic activities for several years now – that is profoundly changing the world of work. Rather, the disruptive force of the Fourth Industrial Revolution stems from the constant interaction – also by means of online platforms and devices (i.e. cyber physical systems [CPS] and the Internet of Things [IoT]) – of research, planning, production, services, and consumption, which has an impact on production factors and on demand in terms of sharing and reciprocity, as opposed to traditional industrial processes and utilisation of goods. The introduction of the Internet in the processes of production of goods and services has modified the manufacturing cycle: through sensors, firms can monitor goods and their progress once sold, while providing a number of customised services, even remotely. It is the changing relationships between man and machine and between different production factors, owing to these enabling technologies, that call for a thorough review of the main categories of labour law, especially of some fundamental notions, namely, ‘subordination’ and ‘business’. At the same time, this state of play also calls for rethinking the current system of active labour market policies and the links between education and work. In terms of work relationships, the Fourth Industrial Revolution is moving away from the Fordist approach based on command and control, traditionally entailed by the notion of legal subordination provided by the Italian Civil Code discussed earlier. New work organisation is now shifting towards a more collaborative and cooperative model, where workers are given more autonomy and engaged on a project-by-project basis. For this reason, the place and the time of work lose relevance and the focus shifts from controlling task execution to task completion. This is what human resource management theorists call smart working, that is, ‘an approach to organising work that aims to drive greater efficiency and effectiveness in achieving job outcomes through a combination of flexibility, autonomy and collaboration, in parallel with optimising 7

8

See J. Rifkin, The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era (New York: G. P. Putnam’s Sons, 1995). See F. Seghezzi, La nuova grande trasformazione: lavoro e persona nella quarta rivoluzione industriale [The New Great Transformation: Work and People in the Fourth Industrial Revolution] (Bergamo, 2017). See also K. Schwab, The Fourth Industrial Revolution (Geneva: World Economic Forum, 2016).

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tools and working environments for employees’.9 Moreover, the loss of relevance of the working space and times also impacts traditional occupational health and safety regulations, since they are strictly connected to a specific place of work (the factory/the office) and to the limitation of the duration – hence the measurability – of working hours. The risks for the health and safety of workers were highlighted following the use of remote working during the Covid-19 emergency (i.e. inadequacy of the working environment; excessive workloads, poor work–life balance). Moving from the individual relationship to the labour market, the digitalisation of work – and, more generally, the Fourth Industrial Revolution – has impacted labour mobility and occupational transitions. Even if the overall effects on employment are still debated, one might envisage that the employment rates in the traditional manufacturing sector are going to decline and that the continuous transition between different employment statuses – rather than between different job positions – will become a constant for many workers. From a different point of view, the ongoing transformation of work is set to exacerbate the already existing mismatch between labour demand and supply, owing to the lack of the skills – both technical and soft skills – needed in new work organisations.10 The consequences of these trends directly question the adequacy of the social security system, the active labour market policies, and the legal and institutional framework underlying education and training. B Recent Legal Developments Against this background, Italian lawmakers have focussed on the regulation of a new way of working – so-called lavoro agile – that was originally aimed at enabling the introduction of smart working (see Section II, A).11 After a long gestation period – started in 201412 – the lavoro agile way of working was finally regulated by Law no. 81/2017. This Act can be considered the final step of a complex labour law reform, called the Jobs Act, which includes eight legislative decrees tabled in 2015 (including the already mentioned Legislative Decree no. 81/2015). The aim of the Jobs Act Reform was to promote the centrality of the open-ended, full-time contract of employment. In line with this goal, the Act introduces a regulation for smart working that applies autonomy, flexibility in time and space, and also collaboration to this way of working within the context of salaried work. For this reason, the regulation of lavoro agile plays a role when reviewing the scope of labour law. While a subcategory of lavoratori parasubordinati (i.e. ‘employer-organised’ workers) falls within the scope of application of labour law governing salaried employment, work characterised by a high degree of autonomy is regulated through the contract of employment. This choice is evident when looking at the definition of lavoro agile provided by Article 18 of Law no. 81/2017, which states that lavoro agile is a way of providing work under a contract of employment, which is established through an agreement between the employer and the employee; it can also be organised through phases, 9

10

11

12

Chartered Institute of Personnel and Development (CIPD), HR: Getting Smart about Agile Working, Research Report (London: CIPD, 2014), 3–4. See also T. Torre and D. Sarti, ‘Into smart work practices: Which challenges for the HR department?’ in E. Ales, Y. Curzi, T. Fabbri et al. (eds.), Working in Digital and Smart Organizations, 249–75 (Cham: Palgrave Macmillan, 2018). See Eurofound (D. Storrie), The Future of Manufacturing in Europe, Research Report (Luxembourg: Publications Office of the European Union, 2019). M. Del Conte, ‘Premesse e prospettive del “Jobs Act” [Premises and perspectives of the “Jobs Act”]’, Diritto delle relazioni industriali [Industrial Relations Law], 25 (2015), 939, 959. The first Draft Bill regarding lavoro agile [agile work] was Draft Bill no. 2014/2014, submitted for consideration to the Lower Chamber of the Parliament.

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working cycles and objectives and without specific bonds regarding working time and the workplace and can be performed with the use of technological tools. Work is carried out outside and at the employer’s premises, without a fixed workstation and (only) complying with the maximum limits of daily and weekly working hours.13

In the first sentence of this definition, there are two elements that seem to clash. On the one hand, it says that the work regulated by the Act is salaried work; on the other hand, and in order to foster forms of employment consistent with the Fourth Industrial Revolution, a project-byproject organisation of work – typical of self-employment – is enabled, also stressing the possible features of self-organisation in relation to time and place of work. The tension between these two aspects seems to characterise the overall regulation of lavoro agile. Although it was promoted as a regulation enabling forms of work suitable for the organisational model of smart working and with the collaborative dynamics of the modern enterprise, the result has been an updated and simplified regulation of alternating teleworking. Using the notions proposed by International Labour Organization (ILO) specialist Jon Messenger, the new provision still refers to the second generation of telework (i.e. the mobile office), failing to address the reality of the third generation of telework (i.e. the virtual office).14 Lavoro agile can be adopted by employees and employers only if they reach an individual agreement15 – alternatively, if they conclude an open-ended or a fixed-term agreement, irrespective of the duration of the contract of employment16 – the terms of which are established by Law no. 81/2017. These terms play an important role. To begin with, the individual agreement must indicate how work should be performed outside the employer’s premises also with reference to the exercise of directive power and the use of ICTs as working tools.17 In addition, ‘the agreement also indicates the employee’s rest periods and the technical and organisational measures needed to ensure the disconnection of the employee from technological working tools’.18 In the determination of the rest periods, the agreement must comply with the maximum limits of daily and weekly working hours, as established by law and collective agreements.19 Moreover, it is provided that the agreement of lavoro agile includes specific provisions regulating how the employer can exercise the power of monitoring work provided outside the employer’s premises, as well as the penalties for the employee in the context of the same work that can be sanctioned by the employer in the exercise of his or her disciplinary power.20 Other important provisions relate to the health and safety of employees working outside the employers’ premises, coverage for accidents, administrative communications, and the principle of equal treatment with those working on-site.21 13 14

15

16 17 18 19 20 21

Art. 18, para. 1, Law no. 81/2017. See. J. C. Messenger, ‘Introduction: Telework in the 21st century – an evolutionary perspective’ in J. C. Messenger (eds.), Telework in the 21st Century: An Evolutionary Perspective, 1–34 (Geneva: International Labour Office, 2019), 5–8. During the pandemic, the obligation to stipulate an individual agreement was suspended so that the employer could unilaterally decide that employees should engage in lavoro agile in order to protect their health and safety by implementing social distancing. Now that the pandemic is over, the rules governing lavoro agile have been restored, except for persons with a particular vulnerability to infection who have yet to be unilaterally assigned to this form of work by their employers. Art. 19, para. 2, Law no. 81/2017. Art. 19, para. 1, Law no. 81/2017. Ibid. Art. 18, para. 1, Law no. 81/2017. Art. 21, paras. 1–2, Law no. 81/2017. Specifically, Art. 22, Art. 23, and Art. 20, para. 1, Law no. 81/2017.

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From this, a focus clearly emerges on the exercise of the employer’s managerial prerogatives in terms of direction, control, and disciplinary power. While it is true that the ways of exercising these prerogatives are to be agreed in the individual agreement, they are strongly reasserted and unilaterally exercised by the employer. Consequently, the emphasis on the managerial prerogatives seems to contradict the managerial philosophy that inspired regulation. While the Fourth Industrial Revolution entails changes in the world of work that question the adequacy of the divide between employment and selfemployment and, most of all, the logic of command and control typical of Fordism, the regulation of lavoro agile confirms the centrality of salaried work in the future. In this way, interpretation of the new ways of working is limited as it fosters flexibility of time and place of work, and does not deal with the new collaborative and fiduciary features marking work organisation in the Fourth Industrial Revolution. The label itself of this form of work stands as a clear indication: while managerial philosophy characterises smart working, the Italian label is linked to the notion of agility. While agility is consistent with an emphasis on the possibility of working anytime and anywhere thanks to the use of technologies and with the aims of promoting a work–life balance, this is not the case with the new skills that workers are required to have in the new world of work. Confirming this is the limited importance given to workers’ lifelong learning and training in the regulation of lavoro agile. The right to lifelong learning and to skills certification is formally stated but neither mandatory nor adequately implemented.22 The widespread adoption of this form of remote working for the protection of workers’ health and safety during the pandemic brought to the fore the critical aspects analysed in the previous paragraphs. Lawmakers gave considerable attention to the regulation of smart working, which was the subject of an agreement (Protocol) between the Ministry of Labour and Social Policies and the social partners23 and of ten different reform proposals that have been lately brought together in a single bill. However, parliamentary discussion of this bill has been interrupted by the 2022 Italian government crisis and the subsequent parliamentary elections.24 Neither the Protocol nor the other rules are set to change the general approach of the law. The former is aimed at fostering collective bargaining on lavoro agile and at specifying some of the general provisions of the law (e.g. the right to disconnect, overtime, and cost reimbursement). The latter is intended to provide specific amendments with reference to the main issues that emerged during the implementation of remote working during the pandemic. In conclusion, the regulation governing lavoro agile seems to have missed the objective sought, so that a review of some structures of labour law is still required. C Key Reform Issues Beyond the attempts at regulating the ways of working enabled by ICT and new models of work organisation discussed so far, other relevant reform issues seem to have been neglected by the Italian legislator regarding the impact of digitalisation on the labour market. As said, the Fourth Industrial Revolution entails changes to the skills needed in the labour market and how they are used in work organisation. On the one hand, the technological transformation involves sudden cycles of skills obsolescence as well as problems connected to the skills shortage and mismatch 22 23

24

Art. 20, para. 2, Law no. 81/2017. See Protocollo nazionale sul lavoro in modalita` agile [National protocol on work in agile mode], stipulated 7 December 2021. See Disposizioni in materia di lavoro agile [Agile working provisions], 16 March 2022.

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with respect to market needs. On the other hand, the skilled worker is engaged on a project-byproject basis, so that transitions in the labour market are increasingly frequent. In this context, for the worker to be employable, but also for firms to acquire the skills enabling new production processes, a proper ecosystem where different institutions are involved is needed. In this ecosystem, labour law as well as industrial relations should play a fundamental role, in connection with local institutions and the education systems. As far as labour law is concerned, the main areas involved are those relating to social security and active labour market policies, but also relevant are the overall labour market regulation and structures. The abovementioned Jobs Act Reform tried to deal with these aspects;25 in addition, in 2019, the legislator (with a new government) introduced a guaranteed minimum income,26 which had not been provided in Italy until then. A new guaranteed minimum income scheme (Assegno di inclusione), with stricter eligibility criteria, has been introduced by Law Decree no. 48/2023 and will substitute reddito di cittadinanza starting from 2024. Notwithstanding the recent reforms, the systems have proved unsuitable to meet new labour market needs, especially after the outbreak of the pandemic. For this reason, the government has been considering a new reform of labour market policies since 2020. This issue has gained momentum in the context of the Next Generation EU and the National Recovery Plan, since active labour market policies are included among the missions and milestones to be achieved (EUR 6 billion will be allocated to active labour market policies in the context of the Italian National Recovery Plan). The previous reform failed to address the challenges posed by the Fourth Industrial Revolution because it was inspired by a centralised approach and based on the idea of jobto-job transition. Nevertheless, the future world of work is expected to be increasingly characterised by a local dimension – economists argue that ‘future factories’ will not be individual companies but interconnected, highly populated cities featuring a concentration of resources, technologies, and skills27 – and by transitions between different professional statuses, not only from employment to self-employment and the other way round but also from employment to periods of retraining or care (this is the theory of transitional labour markets).28 Against this background, it is important to review active labour market policies in order to carefully develop vocational retraining in the context of employment services. Towards this aim, labour market institutions should focus on analysis of the skills required at local level, using big data and analytics.29 At the same time, they must also lay down an effective skills certification system. This was already established in 2012,30 but it has not been fully implemented by Italian public bodies. 25

26

27 28

29

30

This concerns two Legislative Decrees, nos. 22/2015 and 148/2015, on passive labour market policies and Legislative Decree no. 150/2015 on active labour market policies and labour market regulation. Preceded by reddito di inclusion [inclusion income], the guaranteed minimum income is regulated by Law Decree no. 4/2019 converted into Law no. 26/2019 and is called reddito di cittadinanza [basic income]. See E. Moretti, The New Geography of Jobs (New York: Harper Business, 2012). See G. Schmid, ‘Sharing risks of labour market transitions: Towards a system of employment insurance’, British Journal of Industrial Relations (BJIR), 53 (2015), 70–93. See also G. Schmid, ‘Transitional labour markets: Theoretical foundations and policy strategies’ in M. Vernengo, E. Pe´rez Caldentey, and J. Barkley Rosser, Jr (eds.), The New Palgrave Dictionary of Economics, 13829–43 (London: Palgrave Macmillan, 2017) living online version, https://doi.org/10.1057/978-1-349-95189-5_3050. See M. Mezzanzanica and F. Mercorio, Big Data for Labour Market Intelligence: An Introductory Guide (Turin: European Training Foundation, 2019). The skills certification system was introduced in the Italian legal system by Riforma Fornero (Law no. 92/2012), but its implementation has proved to be particularly difficult.

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Besides active labour market policies, these transitions can be managed in a socially and economically sustainable way only if other factors are taken into consideration. For instance, lifelong learning can be effective only if a new link is established between an innovative education and training system and the labour market. This entails not only closer collaboration between education systems and local stakeholders (i.e. social partners, the tertiary sector, local institutions, labour market intermediaries, etc.) but a completely new understanding of school/ university-to-work transitions. Traditionally understood as a one-way pattern aimed at young people, school-to-work transitions should be interpreted, in the context of the transitional labour markets, as a continuous two-way process, directly involving adult workers. To foster the functioning of transitional labour markets, labour law should not only promote dialogue between different stakeholders but also provide for adequate instruments with which to enable transitions among or the coexistence of different professional statuses. For instance, this entails decoupling the provision of social security rights from a specific professional status and enabling the portability of the same rights when moving between professional categories. Moreover, it requires strengthening and adapting training contracts, such as apprenticeship contracts, to be used outside their traditional scope connected to youth employment (this happens, though to a limited extend, to adult unemployed workers thanks to Legislative Decree on. 81/201531). In addition, the closer integration of private labour market intermediaries in the context of active labour market policies and employment services could foster their role of enablers when matching supply and demand. The Jobs Act Reform provided for an instrument – the assegno di ricollocazione (job re-integration voucher)32 – to foster the role of private labour market intermediaries in the field of active labour market policies, by providing an amount of money to be spent for personalised paths of intensive job search. Its implementation has been unsuccessful so far: the reason for the failure must not be regarded as a consequence of the limits of the instrument itself. Rather, it is the result of the problematic coordination between the institutions involved and the reform that in 2019 completely changed the legal framework, starting from its prospective recipients.33 The actions undertaken to tackle the economic effects of Covid-19 and in the context of the Next Generation EU and the Italian Recovery Plan implementation appear unsuitable to respond to the foregoing needs. While they can be considered a step in the right direction, they seem to lack a systematic understanding of and the capacity to foster the networks and the local dimension of the labour market. This is the case, for example, with one of the most interesting policies, the New Skills Fund,34 which was introduced to promote the use of public funding to retrain workers in the event that the employer and the workers’ representative agreed to a reduction of working hours owing to the impact of coronavirus. It has subsequently been refinanced in the post-pandemic period to deal with the twin (digital and green) transitions. Its compatibility with the transitional labour markets described earlier depends on the way this funding will be used: to provide workplace-specific skills in order to promote job stability or to provide skills that are useful in the labour market. Other measures – such as the accordi di transizione occupazionale (occupational transition agreements) introduced by the 2022 Budget Law35 and the whole active policy programme connected to the Recovery Plan (so-called 31 32

33

34 35

Art. 47, para. 4, Legislative Decree no. 81/2015. After the first regulation of a ‘job re-integration contract’ laid down in Legislative Decree no. 22/2015, the regulation of the assegno di ricollocazione [relocation allowance] was introduced by Legislative Decree no. 150/2015. Law Decree no. 4/2019, converted into Law no. 26/2019, suspended the use of the instrument for unemployed persons receiving the unemployment allowance, in order to use the resources and the assegno di ricollocazione for the recipients of the guaranteed minimum income (reddito di cittadinanza). Art. 88, Law Decree no. 34/2020, converted in Law no. 77/2020. See Art. 22-ter, Legislative Decree no. 148/2015, as amended by Law no. 234/2021.

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GOL)36 and aimed at redefining the offer of the active labour market policies that exist at national scale – are to be assessed when implemented and, anyhow, are not set to change the general framework of active labour market policies.

III REGULATING WORK IN THE PLATFORM ECONOMY

A The Background In Italy as in many other countries, the platform economy has increasingly gained momentum since 2015 and is still growing. Although the platform economy developed in Italy following the advent of Uber, the prohibition of its most popular service (UberPop) owing to judgments in the field of competition law37 resulted in this trend being identified with the other internationally fast-growing platform economy sector, that is, food delivery. This identification affected not only the public debate but also the academic and political one, because, starting from 2016, the first disputes in courts38 and the first union actions39 took place in this sector. It is for this reason that the legal developments (i.e. regulations, case-law, collective bargaining) considered in the following paragraphs will mainly, if not exclusively, refer to the condition of riders or (ciclo)fattorini. While the specific attention devoted to platforms in the delivery sector is reasonably linked in part to the growth of the number of workers and in part to their visibility in urban contexts, the focus on this sector has resulted in a lack of analysis and attention being paid to other platforms and workers within this highly heterogeneous business model. This is the case, for example, of workers on micro-crowd-work platforms (such as Amazon Mechanical Turk), but also of those who work on so-called freelance marketplaces, both online and offline (from web designers to plumbers, from lawyers to babysitters and professional caregivers).40 As a consequence, the issue considered in the debate as well as in the legal developments directly regards riders’ employment status and the need for a specific regulation of their work, leaving aside the more general features of the platform economy’s economic model, such as the use of rating systems and the form of intermediation provided. B Recent Legal Developments The most important developments regarding the gig economy took place in late 2019 and 2020. Although the relationship between riders and platforms (i.e. Foodora, Glovo, etc.) has been questioned in court since 2017,41 and the Minister of Labour stated that the gig economy was at 36

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See Decree of the Labour Minister, 5 November 2021, Adozione del Programma nazionale per la garanzia di occupabilita’ dei lavoratori [Adoption of the National Program for the guarantee of workers’ employability]. The first decision by an Italian court was Trib. Milano, Enterprises section, 9 July 2015, ruling that the Uber Pop service was unlawful because of the violation of fair competition in public transportation services (taxi). The first dispute regarded the case of Foodora. See later in the chapter for an analysis of the decisions regarding the dispute. See A. Tassinari and V. Maccarrone, ‘The mobilisation of gig economy couriers in Italy: Some lessons for the trade union movement’, Transfer, 23 (2017) 353–7; A. Tassinari and V. Maccarrone, ‘Riders in the storm: Workplace solidarity among gig economy couriers in Italy and the UK’, Work, Employment & Society (WES), 34 (2020) 35–54. For the typologies of different platforms, see, inter alia, F. A. Schmidt, Digital Labour Markets in the Platform Economy: Mapping the Political Challenges of Crowd Work and Gig Work (London: Friedrich Ebert Foundation, 2017), https://library.fes.de/pdf-files/wiso/13164.pdf; D. Howcroft and B. Bergvall-Kareborn, ‘A typology of crowdwork platforms’, WES, 1 (2019), 21–38. The first Italian decision regarding the employment status of gig workers was Trib. Torino, 7 May 2018, followed by Trib. Milano, 10 September 2018. Both judgments confirmed the status of self-employment for those operating through the platforms.

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the centre of its action in 2018,42 it has been Law Decree no. 101/2019, converted in Law no. 126/ 2019 and the decision by the Court of last resort (henceforth: the Court of Cassation) no. 1663/ 2020 that gave relevance to the regulation of (food) delivery through platforms.43 Law Decree no. 101/2019 is the consequence of unsuccessful concertation by the Minister of Labour that aimed at concluding a collective agreement regulating the working conditions in the food delivery sector between the representatives of the platforms and the unions. The failure at the negotiating table prompted the legislator to introduce a specific regulation for the sector and to amend the above-mentioned Article 2 of Legislative Decree no. 81/2015, namely the provision that extends the application of labour law to employer-organised workers. In that period, the case of Foodora – which finally resulted in the application of Article 2 of the Law Decree by the Court of Cassation no. 1663/2020 – was still pending, after the decision by the Court of Appeal of Torino44 partially reversed the lower court decision (Trib. Torino, 7 May 2018), confirming that the rider and the platform did not conclude an employment relationship, for the first time applying the notion of etero-organizzazione (employer-organised work) to the case. As a consequence of these two developments, the legal framework for the (food) delivery sector of the gig economy features two possible regimes: – a ‘default’ regime, provided by special regulation contained in Law Decree no. 101/2019 (Art. 1, para. 3), that applies to any platform and self-employed worker when they stipulate a contract for services or a co.co.co. (employer-coordinated freelance work); – a ‘judiciary’ regime that applies when the workers give evidence in court that they are not engaged through self-employment or co.co.co. but are in a form of employer-organised work. Providing this evidence – which was made easier by Law Decree no. 101/2019 (Art. 1, para. 1) and confirmed in the important Foodora case – implies application of the more protective regulation of labour law or, at least, of the provision of labour law that is considered compatible. Starting from the ‘default’ regime, the regulation consists of seven articles (from Art. 47-bis to Art. 47-octies) introduced into Legislative Decree no. 81/2015 by Law Decree no. 101/2019 mentioned earlier. After defining its scope (it is limited to workers in the delivery sector engaged by platforms with self-employment arrangements45), the regulation provides some specific protections regarding information rights and the requirement to conclude the contract in writing,46 remuneration,47 anti-discrimination protection,48 data protection,49 and OSH safeguards and 42

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47 48 49

It should be noted that the first draft bill regarding the employment status and the regulation of the workers of the gig economy was submitted to the Parliament in 2017 (Draft Bill no. 4283/2017 titled Disposizioni concernenti le prestazioni di lavoro con modalita` di esecuzione organizzate o coordinate dal committente [Provisions concerning the performance of work with methods of execution organised or coordinated by the customer]) and to the Senate by Senator Airaudo. While the regulation is provided for the delivery sector in general terms (the delivery of goods), it is known that most deliveries concern food. Court of Appeal Torino, 4 February 2019, no. 26. Art. 47-bis, Legislative Decree no. 81/2015. Art. 47-ter, Legislative Decree no. 81/2015. The provision has been integrated in the context of the implementation of the Directive (EU) 2019/1152: information regarding the automated decision-making and monitoring should be provided to the riders and to their representatives, even though they ‘formally’ fall outside the scope of application of the Directive, being self-employed workers. Art. 47-quater, Legislative Decree no. 81/2015. Art. 47-quinquies, Legislative Decree no. 81/2015. Art. 47-sexies, Legislative Decree no. 81/2015.

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insurance coverage against accidents at work.50 Finally, an observatory has been set up to monitor and assess application of the regulation.51 Among these protections, the most interesting ones concerning the struggle faced by riders are remuneration, anti-discrimination, and health and safety. Beginning with the last, it is established, on the one hand, that riders are covered by the mandatory insurance against work accidents and that the related fees are paid by the platforms. On the other hand, the platform is considered to be responsible at its own expense for application of the OHS Act (Legislative Decree no. 81/2008). It is not clear if the second obligation means covering the overall application of the Act – which is mainly directed to employee protection – or if it entails only application of the specific safeguards provided by the OHS Act for self-employed workers. As for anti-discrimination protection, the law extends the application of anti-discrimination law and also the provisions of labour law specifically directed to the protection of employee freedom and dignity. While the first aspect, anti-discrimination law, entails the application of the whole set of terms providing protections against discrimination disseminated in different Acts,52 the second one seems to be aimed at applying section 1 of Law no. 300/1970, which establishes rights regarding the limits of the employer’s prerogative of monitoring work and protections regarding freedom of expression. In addition, a protection addressing the functioning of the platforms is provided: it is forbidden to exclude workers from the platforms or to diminish the number of tasks (i.e. deliveries) proposed to workers because of their refusal to carry out tasks that have been assigned to them. Finally, in relation to the remuneration systems, the law establishes that a collective agreement stipulated between the employer’s association of the platforms and the unions representing the riders could define criteria for determining remuneration linked to the ways of working and the organisation of the work by the platform. Absent this agreement, remuneration must not be established on the basis of the number of deliveries (i.e. the piece rate system is forbidden) and must adhere to the hourly minimum wage determined by comparison with the collective agreement of a similar sector.53 Extra pay for night work, work on public holidays, and work in severe weather conditions is also established. Since this was the provision that had the most impact on the business model of the platforms operating in the (food) delivery sector, the entry into force of the provision was postponed for twelve months, in order to allow negotiation between the employer’s association and the trade unions. Gig workers can still decide to question their default employment status in courts, asking for application of Article 2094 c.c. (status of employee) or Article 2 of Legislative Decree no. 81/2015 (status of employer-organised worker). While employee status has been recently applied by lower courts,54 the Court of Cassation found that the relationship between the platform and the riders 50 51 52

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Art. 47-septies, Legislative Decree no. 81/2015. Art. 47-octies, Legislative Decree no. 81/2015. Significantly, anti-discriminatory regulation has been applied to platform work in Decision no. 2949/2020 of 31 December 2020 of the Court of Bologna, which was an interim injunction decision. In this case, the regulation was found applicable prima facie, both on the ground of Art. 47-quiquies and, alternatively, for the application of Art. 2, § 1, Legislative Decree no. 81/2015. The court found that the algorithmic system resulted in indirect discrimination because the ranking process used to assign shifts did not take into account workers’ specific conditions (i.e. disability and trade union action). See A. Aloisi and V. De Stefano, ‘“Frankly, my rider, I don’t give a damn”’, Il Mulino (7 January 2021), www.rivistailmulino.it/news/newsitem/index/Item/News:NEWS_ITEM:5480. It is worth noting that the national collective agreement of the logistics sector (CCNL Logistica) introduced, already in 2017, a specific regulation for riders who concluded an employment relationship. Classification as employee was first applied in the Decision of Court of Palermo no. 3570 of 24 November 2020 and, after that, in decisions by the Court of Turin (18 November 2021) and the Court of Milan (no. 1018 of 20 April 2022). Other decisions have since applied this classification, most recently the Court of Appeal of Torino (5 July 2023).

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fell within the scope of employer-organised work. In the current version of the provision, the legislator decided to specify, even if it was already applied by the courts as such, that the organisation of work that entails the application of labour law regulating salaried employment could also be determined by the use of a technological platform. Moreover, while in the previous version of the provision the organisation of the work relevant for the application of the notion of etero-organizzazione implies that the employer’s prerogative to organise work performance was exercised on both the time and the place of work, it is now up to the court to identify when work is organised by the employer or only coordinated (co.co.co.),55 taking into account the reality of the relationship. Even after the decision by the Court of Cassation, it remains unclear whether including employer-organised work in the scope of application of traditional labour law Article 2 of Legislative Decree no. 81/2015 entails application of the whole regulation of labour law (i.e. all the provisions that are normally applied to the employee) or application only of the provisions that are deemed to be consistent with the status of an employer-organised worker. Although the criteria for implementation of Article 2 have been made easier – as evidenced by its increasing application to riders56 – the ‘judiciary’ regime entails costs (i.e. litigation costs) and risks for the workers, especially because the platforms can always partly change the business model in order to avoid application of the law. It is probably for this reason that the Minister of Labour had been pushing for the stipulation of a collective agreement that, coherently with the ‘default’ regime, would provide a specific set of protections and safeguards for self-employed riders. While the negotiating table did not lead to stipulation of a collective agreement among the parties, Assodelivery – the employers’ organisation representing the most relevant platforms (except Just Eat) – in September 2020 concluded an agreement with UGL (Unione Generale del Lavoro, or General Labour Union), a right-wing Italian trade union.57 The agreement not only regulated the remuneration of riders but also made use of the derogations permitted by Article 2, paragraph 2, letter a) of Legislative Decree no. 81/2015, where it is established that a collective agreement providing a specific regulation relevant for the sector can exclude the application of labour law in cases of employer-organised work. 55

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In order to better specify the difference between etero-organizzazione (employer-organised work) and coordinamento (employer-coordinated freelance work), an amendment to Article 409 c.p.c. was introduced by Law no. 81/2017. The new version states: ‘The relationship of collaboration is considered to be coordinated when, in compliance with the coordination methods established by mutual agreement between the parties, the worker independently organises the work activity.’ The enactment of the new regulation provided in 2019, that is, the application of Art. 2, para. 1, Legislative Decree no. 81/2015, has been encouraged both in court and by the Labour Inspectorate. As for the courts, employer-organised work was first evaluated with reference to interim injunctions with the aim of enjoying OSH regulation in the context of the pandemic and, as anticipated, with the aim of applying anti-discriminatory legislation. In the decisions (Trib. Firenze, 1 April 2020, no. 886 and Trib. Bologna, 14 April 2020, no. 745) the courts found fumus boni iuris, that is, a good prima facie case for the application of Art. 2, para. 1. Nevertheless, since the decisions are based only on summary information, one of the decisions also considered and established the application of a default regime that entails the application of OSH regulation. Moreover, the application of Art. 2, para. 1 is also at the basis of a huge operation conducted by the Labour Inspectorate that in February 2021 found that 60,000 riders had to be considered employer-organised workers and, as a consequence, required the platforms to regularise the work relationship. Stemming from this operation, the prosecutor in charge of prosecuting criminal offences connected to violation of the OSH Act fined the platforms involved EUR 733 million. More recently, in addition to cases related to the classificatory issue (see, for example, Court of Bologna No. 111/2022 and Court of Appeal Milano, 9 February 2023), classification as employer-organised workers has been considered in the context of litigations related to application of the Assodelivery collective agreement and to violation of the right to information on algorithmic management introduced by Legislative Decree no. 104/2022. On right-wing trade unionism in Italy, see A. Allamprese and N. Contouris, ‘Right wing politics & trade unionism in Italy: Three contradictions and one-way forward’, Journal of the International Centre for Trade Union Rights, 27 (2020), 1–2, 16–18.

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Although the conclusion of such an agreement is legitimate according to Italian law, the agreement was challenged by the traditional trade union confederations (CGIL, CISL and UIL, which were negotiating at the ministerial table) and by the Minister of Labour.58 They argued that the collective agreement could not be considered as being stipulated by qualified unions,59 as required by the regulations for the production of derogatory effects.60 To contrast the application of the Assodelivery–UGL agreement, a supplementary agreement (Protocol) to the sectoral collective agreement of Logistica, Trasporto Merci, Spedizioni (logistic, freight transportation, and shipment) was stipulated by the CGIL, the CISL, and UIL according to Article 47-quater, but the agreement has not been applied so far by the most relevant platforms, which are still applying the Assodelivery–UGL agreement. The adoption of this agreement by platforms has been contested by trade unions in the lower courts: the first decisions confirmed the position of the plaintiffs, requiring platforms to end application of the above-mentioned agreement.61 Although this case-law has been consolidating, differences remain with respect to identification of the collective agreement to be applied: some decisions establish the application of CCNL Logistica mentioned earlier, while others provide for the application of CCNL for the retail sector. As a result of all this, the regulation of ciclofattorini remains uncertain and debated: the announced EU-level regulation and its future implementation will probably be the occasion for a systematic reform of the regulation applied to platform work. In addition, further developments could stem from industrial relations with Assodelivery, which, after joining the employers’ association Confcommercio, is seeking to conclude a new collective agreement with retail sector trade unions affiliated to CGIL, CISL, and UIL. C Key Reform Issues While the conditions of gig workers in the (food) delivery sector are at the centre of recent legal developments, no reference has been made in Italy to the overall dynamic of the uberisation of work. If the ‘default’ regime has addressed this industry, also the widening of the application of Article 2 seems to be limited to this sector of the gig economy.62 Since Uber and similar companies do not operate in Italy, where attempts to update the regulation of public transport to the ‘app era’ have been and are harshly contested by taxi associations,63 it is not easy to envision any other sector of the gig economy where the business model requires such an organisation by the employer to motivate the application of Article 2 of Legislative Decree no. 81/2015. This would hardly be the case for so-called micro-tasking crowd work and even less so for freelance marketplaces involving plumbers, web designers, professional caregivers, and so on. As a consequence, the regulations enacted and enforced in Italy are failing to address the conditions of an increasing number of workers who are involved in the heterogeneous world of the gig economy. The fact that, for these workers, employment status is not controversial does not mean that they do not deserve specific attention on account of some of the weak conditions they 58

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The main trade union confederations are the Confederazione Generale Italiana del Lavoro [General Confederation of Labour] (CGIL), the Confederazione Italiana Sindacati Lavoratori [Italian Confederation of Trades Unions] (CISL), and the Unione Italiana del Lavoro [Italian Labour Union] (UIL). Trade unions are considered qualified to stipulate this type of agreement when they are comparatively more representative in the sector than other unions, on a national basis. See, in particular, Circolare no. 17, 19 November 2020, of the Minister of Labour. See Court of Bologna, 30 June 2021 and Court of Florence no. 721 of 24 November 2021. Conversely, the amendment to Art. 2 will produce effects in sectors other than the gig economy. July 2022 saw a hotly contested new attempt by the government to reform transport law.

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face. Beyond the problems connected to their classification, critical issues arise from certain platform systems such as rating and review, and algorithmic management. These systems have a strong impact on the employment that candidates can find on the platform. Moreover, the functioning of the platform often entails information asymmetries and a unilateral power of modification over the platform terms and conditions. While having recourse to agency work in the context of the platform economy does not seem a proper solution,64 since it entails a different allocation of the employer’s prerogatives on an employee in a triangular relationship and not the regulation of a different kind of triangular relationship, a viable regulation may be found in the field of labour market law. Specifically, it seems reasonable to work on the regulation addressing labour market intermediaries. It is not a question of extending its application to the platform as such;65 rather, it is about introducing specific protections to these workers, regulating the peculiar kind of service of (inter)mediation and the requirements for the platforms. Applying this kind of approach could guarantee some specific rights to gig workers with reference to those conditions of weakness specifically related to platforms’ functioning. It could also ensure a better structuring of the labour market and address issues related to the payment of fees required by some platforms for premium services aimed at obtaining more job opportunities on the platform. In addition, by focussing on the sole sector of (food) delivery, the debate over the gig economy missed the opportunity to analyse the dynamic of the uberisation of work in the context of more general trends and, in particular, the new reality of self-employment. From this point of view, it emerges that some of the needs for protections that are a result of the positional weakness of gig workers can be traced back to more general trends in the labour market. As such, it would need a systemic rather than a sector-specific response. This relates to the economic vulnerability of these workers and the weak level of social security protections available to them, the difficulty of upskilling and moving to other jobs or professional statuses, and the lack of proper union representation. Against this background, a profitable way to respond to this kind of weakness seems to be to separate employment status from the provision of non-employment-related rights and, thus, universalise some labour-related rights. Therefore, the regulation of work in the platform economy implies an adequate balance between selectivity and universalism,66 a balance that can be struck by working at both ends of the continuum between these two strategies, to universalise some rights while providing specific regulation for the aspects that are inherently connected to the very functioning of the platforms.

IV CONCLUDING REMARKS

The overview provided in this chapter shows that the Italian legislator has identified in good time the impact of new technology on the world of work as a matter of interest for labour law. However, notwithstanding the action taken by the government and the Parliament in this regard, 64

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See A. Rosin, ‘Applying the Temporary Agency Work Directive to platform workers: Mission impossible?’, International Journal of Comparative Labour Law and Industrial Relations, 36(2) (2020), 141–68; L. Ratti, ‘Online platforms and crowdwork in Europe: A two-step approach to expanding agency work provisions’, Comparative Labor Law and Policy Journal, 38(2) (2017), 477–511. The regulation of intermediazione (private labour intermediation services) in Italy applies only when the service leads to the conclusion of a contract of employment or, as was stated in an opinion by the Minister of Labour (Interpello no. 12/2013), to the conclusion of a self-employment arrangement that creates a long-lasting job position at the client company. As a consequence, this regulation covers a strict number of platforms mediating long-lasting work, or job positions with an employment contract. See G. Davidov, ‘Setting labour law’s coverage: Between universalism and selectivity’, Oxford Journal of Legal Studies, 34 (2014), 543–66.

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the analysis here has demonstrated that the legal framework still presents a number of drawbacks and gaps. This situation is the consequence of two concurring and connected factors. On the one hand, with reference to both of the trends analysed, the political debate (but, also, partly the scholarly debate) has adopted a very narrow perspective of the ongoing phenomena. The disruptive effects of the Fourth Industrial Revolution have been addressed relying on the traditional labour law categories and instruments. This is clear for the smart working revolution, where response to the dynamic has resulted in a new regulation for a form of dependent alternating telework (lavoro agile). The same consideration seems to apply also to the management of the issues related to the gig economy where the solution has been found in the extension of a number of protections typical of the employment relationship in the context of the ‘default regulation’ (OSH regulation, insurance coverage, etc.) or, alternatively, in the expansion of labour law’s scope to employer-organised work, when relevant for the gig economy. The concurring factor can be seen in the little role that the social partners have so far played in managing the different trends of change. As for lavoro agile, while some experimentations with this form of work had been already implemented by collective agreements before the enactment of the law, the regulation provided by Law no. 81/2017 completely bypasses the role of workers’ representatives and unions, so that this role can be deemed, at most, complementary in this field. With regard to the gig economy, traditional trade unions have been displaced by the dynamics to the extent that they have left room for autonomously formed organisations. The attempt by the Ministry of Labour to include them at the consultation table proved unsuccessful and also created competition between the various sectorial categories of CGIL, CISL, and UIL. With some delay, social partners are starting to be engaged in the management of both the trends, by reaching new and, partly, innovative agreements on lavoro agile (at both company and national level) and by directly being involved in the representation of workers of the gig economy. The Protocol on lavoro agile and the activism – also in terms of strategic litigation – in the field of the gig economy are to be welcomed, but the overall action of social partners seems to lack a systematic view on the challenges posed by the transition. Hopefully, the issue can be overcome with the help of the EU-level social partners that – through both the European social partners framework agreement on digitalisation stipulated in 2020 and the joint work programme for 2022–4 signed in June 2022 – are paving the way to a participative management of the matter. If labour law has to be significantly revised to address the changes produced by the Fourth Industrial Revolution, the role played by the social partners cannot be a marginal one. As said, important reforms of labour protections, active and passive labour market policies, and labour market regulation are needed. Reforms of such a kind entail not only voicing one’s claims but also directly involving social forces and the social partners, both during the drafting and in the implementation stage.

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9 Spain: Towards a New Architecture for Labour Law Institutions Daniel Pe´rez del Prado

I INTRODUCTION: SPAIN IN A CHANGING WORLD

The fourth industrial revolution, the economy 4.0, the digital economy . . . all these terms refer to the profound processes of transformation that are changing the lives of people all over the world. Despite there being no consensus on the founding principles of the digital economy, some basic common points are frequently mentioned in all research studies: the key role played by platforms, robotization, and digital intelligence; the importance of network effects and the use of big data; the emerging model of Industry 4.0; and the increasing profitability of technological investments.1 Digitalization is changing the economy, our societies, our daily lives, and it is having an especially significant impact on employment, working, and social conditions. In fact, it is one of the major concerns and study targets in the framework of the initiative and activities promoted by the International Labour Organization (ILO) regarding ‘The Future of Work’. Within this framework, Spain shows both important strengths and weaknesses. On the one hand, the strengths are connected with the way in which digital processes are being developed in the country. Spain is dealing with the challenge of digitalization by amassing very good quality data on some crucial points.2 In the European Digital Economy and Society Index (DESI) 2020, Spain ranked eleventh out of the twenty-eight European Union (EU) Member States, higher than Germany, Austria, or France, and was above the European average in most of the analyzed factors. The country ranked second in the EU on digital public services thanks to its well-timed implementation of a digital-by-default strategy throughout its central public administration. Additionally, it ranked fifth in the area of connectivity as one of the top performers in the roll-out of very-high-capacity networks as well as the take-up of ultrafast broadband connections. Spain was one of the first countries to deploy the 5G network, which covered 75 per cent of the population by the end of 2020. Finally, the country’s score was in line with the EU average regarding digital integration. That is to say that whereas, generally speaking, Spanish businesses take advantage of the opportunities presented by digital technologies, the majority of small and medium-sized enterprises (SMEs) have yet to fully unlock the potential of e-commerce. One of the reasons behind these good results is the determined position of political actors over time, which has meant not only the development of a strategy focussed on digitalizing Spain earlier and faster than our neighbours but also the setting up of valuable alliances with the 1

2

G. Valenduc and P. Vendramin, Work in the Digital Economy: Sorting the Old from the New, SSRN Scholarly Paper ID 2770405 (Rochester, NY: Social Science Research Network, 2016). European Commission, The Digital Economy and Society Index (DESI) 2020 (Brussels: European Commission, 2020), https://ec.europa.eu/digital-single-market/en/desi.

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private sector. The new coalition government keeps this line. Digital affairs are currently under a vice-president in the Ministry for Economic Affairs and Digital Transformation (Ministerio de Asuntos Econo´micos y Transformacio´n Digital) and three state secretaries in that ministry have responsibility for digital matters: one for digitization and artificial intelligence (AI), a second for telecommunications and digital infrastructure, and a third for economy and business support. Moreover, the government is implementing its national AI strategy and is currently working on a national strategy for digital skills to ensure that all citizens, with a special emphasis on workers, women, and the elderly, reach the level of digital skills needed to conduct their lives and work in today’s society and labour market. On the other hand, the main weaknesses are connected to the labour market. According to the same index, though Spain had improved its scores, it was below the EU average on the human capital indicators, with almost half of the Spanish population at the time still lacking basic digital skills and 8 per cent never having used the Internet.3 Furthermore, Spain had to deal with the Covid-19 crisis and the emerging disruptive changes when it had not yet completely recovered from the previous financial crisis. This position of weakness not only limited the country’s capacity to face the pandemic but also put at risk its advances in terms of digitalization. According to Eurostat’s database, despite unemployment having notably improved, decreasing from 26 per cent to 12.9 per cent, Spain still had the second highest unemployment rate in the EU. It was also the European country with the highest youth unemployment rate (22.4 per cent in 2022). The high percentage of long-term unemployment and the high number of temporary employees are also usually mentioned as other structural problems of the Spanish labour market. From the perspective of both strengths and weaknesses, labour law plays a decisive role in dealing successfully with today’s disruptive changes. It is the key to adapting the Spanish labour market to the requirements imposed by digitalization and preparing Spanish society for the challenges that derive from it. Nevertheless, neither the legislative framework nor the classical stakeholders seem to be sufficiently ready to achieve the objective of being a better, more prepared, and more resilient society after all these disruptive challenges. This chapter focusses on how Spain’s labour and employment law is dealing with the technological disruption. Section II pays attention to the traditional configuration of the employment relationship and its limits in order to show its insufficiencies concerning the digital change. Section III describes how the traditional configuration of employment is evolving and how digitalization is transforming it. Section IV analyzes the way in which technological innovation is affecting both the legal framework and the main actors, some of whom are new. Section V studies the most important manifestations of technological change in Spain, the ‘uberization’ process of the economy, while Section VI draws up some basic trends for the short-term future.

II THE ARCHETYPE

Traditionally, Spanish regulation has set the limits of the employment relationship through three different notions that have emerged successively with the evolution of the labour market. As a consequence, the Spanish legal framework for the employment relationship could be described as an ‘obtuse triangle’ because it is formed by three elements but they do not have the same importance. As in this type of triangle, where one of its interior angles is bigger than the others, the employment relationship, from a legal point of view, is far more important than 3

Ibid.

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the other two employment types, namely self-employment and economically dependent selfemployment. Hence, attention must be paid, first and most logically, to the biggest interior angle of the obtuse triangle, the employment relationship as represented by the concept of the employee. In contrast to other legal systems (i.e. Anglo-Saxon), this is a single concept, defined as someone ‘voluntarily rendering their services for compensation on behalf of another party, within the scope of the organization and management of another, physical or legal person, called the employer or entrepreneur’.4 On this basis, from the Spanish labour law perspective, the employee and, as a consequence, the employment relationship is defined by the convergence of a number of elements. The classical classification distinguishes the following ones: (i) willingness, as labour law covers and protects those activities that are freely carried out by the employee, rejecting and prosecuting the different forms of forced labour; (ii) alterity, meaning that the employee works for another person, the employer; (iii) control, which is also included because the work must be developed under the instructions of the employer; and (iv) remuneration, that is, the professional activity is performed in exchange for a salary.5 Other authors synthesize this definition into only three elements or ‘coordinates’: (i) the objective coordinate, which refers to the development of a professional activity; (ii) the space coordinate, which relates to the coverage of the employment relationship; and (iii) the time coordinate, which covers the fact that it takes place during a certain period of time.6 Whatever the approach, Spanish regulation defines the employment relationship quite similarly to other analogous legal systems. Indeed, this is quite similar to the definition provided in ILO Recommendation 198, which includes most of the already mentioned indicators in its paragraph 13, although it organizes them in a different way: (a) the fact that the work: is carried out according to the instructions and under the control of another party; involves the integration of the worker in the organization of the enterprise; is performed solely or mainly for the benefit of another person; must be carried out personally by the worker; is carried out within specific working hours or at a workplace specified or agreed by the party requesting the work; is of a particular duration and has a certain continuity; requires the worker’s availability; or involves the provision of tools, materials and machinery by the party requesting the work. (b) periodic payment of remuneration to the worker; the fact that such remuneration constitutes the worker’s sole or principal source of income; provision of payment in kind, such as food, lodging or transport; recognition of entitlements such as weekly rest and annual holidays; payment by the party requesting the work for travel undertaken by the worker in order to carry out the work; or absence of financial risk for the worker.7

Spanish courts frequently use these elements or indicators when applying the multiple test to determine whether an employment relationship exists. Nevertheless, this is not an easy task in practical terms. As the Supreme Court recognizes, ‘in the judgement of litigious cases, it frequently resorts, for the identification of these notes of the employment contract, to a set of indications or indicative facts of one and the others. These indications are sometimes common to the generality of the activities or jobs and, other times, specific of certain work or professional activities’.8 4 5 6 7

8

Art. 1, Workers’ Statute [Estatuto de los Trabajadores]. M. Alonso Olea and M. E. Casas Baamonde, Derecho del trabajo [Labour Law] (Madrid: Civitas, 2005). J. R. Mercader Uguina, Lecciones de Derecho del Trabajo [Labour Law Lessons] (Valencia: Tirant lo Blanch, 2008). International Labour Organization, R198 – Employment Relationship Recommendation, 2006 (No. 198), www .ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_INSTRUMENT_ID:312535. Supreme Court Judgment, 24 January 2018, Case ECLI: ES:TS:2018:588.

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The insufficiencies of the definition are not only detected by courts but assumed by the law when it sets the so-called special employment relationships. These activities have their own regulation in order to provide a specific framework for some particularities. Except for these particularities, however, the rest of the employment is regulated according to the Workers’ Statute. In other words, special employment relationships are regulated, primarily, by their own regulation and, subsidiarily and complementarily, by the common one. This special employment category includes managers, household workers, convicts in penitentiary institutions, professional sportsmen and women, artists, sales agents, workers with disabilities, junior doctors in training, and lawyers who work for law offices. Returning to the idea of the obtuse triangle described earlier, the two remaining interior angles are of equal size and both smaller than the first. One is represented by the concept of selfemployment. This is the obverse side of the coin, the opposite of the concept of employment. According to the Self-Employment Statute – even in name it observes the weight of traditional regulation, despite it having the merit of being a pioneering piece of legislation in Europe9 – a self-employee is defined as ‘a natural person who regularly, personally, directly, on their own account and outside the scope of management and organization of another person, carries out an economic or professional activity for profit, whether or not they give employment to workers employed by someone else’. Whereas in the employment relationship the employee works for another person, here the self-employee carries out their professional activity ‘on their own account’. While in the first one the work is provided under the direction and control of the employer, in the second one it is done ‘outside the scope of management and organization of another person’. Finally, the employee works in exchange for a salary, but the self-employee develops an economic or professional activity ‘for profit’. The only genuine features of the definition are: (i) that the activity must be developed ‘regularly, personally and directly’, although it does not say much regarding the limits of the notion because the employment relationship is also carried out under the same circumstances; (ii) that it must be carried out by a natural person, excluding the possibility of applying the status to legal persons; (iii) and that it matters not whether the self-employee hires one or more employees, which admits the possibility of the self-employee being an employer too. Consequently, it is possible to affirm that the distinction between employment and selfemployment is clearly dominated by the first one. The debate is frequently focussed on the existence of an employment relationship because, otherwise, the legal relationship would be covered by a civil or commercial contract and the presence of self-employment confirmed.10 Hence, from a practical perspective, the definition does not add much to the debate, which is already governed by the classical definition of the employment relationship. The other smaller interior angle of the obtuse triangle is the so-called economically dependent self-employment, known as TRADE because of the Spanish acronym (trabajador auto´nomo econo´micamente dependiente). This is also covered by the Self-Employment Statute, even though it is something of a ‘grey area’. Essentially, TRADE applies to those who usually, personally, and directly carry out an economic or professional activity for lucrative purposes but for one client, from whom they receive at least 75 per cent of their income. Among the measures, these TRADE self-employees have the right to enjoy eighteen days of holiday per year, 9

10

F. Lo´pez i Mora, ‘Un an˜o y medio de Estatuto del trabajo auto´nomo y su infradesarrollo: y en eso llego´ una gran crisis econo´mica [A year and a half of the self-employment statute and its underdevelopment: And the great economic crisis that came with it]’, REVESCO: Revista de estudios cooperativos [Journal of Cooperative Studies], 98 (2008), 89–132 (claims that the Self-Employment Statute was the first code for self-employment in Europe). F. J. Go´mez Abelleira, Handbook on Spanish Employment Law (Madrid: Tecnos, 2012).

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the right of affiliation to trade unions or employers’ associations, and the right to create specific professional associations and engage in a sort of collective bargaining, the results of which are called agreements of professional interest, not collective agreements, and can benefit the associates of the signatory organizations. The emergence of this notion has aroused great interest in light of its potential impact on traditional industrial relations and the consequences for the design of social policies.11 Nevertheless, it seems that its introduction does not change too much in the Spanish labour market panorama. Despite the country holding an intermediate position concerning selfemployment among the European countries – according to Eurostat’s database, the selfemployment rate is around 15 per cent and remains quite stable – TRADE self-employees account for only 1.5 per cent of all self-employees and only 10 per cent of them are covered by an agreement of professional interest.12 As a consequence, it is possible to say that TRADE’s evolution is not a success story, except for in the traditional sectors in which it was previously consolidated.13 Anyway, the result of this evolution is regulation characterized by the convergence of the three mentioned categories, with different sources and very different guarantees concerning working conditions and social protection (see Table 9.1). Moreover, this increasing regulatory effort does not solve the problems concerning professional classification. On the contrary, new regulations have been used in some sectors to avoid classical labour law protection.14 Further, the

table 9.1 Types of professional relationship and legal coverage Type of relationship

Regulation

Rights

Employee

All rights

Self-employee

Workers’ Statute + collective agreements Self-Employment Statute

Economically dependent selfemployee

Self-Employment Statute + agreements of professional interest

Some individual rights + freedom of association Some individual rights + freedom of association + special collective bargaining

Source: Author’s own elaboration.

11

12

13

14

C. C. Williams and F. Lapeyre, Dependent Self-Employment: Trends, Challenges and Policy Responses in the EU, Working Paper (Geneva: ILO, 2017), https://bit.ly/3NNqRP0; C. C. Williams and I. A. Horodnic, ‘Evaluating the prevalence and distribution of dependent self-employment: Some lessons from the European Working Conditions Survey’, Industrial Relations Journal, 49(2) (2018), 109–7. https://doi.org/10.1111/irj.12206; C. Roma´n, E. Congregado, and J. M. Milla´n, ‘Dependent self-employment as a way to evade employment protection legislation’, Small Business Economics, 37(3) (2011), 363–92, https://doi.org/10.1007/s11187-009-9241-3; W. Eichhorst, M. Braga, U. Mu¨hlberger, M. Gerard, and G. T. Horvath, Social Protection Rights of Economically Dependent Self-Employed Workers Based on a Study Conducted for the European Parliament under Contract IP/A/EMPL/FWC/2008-002/C1/SC8 (Bonn: IZA, 2013), www.iza.org/en/webcontent/publications/reports/report_pdfs/iza_report_54.pdf. P. Nieto Rojas, ‘Los acuerdos de intere´s profesional: Balance tras diez an˜os del estatuto del trabajo auto´nomo [Agreements of professional interest: Balance after ten years of the self-employment statute]’, Revista de informacio´n laboral [Labour Information Magazine], 3 (2018), 161–80. J. Cruz Villalo´n, ‘El trabajo auto´nomo econo´micamente dependiente en Espan˜a [Economically dependent selfemployment in Spain]’ (2013), https://idus.us.es/handle/11441/41506. Roma´n, Congregado, and Milla´n, ‘Dependent self-employment’.

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emergence of new technologies and business models related to the digitalization of the economy has complicated the situation even more.

III THE CHANGING NATURE OF WORK

The particularities of Spain’s labour market, productive structure, and educational system, among other factors, make it a country in which the impact of automatization is likely to be high. According to the Organisation for Economic Co-operation and Development (OECD), the average share of jobs at high risk of automation (i.e. those with a probability of being automated of at least 70 per cent) is around 14 per cent; in the case of Spain, it is eight percentage points higher, up to 21.7 per cent. Hence, the country is placed above the mean, in a range from 6 per cent in Norway to 34 per cent in the Slovak Republic. Additionally, the OECD also estimates that 32 per cent of jobs, on average, may see a large share of their tasks becoming automated, while entirely new tasks may emerge. In other words, around a third of existing jobs may change substantially in the way they are carried out. Here, Spain shows relatively better figures, setting this share at 30.2 per cent, slightly below the average.15 Even considering this, however, there is no doubt that the country will have to deal with a profound transformation, more intense than in other, nearby countries (see Figure 9.1).

High risk of automation

Risk of significant change

70 60 50 40 30 20 10

SV K

JP N G R C TU R LT U

ES P SV N C H L D EU

N O R N ZL FI N SW E U SA G BR D N K N LD C AN BE L IR L ES T KO R IS R O EC D AU T C ZE FR A PO L IT A

0

figure 9.1 Jobs at risk of automatisation in OECD countries Source: OECD, OECD Employment Outlook 2019, Share of jobs at a high risk of automatization or at risk of significant change (%). Note: Countries listed are: NOR – Norway; NZL – New Zealand; FIN – Finland; SWE – Sweden; USA – United States; GBR – Great Britain; DNK – Denmark; NLD – Netherlands; CAN – Canada; BEL – Belgium; IRL – Republic of Ireland; EST – Estonia; KOR – Republic of Korea; ISR – Israel; OECD – Organisation for Economic Co-operation and Development; AUT – Austria; CZE – Czech Republic; FRA – France; POL – Poland; ITA – Italy; ESP – Spain; SVN – Slovenia; CHL – Chile; DEU – Germany; JPN – Japan; GRC – Greece; TUR – Turkey; LTU – Lithuania; SVK – Slovakia.

15

OECD, OECD Employment Outlook 2019: The Future of Work (Paris: OECD, 2019).

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The disjunctive concern is whether more existing jobs will be destroyed by automatization than new jobs will be created by it, or vice versa. Further, will the disruptive changes produce higher unemployment in a country that is traditionally affected by this problem16 and will those changes alter the country’s employment status, making vulnerable17 or precarious work more common?18 In other words, the impact of disruptive forces on the labour market is connected not only to the quantity but to the quality of work. Regarding this point, the profound technological changes permit working anywhere and everywhere at any time, blurring the traditional limits of working time and place. According to the ILO and Eurofound, digitalization intensifies working time, compelling people to work during the evenings, weekends, and even at night.19 Indeed, instead of taking advantage of the flexibility provided by the new technologies to enjoy more balanced personal and family lives, people experience a significant loss in the ‘sovereignty’ of their own time. In Spain, 64 per cent of employees affirm carrying out professional activities during their free time, while 68 per cent confirm that they receive emails or calls out of working hours.20 As a result, there is a clear trend towards the erasure of the limits between professional activity and private life,21 which was even more intense during the confinement produced by the Covid-19 pandemic. And the technological transformation also makes disappear the space limits of work. In this case, Spain shows some contradictory trends. On the one hand, it is a country in which telework is scarcely developed. As will be explained in Section IV, only 7.5 per cent of Spanish workers are involved in telework, which is six percentage points below the European average (13.5 per cent). On the other hand, Spain is one of the countries in which the platform economy has emerged early on and intensely, as the following data show. In most of the countries where platform work is operating, it is quite a new phenomenon, having emerged since the late 2000s or early 2010s. According to Eurofound, crowd employment is rising in eleven Member States, among a mix of large and small countries and geographic locations. Interestingly, among northern European countries, often linked to a high level of adoption of new technologies, only Denmark shows indicators of being included in the emerging group. Among the eastern European Member States, employment platforms have been established in the Czech Republic, Latvia, and Lithuania. Southern countries are represented by Greece, Italy, Portugal, and Spain, where the recent increase is explained by the economic and financial crisis, which has resulted in lack of liquidity and the need to find alternative (and cheap) ways of marketing one’s services. The last group is formed by Belgium, Germany, and the UK, although the UK is now outside the EU.22 Despite the influence of the financial crisis (and, in some cases, fuelled by it), the activity is increasing strongly. Between 2018 and 2019, the sector doubled its contribution to gross value added (GVA).23 But Spain is not only a country in which platforms are developing quickly; it is 16 17 18

19

20 21

22 23

M. Gaggi and E. Narduzzi, Pleno desempleo [Full Unemployment] (Madrid: Lengua de Trapo, 2009), 31. International Labour Organization, World Employment and Social Outlook: Trends 2016 (Geneva: ILO, 2016). J. R. Mercader Uguina, El futuro del trabajo en la era de la digitalizacio´n y la robo´tica [The Future of Work in the Era of Digitization and Robotics] (Valencia: Tirant lo Blanch, 2017). Eurofound and the International Labour Organization, Working Anytime, Anywhere: The Effects on the World of Work (Luxembourg: Publications Office of the European Union; Geneva: ILO, 2017). Ibid. J. Webster, ‘Microworkers of the gig economy: Separate and precarious’, New Labor Forum, 25(3) (2016), 56–64. https://doi.org/10.1177/1095796016661511. Eurofound, New Forms of Employment (Luxembourg: Publications Office of the European Union, 2015). ADIGITAL and AFI, La contribucio´n econo´mica de las plataformas delivery en Espan˜a [The economic contribution of delivery platforms in Spain] (2019), http://docplayer.es/125242817-La-contribucion-economica-de-lasplataformas-de-delivery-en-espana-enero-2019.html.

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20 Sporadic

Marginal

Secondary

Main

18 16 14 12 10 8 6 4 2

al

Sl

To t

ry ov ak ia C ze ch ia

d

ga

an

un H

ce

nl Fi

ly

Fr an

Ita

at

om R

ro

an i Sw a ed en

ia

a ni C

ua

an y

th Li

K U

m er G

nd

l ga

la Ire

Po r

nd

ai

rla

Sp

he N

et

tu

s

17 18 17 18 17 18 17 18 17 18 17 18 17 18 17 18 17 18 17 18 17 18 17 18 17 18 17 18 17 18 17 18 17 18 n

0

figure 9.2 Intensity and relevance of platform work: estimates combining information on income and hours worked Source: M. C. Urzı´ Brancati, A. Pesole, and E. Ferna´ndez-Macı´as, New Evidence on Platform Workers in Europe: Results from the Second COLLEEM Survey (Brussels: European Commission, Directorate-General for Economic and Financial Affairs, 2020).

also experiencing a relevant increase in terms of employment. The best way to assess the impact of the labour market is focussing on the jobs involved in it. Figure 9.2 shows the percentage of the working age population that corresponds to each of the four categories of platform workers across the countries participating in the COLLaborative Economy and EMployment (COLLEEM) I and II surveys conducted by the European Commission’s Joint Research Centre.24 These categories are related to the time they spend working for platforms and, consequently, the figure shows the type of income involved. As can be seen, Spain forms with the Netherlands, Portugal, Ireland, and the UK the group of countries leading the share of the workforce who provide services to platforms. Particularly, in 2018 Spain rocketed up to 18 per cent, more than four percentage points above the second country in the group, the Netherlands, and more than five percentage points above the average. Additionally, the country is first in terms of secondary employment – 6.7 per cent v. the 4.1 per cent average – and second, after the Netherlands, if focussing on main platform workers – 2.6 per cent compared to the Dutch share of 2.7 per cent and the average of 1.4 per cent. As a consequence, in Spain platform employment is relevant not only in terms of the percentage of the working population but also in relation to financial considerations; it is the primary or secondary source of income for more than half of platform workers. This is in line with studies that found platform workers’ earnings, on average, to be 1.4 times the Spanish minimum wage.25 24

25

M. C. Urzı´ Brancati, A. Pesole, and E. Ferna´ndez-Macı´as, New Evidence on Platform Workers in Europe: Results from the Second COLLEEM Survey (Brussels: European Commission, Directorate-General for Economic and Financial Affairs, 2020). ADIGITAL and AFI, ‘Importancia econo´mica de las plataformas de delivery y perfil de los repartidores en Espan˜a [Economic importance of delivery platforms and profile of distributors in Spain]’ (2020), https://bit.ly/3IUUF9q.

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IV THE PROTOTYPES

The changing nature of work clearly shows a process of profound and rapid changes that goes further than the limits of the labour market. Our Western societies have been described as ‘liquid’ because they cannot keep their shape for long under conditions of constant uncertainty.26 Digitalization is accelerating this process. Nowadays, changes are happening at breakneck speed and the law, produced and applied following procedures created centuries ago, has the challenge of regulating something that is not stable, yet is altered permanently. In order to deal with this challenge, the law itself is changing its shape, with new forms of regulation emerging that have been called ‘liquid law’.27 From this perspective, law must change as much and as fast as society. It must be flexible enough to be adapted to the new volatile reality. This process affects very different areas of law, from compliance to content. On the one hand, thanks to technological advances, the world is interconnected, permitting business to be carried out everywhere at any time and, consequently, creating labour issues not only internationally within the same company or groups of companies but among states and international organizations. As classical techniques of regulation seem to be incapable of dealing with this new context, some new alternative and more flexible forms have been raised as possible solutions by the stakeholders involved. This is the case of the international framework agreements or the labour provisions included in commercial agreements, which try to guarantee minimum working conditions being non-binding, that is, as forms of ‘soft law’. Actually, soft law is gaining ground as the most appropriate form of regulation in the international panorama. The evolution of the European economic governance is probably the most complete example. During the financial crisis – and, probably, in the Covid-19 crisis – it became necessary to produce reforms and legal changes, especially in those countries with greater economic difficulties, such as Spain. This was not achieved through the classical legal procedure but by a combination of technical documents and political decisions that crystallize in the European Semester. The final result is that political and economic conditionality, as pillars of soft law, can effectively represent the rule of law in practical terms.28 On the other hand, the influence of technology is observed in legal content.29 Nowadays, it is not rare to find algorithms or other forms of technical or mathematic tools in different types of law. This is the case with the Spanish Royal Decree 286/2006 on protection of workers from risks to their health and safety arising from exposure to noise, which measures this exposure by using an algorithm, and with the General Social Security Law that regulates the so-called pension revaluation index. The introduction of this kind of content is a complete transformation of law because formulas substitute for words and the result depends on data that are not accessible to or highly difficult to interpret by traditional legal subjects and, particularly, courts.30 These novelties also include the regulation of some specific tasks or activities that are relevant within the context of digital revolution. The first remarkable example passed by the parliament was the regulation on the right to privacy in the digital environment and the right to 26 27

28

29

30

Z. Bauman, Liquid Modernity (Cambridge: Polity Press, 2000). J. R. Mercader Uguina, El futuro del trabajo en la era de la digitalizacio´n y la robo´tica [The Future of Work in the Era of Digitization and Robotics] (Valencia: Tirant lo Blanch, 2017). D. Pe´rez del Prado, El impacto social de la Gobernanza econo´mica europea [The Social Impact of European Economic Governance] (Valencia: Tirant lo Blanch, 2020). J. R. Mercader Uguina, Algoritmos e inteligencia artificial en el derecho digital del trabajo [Algorithms and Artificial Intelligence in Digital Labour Law] (Valencia: Tirant lo Blanch, 2022). A. Desdentado Bonete, ‘Reflexiones sobre el factor de sostenibilidad del sistema pu´blico de pensiones [Reflections on the sustainability factor of the public pension system]’, Revista de derecho social [Social Law Magazine], 64 (2013), 223–36.

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disconnection. These two rights were introduced in the Workers’ Statute (Article 20 bis) by the Organic Law 3/2018 on data protection and regulated together. This new rule sets out that employees ‘have the right to privacy in the use of digital devices made available to them by the employer, to digital disconnection and to privacy from the use of video surveillance and geolocation devices in the terms established in the current legislation on protection of personal data and guarantee of digital rights’. Some research studies have criticized the fact that, aside from its specific recognition of and connection to other digital rights, the reform does not introduce relevant practical changes as both rights were guaranteed by courts within the right to privacy.31 Particularly concerning the right to disconnection, the collective bargaining sphere is still the most appropriate to regulate and delimit it; regulation here means setting more concrete aspects such as who is entitled to use it, and how and when.32 The second legal novelty is the implementation of a working time record system (Royal Decree-Law 8 /2019). Despite its origin of being connected to a European Court of Justice case (Case C-55/18, CCOO v. Deutsche Bank), it has a clear link to digitalization and its effects on working time. As the digital economy blurs the lines between working and personal and family life, new mechanisms of delimitation are required. The reform establishes the business obligation to guarantee a daily record of the hours worked ‘the undertaking shall guarantee the daily record of working time, which shall include the beginning and the end of the working time for each employee, without prejudice time flexibility regulated in this article’. On the other hand, we must highlight the regulation of telework. This is an issue that has been reviewed frequently during recent decades without achieving any real results. The last legal reform (until now) was introduced in 2013 in order to renew the old-fashioned Workers’ Statute article concerning ‘household work’ to transform it into ‘remote working’. Despite the advance, that regulation was not profound, focussing on providing a new definition and guaranteeing the same rights in all circumstances. As a result, Spain has traditionally been one of the countries in which telework has been less used. According to the Bank of Spain’s calculations, only 7.5 per cent of workers are involved in telework, which is six percentage points below the European average (13.5 per cent) and clearly some way off from the figures of other large countries, such as France (20.8 per cent) and Germany (11.6 per cent).33 Although the legal framework has a clear influence on these results,34 some research studies have underlined other factors, including, concretely, ‘cultural’ assumptions. Particularly, 31

32

33

34

M. B. Cardona Rubert, ‘Los perfiles del derecho a la desconexio´n digital [Profiles of the right to digital disconnection]’, Revista de derecho social [Social Law Magazine], 90 (2020), 109–26; A´. A. Aguirre Forero , A. K. Zamora Guaba, and M. A. Gonza´lez Pinto , ‘La prestacio´n de servicios en plataformas digitales: nuevos indicios para una nueva realidad [The provision of services on digital platforms: New indications for a new reality]’ in A. Todolı´ Signes and M. Herna´ndez-Bejarano, Trabajo en plataformas digitales: innovacio´n, derecho y mercado [Work on Digital Platforms: Innovation, Law and Market], 127–51 (Cizur Menor: Aranzadi, 2018); E. M. Bla´zquez Agudo, Aplicacio´n pra´ctica de la proteccio´n de datos en las relaciones laborales [Practical Application of Data Protection in Labour Relations] (Madrid: Wolters Kluwer, 2018); J. R. Mercader Uguina, ‘Aspectos laborales de la Ley Orga´nica 3/2018, de 5 de diciembre: una aproximacio´n desde la proteccio´n de datos [Labour aspects of Organic Law 3/2018, of 5 December: An approach from data protection]’, Trabajo y derecho: nueva revista de actualidad y relaciones laborales [Work and Law: New Current Affairs and Labour Relations Magazine], 52 (2019), 110–18. A. P. Baylos Grau, ‘Los derechos digitales y la negociacio´n colectiva [Digital rights and collective bargaining]’, Diario La Ley [Law Newspaper], 9331 (2019), 2; M. L. Rodrı´guez Ferna´ndez, ‘Sindicalismo y negociacio´n colectiva 4.0 [Unionism and collective bargaining 4.0]’, Temas laborales: Revista andaluza de trabajo y bienestar social [Labour Issues: Andalusian Magazine of Work and Social Welfare], 144 (2018), 27–42. A. Brindusa, M. Cozzolino, and A. Lacuesta, ‘Teleworking in Spain’, Banco de Espan˜a Economic Bulletin, 2/2020 (2020), http://dx.doi.org/10.2139/ssrn.3678038. Eurofound, Telework in the European Union (Dublin: Eurofound, 2005).

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Rodrı´guez Ferna´ndez and Pe´rez del Prado, focussing on the technological sector, that is, the one in which telework can be developed most easily, find resistance from both sides of the employment relationship. On the one hand, employers’ worries crystalize on the idea of control. According to their view, telework must be developed very carefully because it carries a high risk of employee fraud. On the other hand, and this is something relatively surprising, employees do not seem very interested in teleworking owing to the fact that it means a loss of control over their free and personal time. From their view, there is also a risk of the limits between private and professional life being blurred, which would be a cost higher than any potential benefits.35 Though the debate on telework was not concluded, the Covid-19 crisis triggered some new political proposals. The emerging of the pandemic and the confinement obliged companies to adopt telework without having a concrete regulatory framework, and this became a source of disputes. In order to prevent this and support telework, the government launched the Law 10/ 2021 Telework (previously, Royal Decree-Law 28/2020). Compared to previous reforms, the current one is much deeper. It is a complete law separated from the Workers’ Statute and regulating the most important aspects concerning the practical application of telework, such as minimum working conditions, data protection, cost coverage, health and safety, learning and training, and so on. Apart from this, it remains to be seen whether the pandemic (and the new law itself) will have a secondary effect, shifting the way in which both employers and employees understand and use telework. As confinement obliged both parties to use it, it could be a sort of real experiment to show, on the one hand, that it is possible to control employees when they are teleworking and, on the other hand, that it is possible to set limits and protect personal and family life. Both factors, the forced use derived from the pandemic and the new reform, would mean an inflection point in the development of telework in Spain, improving the country’s position in the compared panorama. But telework is not the only legal novelty connected to the advancement of new technologies that is still under debate. Spain has been one of the first countries in regulating platform work. So far, initiatives to regulate the labour legal framework of platforms have been mere political proposals: (i) the Governmental Agreement between the Partido Socialista Obrero Espan˜ol (PSOE) [Spanish Socialist Workers’ Party] and the Cuidadanos (Cs) [Citizens] proposed to set special social security contributions for entrepreneurs who work sporadically with platforms; (ii) the motion from the Unidas Podemos–En Comu´n Podem–En Marea (Podemos) [United We Can] parliamentary group in the Senate asking the government to adopt measures to adapt Spain’s labour, social security, and tax law to the new reality of collaborative economy; (iii) the ‘Common Declaration on collaborative economy and its impact on industrial relations’ promoted by various councils of industrial relations of different autonomous communities; and (iv) specialized reports promoted by private entities, such as GoVup and ADIGITAL.36 35

36

M. L. Rodrı´guez Ferna´ndez and D. Pe´rez del Prado, Economı´a digital: su impacto sobre las condiciones de trabajo y empleo. Estudio de caso sobre dos empresas de base tecnolo´gica [Digital Economy: Its Impact on Working and Employment Conditions. Case Study on Two Technology-Based Companies] (Barcelona: Fundacio´n para el Dia´logo Social [Foundation for Social Dialogue], 2017); M. L. Rodrı´guez Ferna´ndez and D. Pe´rez del Prado, Digitalizacio´n y gran empresa: II Informe sobre el impacto de la digitalizacio´n en las condiciones de trabajo y empleo [Digitization and Large Companies: II Report on the Impact of Digitization on Working and Employment Conditions] (Barcelona: Fundacio´n para el Dia´logo Social [Foundation for Social Dialogue], 2019). M. Rodrı´guez-Pin˜ero Royo, ‘La agenda reguladora de la economı´a colaborativa: aspectos laborales y de seguridad social [The regulatory agenda of the collaborative economy: labour and social security aspects’, Temas laborales: Revista andaluza de trabajo y bienestar social [Labour Issues: Andalusian Magazine of Work and Social Welfare], 138 (2017), 125–61.

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The only legislative act concerning this adopted by the parliament was the Law 5/2015 on promotion of business financing, which regulates crowd-funding and lend-funding platforms but without including any labour provisions. Nevertheless, following the European Commission’s suggestion,37 the government was determined to put under social partners’ consideration a draft law on working conditions in the platform economy. After long negotiations, a tripartite agreement was achieved. This was materialized in the so-called Riders Law (Law 12/2021), which focusses on two main issues. On the one hand, it sets a rebuttable presumption of the existence of an employment relationship for riders. Hence, it presumes, unless proven otherwise, the existence of an employment relationship for those who provide, in exchange for remuneration, the services of delivering and distributing products for employers who exercise the business powers of organization, direction, and control indirectly or implicitly through a digital platform, or through the algorithmic management of the service or the working conditions. This means the explicit translation of the general presumption of Spanish Employment Law to this activity. On the other hand, it regulates the use of algorithms for all kinds of employees. Particularly, it introduces a new Article 64(4)(d) of the Workers’ Statute (the Spanish employment law) that states that employees’ representatives have the right, among others, ‘to be informed, by the company, of the parameters, rules and instructions on which the algorithms of artificial intelligence systems are based, that affect decision-making that may involve working conditions, access and maintenance of employment, including profiling’. Even though it is not explicitly mentioned, this is not only a workers’ representatives’ right but an open call to social partners to regulate algorithms by collective bargaining, highlighting its importance in the governance of the AI phenomenon.38 But disruptive changes are affecting not only the law but also the actors involved in industrial relations. In this regard, it is possible to distinguish between the reactions of traditional actors and the newly emerged actors. Starting with the latter, according to some authors, the rise of populism in Europe can be connected, among other factors, with increasing inequality, poorer working conditions, and weaker social protection.39 Spain is no exception. The variety of political parties has increased since 2008, including those in the extremes. The only difference is at the far-right side. Despite economic crisis and fast-eroding political trust, Spain had not seen any right-wing populist party obtain more than 1 per cent of the vote in national elections in recent years, a fact that created interest among scholars.40 Nevertheless, this differential element despaired at the end of 2019 with the emergence of the far-right wing party VOX. Hence, Spain can be included in the group of countries in which populism has presence, as a new actor in today’s political and social debate. But focussing on labour law issues, most of the new subjects are related to the platform economy. Hence, owing to very poor working conditions, the primary absence of reaction from the unions and the atmosphere of mistrust against them, new employees’ associations are emerging, such as ‘riders x derechos’ (riders for rights). Despite their preferring to act as a ‘collective’ or association, their activities are quite close to those related to classical trade 37

38

39 40

European Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: A European Agenda for the Collaborative Economy, 2.6.2016 (Brussels: European Commission, 2016). J. M. Miranda Boto and E. Brameshuber (eds.), Collective Bargaining and the Gig Economy: A Traditional Tool for New Business Models (Oxford: Hart, 2022). P. Mason, Postcapitalismo: Hacia un nuevo futuro [Postcapitalism: Towards a New Future] (Barcelona: Paido´s, 2016). C. Gonza´lez-Enrı´uez, The Spanish Exception: Unemployment, Inequality and Immigration, but No Right-Wing Populist Parties, Working Paper 3 (Brussels: El Cano Royal Institute, 2017), https://bit.ly/46ocJ64.

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unions. Nevertheless, as soon as the union’s strategy regarding platform workers changed, its influence weakened. Nowadays, most of the cases pending in the courts are led by the traditional trade unions UGT (Unio´n General de Tranajadores [General Workers’ Union]) and CCOO (Comisiones Obreras [Workers’ Commissions]). Something similar has happened on the employers’ side. After a first period acting alongside the traditional employer associations CEOE (Confederacio´n Espan˜ola de Organizaciones Empresariales [Spanish Confederation of Employers’ Organizations]) and CEPYME (Confederacio´n Espan˜ola de la Pequen˜a y Mediana Empresa [Spanish Confederation of Small and Medium Enterprises]), the strategy changed recently and, for example, Uber decided to join CEOE at the beginning of 2020. Other companies such as Deliveroo, Cabify, and Glovo are also part of it. Concerning traditional actors, we already highlighted how political parties and the government are launching different proposals to regulate a number of manifestations of the disruptive change. Moreover, the current progressive coalition government has rescued social dialogue as the way to analyze, debate, and implement those reforms related to social issues, after a long period that coincided with the financial crisis in which the legislative strategy was set unilaterally by the government.41 Despite these efforts, legal or governmental reaction seems not to arrive on time. Actually, the courts have dealt with most of the dysfunctions derived from digital change by implementing the traditional instruments they used to apply, adapting them to the new circumstances when necessary. The current debate on the existence of an employment relationship under the activity provided by those who work for delivery platforms is the prototypical example and is explained in Section V. Nevertheless, this is not the only case. The discussion on the impact of digitalization on employment has gone beyond the limits of scientific analysis to reach the courts’ arena. The social judge of Las Palmas delivered a judgment declaring that the substitution of an employee by a bot must be considered unfair dismissal.42 Even the Labour Inspectorate has introduced control over the worst effects of digitalization in its daily work. In particular, its Strategic Plan 2018–2020 sets a line of action on ‘activities developed by platforms’. This includes the creation of a specific operative procedure, specialized training for inspectors, and implementation of pilot programs with autonomous communities. But focussing on industrial relations, it is possible to state that Spanish social partners and collective bargaining are dealing with the disruptive change in a very incipient way. Moreover, most of these actions have risen in the platform arena as a consequence of the very poor working conditions of ‘offline’ workers; ‘online’ workers are still outside this movement, despite being barely in a better situation.43 Additionally, the pressure of the new agents mentioned earlier is also playing an important role, compelling social partners, particularly trade unions, to make a move. For instance, trade unions have launched their own platforms in order to provide legal advice for delivery workers: turespuestasindical.es (UGT), precaritywork.es (CCOO) and Deliveroo’s 41

42

43

J. R. Mercader Uguina, F. J. Go´mez Abelleira, P. Gimeno Dı´az de Atauri, D. Pe´rez del Prado, and A. B. Mun˜oz Ruiz, DIADSE – Dialogue for Advancing Social Europe. Country Report: Spain (Amsterdam: DIADSE Project, 2016), https://aias-hsi.uva.nl/en/projects-a-z/diadse/reports/reports.html. J. R. Mercader Uguina, ‘Despido de una administrativa cuyo trabajo ha sido sustituido por un Robot: ¿es posible poner Puertas al Campo? [Dismissal of an administrator whose work has been replaced by a robot: is it possible to put gates in the field?]’, El Foro de Labos [Labos Forum] (1 October 2019), https://forodelabos.blogspot.com/2019/10/ despido-de-una-administrativa-cuyo.html. F. Rocha, ‘Strengthening the decentralisation of collective bargaining in Spain: Between the legal changes and real developments’ in S. Leonardi and R. Pedersini (eds.), Multi-employer Bargaining under Pressure: Decentralisation Trends in Five European Countries, 225–62 (Brussels: European Trade Union Institute (ETUI), 2018).

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CNT (Confederacio´n Nacional del Trabajo [National Confederation of Labour]) Union Branch. It is also remarkable that there is support from youth organizations such as RUGE (Ugetista Revolution, linked to UGT), which is focussed on helping young workers and particularly those working under very poor working conditions, including platform workers. Its campaigns are frequently directed to those activities in which the employment relationship is under discussion, as is the case with platform work, internships, and other forms of outsourcing. Additionally, its strategy, based on a strong presence on social networks, is fresh and imaginative, away from the traditional unions’ action.

V ‘UBERISATION’

Without doubt, the ‘uberization’ of the economy is one of the most remarkable trends in Spain from all perspectives analyzed here, both the evolution of the labour market and the changes in the legislation and stakeholders’ strategy. This process is referred to as the emerging and spreading phenomenon of using platforms for different purposes and, particularly, those related to the provision of services. As mentioned earlier, Spain is one of the countries in which the platform economy is growing more intensely and the first in Europe in terms of platform-based employment. Platform work is a kind of employment that uses an online platform to enable organizations or individuals to access an indefinite and unknown group of other organizations or individuals to solve specific problems or to provide specific services or products in exchange for payment.44 Two forms of crowd-work platform exist. On the one hand, activities tied to a specific location or offline platform, such as cleaning, transport, gardening, babysitting, personal care, renting assets, plumbing, are local, labour-intensive, delivered in the local community, and their workers are usually low-skilled or unskilled. On the other hand, activities that use an online platform, such as computer assistance, accounting, translation, or programming, are not tied to a specific location and so may be delivered online, and their employees are skilled or high-skilled. Despite them all sharing common problems and challenges, the debate has been focussed, as in other countries, on transport platforms and, more specifically, on delivering and the possible existence of an employment relationship as the door to entry under the protection of labour law. Aside from legal changes that are right now being developed and that have been previously analyzed, legal treatment of the platform economy has been delivered by both academia and the courts. Regarding academia, the debate has been highly intense and could be summarized, as in so many other discussions, in three different perspectives.45 First, the position of the companies, supported by some economists and lawyers, is to require a specific regulation for platform work that would be outside the prototypical confrontation between employment and selfemployment; that is, platform work is a tertium genus that needs its own regulatory framework. From this point of view, the solution would crystalize in the creation of a fourth new category to be added to the three explained in Section II.46 This alternative would be inspired by the French 44 45

46

Eurofound, New Forms of Employment. D. A´lvarez Alonso, ‘Plataformas digitales y relacio´n de trabajo [Digital platforms and the employment relationship]’ in J. Garcı´a Murcia (ed.), Nuevas tecnologı´as y proteccio´n de datos de cara´cter personal enlas relaciones de trabajo [New Technologies and Protection of Personal Data in Labour Relations], 130–62 (Asturias: University of Oviedo, 2019). J. R. Mercader Uguina, supra note 31; A. Martı´nez Escribano, ‘¿Nuevos trabajadores? Economı´a colaborativa y Derecho del Trabajo. Repensando el Derecho del Trabajo: el impacto de la economı´a colaborativa [New workers? Collaborative economy and labour law. Rethinking labour law: The impact of the collaborative economy]’, Derecho de las relaciones laborales [Labour Relations Law], 1 (2018), 48–60; C. Otero Gurruchaga, ‘El complicado encaje de

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Law 206-1088 on labour, social dialogue modernization, and the guarantee of professional itinerary (Loi nº. 2016-1088 du 8 aouˆt 2016 relative au travail, a` la modernisation du dialogue social et a` la se´curisation des parcours professionnels). Second, the perspective close to trade unions’ point of view, supported by most of academia, highlights that the business model for platforms should be based on a strategy focussed on saving costs by avoiding (fraudulently) the application of labour and social security law. The debate here would not be too different from others in the past and the solution would be exactly the same: revealing the abuse and applying the correct legal framework, that is, labour law.47 Finally, there is still room for a third intermediate position that is based on the idea that no new categories are needed; all that is required is to adapt the three that already exist. This point of view does not prejudice classification as employee, self-employee, or economically dependent self-employee but suggests that, depending on the final accommodation according to the particular circumstances of the case, specific rules should be considered.48 This would be the option chosen by the draft law promoted by the government, but keeping in mind that this proposal selects one of the alternatives, the employment relationship, as the most appropriate to regulate professional activities concerning delivering platforms, setting adaptations in different areas and leaving aside any other alternatives. It must be warned that this project, if successful, would be applicable to this type of platform exclusively; cases involving other platform sectors should be analyzed as is being done so far, that is, on the basis of the obtuse triangle. However, the introduction of this new element in the debate is not without risk. There is a possibility of creating another friction point if courts extend its application to other sectors, by analogy, even when the rule applies only to delivering. Regarding the courts, in their treatment of the platform economy, they have been the other protagonist of debate in Spain. Since 2018, several rulings have analyzed Deliveroo’s, Take Eat Easy’s, and Glovo’s models to determine whether riders who worked for them (and were often dismissed) should be considered employees, self-employees, or economically dependent selfemployees. Table 9.2 shows the courts’ judgments delivered from 2018 to October 2020,

47

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los trabajadores de la economı´a colaborativa en el Derecho Laboral: Nuevos retos para las fronteras de la laboralidad [The complicated fit of collaborative economy workers in labour law: New challenges for the frontiers of employment]’, Derecho de las relaciones laborales [Labour Relations Law], 1 (2018), 61–74; F. Pe´rez de los Cobos y Orihuel, ‘El trabajo en plataformas digitales [Work on digital platforms]’ in Y. Sa´nchez-Ura´n Azan˜a and M. A. Grau Ruiz (eds.), Nuevas tecnologı´as y derecho: retos y oportunidades planteadas por la inteligencia artificial y la robo´tica [New Technologies and Law: Challenges and Opportunities Posed by Artificial Intelligence and Robotics], 121–6 (Vila Nova de Gaia: Jurua´ Editorial, 2019); M. L. Rodrı´guez Ferna´ndez (ed.), Plataformas digitales y mercado de trabajo [Digital platforms and the labour market], Informes y estudios, Empleo 56 [Reports and studies, Employment 56] (Madrid: Ministerio del Trabajo, Migraciones y Seguridad Social, Subdireccio´n General de Informacio´n Administrativa y Publicaciones [Ministry of Labour Migrations and Social Security, General Sub-directorate for Administrative Information and Publications], 2019). C. Molina Navarrete, ‘Derecho y trabajo en la era digital: ¿“revolucio´n industrial 4.0” o “economı´a sumergida 3.0”? [Law and work in the digital era: “Industrial revolution 4.0” or “underground economy 3.0”?]’ in OIT [ILO], El futuro del trabajo que queremos [The Future of Work We Want], II: 403–24 (Madrid: OIT [ILO], 2017); A. Todoli Signes, El Trabajo en la era de la Economı´a Colaborativa [Work in the Age of the Sharing Economy] (Valencia: Tirant lo Blanch, 2017); A. Gine`s Fabrellas, ‘Diez retos del trabajo en plataformas digitales para el ordenamiento jurı´dicolaboral espan˜ol [Ten challenges of working on digital platforms for the Spanish legal-labour system]’, Estudios financieros [Financial studies], Revista de trabajo y seguridad social: Comentarios, casos pra´cticos: recursos humanos [Labour and Social Security Magazine: Comments, Case Studies: Human Resources], 425–6 (2018), 89–111; F. Trillo Pa´rraga, ‘El trabajo en plataformas virtuales: a propo´sito del caso Uber [Work on virtual platforms: About the Uber case’ in A. Todolı´ Signes and M. Herna´ndez-Bejarano (eds.), Trabajo en plataformas digitales: innovacio´n, derecho y mercado [Work on Digital Platforms: Innovation, Law and Market], 223–44 (Cizur Menor: Aranzadi, 2018); Baylos Grau, ‘Los derechos digitales [Digital rights]’. A´lvarez Alonso, ‘Plataformas digitales [Digital platforms]’.

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table 9.2 Spanish judgments on platforms’ legal relationship since 2018

Ruling

Platform

SJS Barcelona (nº 11) 29 May 2018 SJS Valencia (nº 6) 1 June 2018 SJS Madrid (nº 39) 3 September 2018 SJS Madrid (nº 17) 11 January 2019 SJS Madrid (nº 33) 11 February 2019 SJS Gijo´n (nº 1) 20 February 2019 SJS Oviedo (nº 4) 25 February 2019 SJS Madrid (nº 1) 3 April 2019 SJS Madrid (nº 1) 4 April 2019 SJS Barcelona (nº 24) 21 May 2019 SJS Barcelona (nº 24) 29 May 2019 SJS Valencia (nº 6) 10 June 2019 SJS Barcelona (nº 31) 11 June 2019 SJS Salamanca (nº 1) 14 June 2019 SJS Madrid (nº 19) 22 July 2019 SJS Barcelona (nº 29) 30 July 2019 SJS Vigo (nº 2) 12 November 2019 SJS Barcelona (nº 3) 18 November 2019 SJS Zaragoza (nº 2) 27 April 2020 SJS Barcelona (nº 21) 7/9/2020 STSJ Asturias 29 July 2019 STSJ Madrid 19 September 2019

TAKE EAT EASY DELIVEROO GLOVO GLOVO GLOVO GLOVO GLOVO GLOVO GLOVO GLOVO GLOVO DELIVEROO DELIVEROO GLOVO DELIVEROO GLOVO GLOVO GLOVO DELIVEROO DELIVEROO GLOVO GLOVO

STSJ Madrid 27 November 2019 STSJ Madrid 18 December 2019 STSJ Madrid 17 January 2020 STSJ Madrid 3 February 2020 STSJ Castilla y Leo´n 17 February 2020 STSJ Catalun˜a 21 February 2020 STSJ Catalun˜a 7 May 2020 STSJ Catalun˜a 12 May 2020 STS Catalun˜a 16 June 2020 TOTAL STS 23 September 2020

GLOVO GLOVO DELIVEROO GLOVO GLOVO GLOVO GLOVO GLOVO DELIVEROO GLOVO

Core employee ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔

✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ 23 ✔

Trade

✔ ✔ ✔ ✔ ✔ ✔ ✔

✔ (reviewed by the Supreme Court)

8

Source: Updated from ignasibeltran.com. Notes: Light grey: first instance; dark grey: appellation; black: Supreme Court judgment. SJS: Sentencia de Juzgado de lo Social [Judgment of the Social Court]; STSJ: Sentencia de Tribunal Superior de Justicia [Judgment of the Superior Court of Justice]; STS: Sentencia del Tribunal Supremo [Judgment of the Supreme Court].

distinguishing between first instance (light grey) and appellation (dark grey). The table highlights the following elements: (i) the discussion is monopolized by delivering platforms; (ii) despite the Supreme Court having the final word, before its judgment the debate was clearly inclined in favour of the existence of an employment relationship; and (iii) this would not preclude other solutions for other types of platform. If we focus on the details, the discussion was more open at the first instance level, in spite of a majority of judgments pointing in the direction of an employment relationship, than at

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appellation, where the discussion clearly drove towards the employment relationship as the solution. The only judgment in favour of the existence of self-employment, STSJ Madrid 199-2019, was corrected by the following ones delivered by the same court and this position has been kept since then. Accordingly, it is possible to say that appellation-level opinion is practically unanimous. The reasons the courts provided for adopting the option of the employment relationship can be summarized according to the main factors that support the notion of an employment relationship.49 On the one hand, the existence of subordination is justified because the company obtains the profits of the riders’ activity and also assumes the risks of that task. Additionally, the rider cannot develop his or her activity without the platform; the platform acts as an intermediary between the rider and the client. Furthermore, the rider’s ownership of the vehicle and the mobile phone cannot be considered evidence of non-subordination because the rider cannot carry out the work outside the digital platform in which it is integrated. If the rider were to decide to undertake this type of activity by themselves as a true self-employed person, they would be doomed to fail, their chances of growing as an entrepreneur non-existent because the success of these platforms is due to the technical support provided by ICT [information communication technology], which they use for their development and the exploitation of a brand, in this case Glovo, which is advertised on social networks through Google-type search engines, a place where customers go when they need the purchase and delivery of the products that demand provides.50

In other words, platforms use their app as a technological tool to interconnect subjects, so who the app’s owner is determines the relationship. As a consequence, this can be considered evidence in favour of the existence of an employment relationship. On the other hand, the existence of dependence can be affirmed on the basis of a number of factors. It is true, as companies usually highlight, that riders enjoy a considerable margin of flexibility. For example, regarding working time, riders can choose the schedules and days on which they want to work, as well as the routes and the number of orders they want to attend; the company is not able to impose any of these requirements. Nevertheless, riders have no absolute freedom when rejecting or accepting the service. The rider enjoys some flexibility, but this is the obvious result of the platform business model. As SJS (Sentencia de Juzgado de lo Social [Judgment of the Social Court]) Madrid (nº 33) 11 February 2019 explains, assertive faculty in the choice of each microtask is the logical consequence of the atomization of working time, because if the employer could always dispose of the rider at his will, this would place him in a situation of permanent availability, which would constitute a state of personal servitude which would be contrary to the constitutional and EU conceptualization of work as a right.

Furthermore, these freedoms do not provide the rider with any power to negotiate their working conditions, since companies have an enormous number of distributors willing to work. Consequently, when any rider refuses to accept an assignment, he or she can be automatically substituted by another one. The result is that basic elements of the relationship such as remuneration are entirely determined according to parameters that the company establishes in each service. 49

50

COGENS Project, Collective Bargaining in the Gig Economy: Who and for Whom (COGENS – Collective Bargaining and Gig Economy: New Perspective, 2020) (Spain’s preliminary results of the project). SJS Madrid (nº 33) 11 February 2019.

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Regarding judgments excluding the existence of an employment relationship, it is interesting to highlight that five out of eight rulings stated that these riders are TRADES because they do not have the two main features of the employment relationship but they do have the main elements of the economic dependent self-employee. Hence, according to this minority position, there is no employment relationship owing to two main reasons. One, there is no subordination because: the rider has almost absolute freedom to choose their working time, place, route, and tasks; the rider has a direct relationship with the final client in the event that the rider accepts that client’s task; and the rider provides their own bike and phone as their worker’s tools. And two, there is no dependence because the company does not have any disciplinary tool with which to force riders to work, in the event that one of them refuses tasks. Nevertheless, once the employment relationship has been excluded, the most common situation is being under TRADE coverage. It must be kept in mind that TRADEs develop economic or professional activity for one client, from whom they receive at least 75 per cent of their income, and that, in Spain, around half of platform employees work for this sector as a main or secondary activity.

VI QUO VADIS?

Spain is dealing with digitalization from a weak position derived from the convergence of the financial and the pandemic crises. Even though the country has not yet recovered completely and is still suffering the huge impact of the Great Recession, it now has to deal with the economic effect of the pandemic and the instability derived from the war in Ukraine. Although the features of the current situation are completely different from those of the previous crises, starting with the fact that this is a symmetric crisis and concluding with the launch of an ambitious recovery fund by the EU, there is no doubt that it is an obstacle in the way not only of Spanish reconstruction but also, and more importantly, of Spain’s ability to devise a strategy for dealing with the challenges related to the process of digitalizing the economy. Despite the significant effects of the pandemic and the war in Ukraine, Spain is unlikely to deviate from its path towards digital conversion. In other words, as in other periods, Spain should transform this crisis into an opportunity to set the basis for the next – digital – society. In this sense, the EU recovery plan becomes an extraordinary tool to help the country continue and strengthen its green and digital transition, isolating or reducing the economic impact of the pandemic. From this perspective, it cannot be considered a contingency plan; rather, it is a structural project to determine the immediate future of the fourth-largest EU’s economy and the economy of the EU as a whole. In this common project, Spain shows a clear advantage in some of the key areas related to digitalization, as is shown here. Nevertheless, changes come so quickly and so profoundly that any pause could become a considerable delay. Spain should keep its digital transformation efforts going, but it must also improve its position in other areas that are crucial for overcoming the disruptive changes, such as transitioning the productive structure towards a green economy and increasing education and training. Regarding the last one, the country shows a mix of old and new challenges. On the one hand, it is not news that Spain has to improve the level of the relatively important group of workers with low education. In a country whose workforce’s skills form a sort of hourglass shape, with a large group at the high education level but also another at the lowest level, it is crucial to drive this second group upwards by ameliorating their aptitudes. On the other hand, this unresolved problem is now increased by the fact that it is necessary to provide them not only basic but also

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digital skills. Despite the improvements, Spain remains slightly below the EU average in basic digital skills: 43 per cent of people aged between sixteen and seventy-four lack basic digital skills, against the EU average of 42 per cent.51 If the digital society is based on knowledge, Spain must pay higher attention to this point. In this regard, there is no doubt that labour law can help to solve this failure, but it is not the only area in which it can act. As was shown here, labour law can play a very important role in the digitalization process. First, labour law needs to guarantee fair transitions for those who are going to be affected by the technological disruption. As in other transformations, there will be winners and losers. It is vital to support and protect those who are going to suffer the worst effects and reintroduce them to the economic cycle. Digital labour law must be transitional, facilitating changes among activities, sectors, and tasks, and must cover whole-life jobs52 as well as adequate working conditions. Second, keeping in mind that jobs are created by economic activity, labour regulation must facilitate work while maintaining its traditional role as the branch of law focussed on guaranteeing decent work.53 Modernizing labour law does not mean necessarily substituting it with another completely different law; rather, it is about analyzing the best way in which it is possible to guarantee fair working conditions in a completely different context and for new tasks and activities. At this point of globalization’s maturity and the beginning of the digitalization process, there is no doubt that decent work must be on all states’ agendas, so labour law still has to play a decisive role in achieving this objective. The problem is how to do it. From some points of view, it is necessary to blur its limits, deleting the old-fashioned notion of employment relationship and permitting it to cover new forms of professional activity such as those related to platforms.54 The Spanish government has not gone so far, but it is keeping to a reform agenda that, though not exempt from criticism, is trying to deal with the new phenomena of the Spanish labour market. Finally, adapting to the new disruption also needs adequate social protection.55 From a transitional perspective, social protection can help facilitate shifts not only among activities but also among situations concerning professional activity, such as the changes from education to work, from work to unemployment, or from work or unemployment to retirement. In this respect, the introduction of the new basic income – Ingreso Mı´nimo Vital, in Spanish – is an extraordinary step in the process of modernization of social protection. But it cannot be the only one. The retirement pension reforms initiated some years ago must be completed as well as the renovation of the unemployment system.

51 52

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European Commission, DESI 2020. G. Schmid and B. Gazier, The Dynamics of Full Employment: Social Integration Through Transitional Labour Markets (Cheltenham: Edward Elgar, 2002); M. de Vos, ‘How the Future of Work Can Work for the Workers’ in T. Toracca and A. Condello (eds.), Law, Labour and the Humanities: Contemporary European Perspectives, 46–61 (Abingdon: Routledge, 2019). M. E. Casas Baamonde, ‘Derecho del trabajo & empleo {Labour and employment law]’, Relaciones laborales: Revista crı´tica de teorı´a y pra´ctica [Labour Relations: Critical Review of Theory and Practice], 4 (2012), 1–11. M. L. Rodrı´guez Ferna´ndez, ‘Plataformas, microworkers y otros retos del trabajo en la era digital [Platforms, microworkers and other challenges of work in the digital age]’, Futuro del Trabajo: Trabajo decente para todos [Future of Work: Decent Work for All], 3 (2017), 5–12. B. Sua´rez Corujo, ‘La gran transicio´n: la economı´a de plataformas digitales y su proyeccio´n en el a´mbito laboral y de la seguridad social [The great transition: The economy of digital platforms and its projection in the workplace and social security]’, Temas laborales: Revista andaluza de trabajo y bienestar social [Labour Issues: Andalusian Magazine of Work and Social Welfare], 141 (2018), 37–66.

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10 Technological Developments and Industrial Relations in Denmark Natalie Videbæk Munkholm

I INTRODUCTION: THE DANISH LEGAL FRAMEWORK FOR LABOUR AND EMPLOYMENT LAW

Denmark is a Scandinavian country of 5.8 million inhabitants. It is a constitutional monarchy, and state powers are divided between the parliament (legislative), the government (executive), and the courts (judiciary).1 The rule of law is a fundamental principle in the Danish legal system.2 Denmark is one of the richest countries in the world, and presumably also among the happiest.3 In the area of digitalisation, Denmark is among the most digitalised countries in the EU4 as well as globally.5 The labour market is generally regulated by ‘the Danish Model’. Collective agreements are the preferred regulatory tool for pay and working terms, with statutory legislation playing a supplementary role.6 All matters of pay and working conditions, such as minimum pay, overtime pay, dismissal protection, working time, and pensions, are determined primarily by way of collective agreements.7 The democratic legitimacy of the model is supported by a high unionisation rate of 65.4 per cent to 67.7 per cent8 and a high collective agreement coverage of 84 per cent (74 per cent in the private sector and 100 per cent in the public sector). Industrial relations in Denmark are to a large extent self-regulated and not governed by legislation. The basic principles for industrial relations in Denmark, codified in the 1899 September Agreement,9 are now expressed in the Main Agreement between the Danish Trade Union Confederation (FH [Fagbevægelsens Hovedorganisation])10 and the Confederation of Danish Employers (DA)(the DA/LO Main Agreement).11 The principles include a right for workers and 1 2

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Danish Constitution (Grundloven), s. 3. For example, Denmark is ranked #1 in the World Justice Project Rule of Law index 2022, http://data .worldjusticeproject.org/rule-of-law-index/global/2022. World Happiness Report 2023, https://worldhappiness.report/ed/2023/. European Commission, The Digital Economy and Society Index (DESI), https://ec.europa.eu/digital-single-market /en/desi. IMD World Competitiveness Center, World Digital Competitiveness Ranking 2022, www.imd.org/centers/wcc/ world-competitiveness-center/rankings/world-digital-competitiveness-ranking/. O. Hasselbalch, Labour Law in Denmark, 5th ed. (Alphen aan den Rijn: Wolters Kluwer, 2016), 43. See, e.g., Ministry of Employment, Rules and Rights – When Working in Denmark (June 2018), https://bit.ly/3Px6HtK. A. Appel, ‘I Danmark er de fleste dækket af overenskomst [In Denmark, most are covered by collective agreement]’, DA (Dansk Arbejdsgiverforening [Confederation of Danish Employers] (16 December 2020), https://bit.ly/3CUl03W. DA [Confederation of Danish Employers], ‘About DA’, DA (n.d.), www.da.dk/en/about-da/. Formerly LO (Landsorganisationen i Danmark [Danish Confederation of Trade Unions]); see ‘About: Danish Trade Union Confederation’, FH, https://fho.dk/om-fagbevaegelsens-hovedorganisation/english-about-fh/. Hovedaftalen mellem LO og DA [The Main Agreement between LO and DA], www.arbejdsretten.dk/arbejdsretten/ regler/hovedaftalen.aspx.

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management to organise and bargain collectively, a duty of peace when a collective agreement is in place, the binding nature of collective agreements, and protection against unreasonable dismissal. The Statutory Act on a Labour Court (the Labour Court Act) gives the Labour Court exclusive mandate to ascertain whether an agreement constitutes a collective agreement.12 Collective agreements can be concluded at several levels and form a hierarchy of binding agreements.13 The overall Main Agreements, hovedaftaler, are national agreements concluded between the main confederations. Industry or sector agreements, fagoverenskomster, often cover a specific type of work and are concluded by trade unions with an individual employer or an employer association. Company-level agreements, lokalaftaler, are concluded at shop level between the shop steward(s) and the employer. Finally, accession agreements, tiltrædelsesoverenskomster, are concluded with individual employers, who are not a member of an employers’ association, with a view to applying provisions in an existing sector agreement of relevance. There is no mechanism for universalisation of collective agreements. Only employers, either who are covered by an individual agreement or who are members of an employers’ association, are obliged to observe pay and working conditions in the collective agreements. It is an essential element of the Danish model that social partners enjoy a wide right to engage in collective negotiations and industrial action against uncovered employers. The right to engage in industrial action is subject only to very few restrictions, most notably by way of a duty of peace,14 according to which work stoppages shall not occur when a collective agreement is in place.15 Negotiation with small and medium-sized enterprises (SMEs), as well as start-up companies, is possible, as industrial action does not require current members performing work at the employer, as long as a certain amount of work is performed by employees at the entity. Collective agreements are enforced by a swift and strong resolution mechanism, starting with dialogue at shop level and organisation level, and in the end settled by judicial review of the Labour Court or industrial arbitration.16 Breaches are sanctioned with heavy penalties, bod, payable to the opposing party and set at the discretion of the Labour Court.17 Employment legislation is passed only as a supplement and only when necessary. There is no general statutory act stipulating what constitutes an employment relationship, statutory minimum pay, or general dismissal protection. Denmark’s membership of the EU has over the last decades resulted in new statutory acts extending rights to employees. When possible, employment legislation is semi-dispositive, so the act applies only to employees, who are not covered by a collective agreement providing as a minimum the rights and duties in the underlying EU-directive.18 Rights provided by statutory legislation are enforced by judicial review in the ordinary court system by ordinary procedures. The social partners have a long history of being closely consulted by government on all reforms affecting the labour market, regardless of the political views of the government.19 12

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The Statutory Act on a Labour Court and Industrial Arbitration No. 1003 of 24 August 2017, s. 9, http://arbejdsretten .dk/generelt/labour-court/labour-court-act.aspx. Main Agreement, supra note 11, s. 3; Hasselbalch, supra note 6, 44. Main Agreement, supra note 11, s. 2. Work stoppages include strikes, blockades, lockouts, and boycotts. Disputes about the interpretation of or breach of collective agreements are considered disputes about rights, and should be settled by judicial review rather than with force; see Hasselbalch, supra note 6, 56. LO/DA Rules for Handling Industrial Disputes [Normen, Regler for behandling af faglig strid], http://arbejdsretten.dk /generelt/labour-court/norm-of-27-october-2006.aspx, and the Labour Court Act, s. 9. Labour Court Act, s. 12. For example, the Part-Time Act and the Act on Equal Treatment. N. V. Munkholm, ‘Collective agreements and social security protection for non-standard workers and particularly for platform workers: The Danish experience’ in U. Becker and O. Chesalina (eds.), Social Law 4.0: New Approaches to Ensuring and Financing Social Security for the Digital Age, 171–202 (Baden-Baden: Nomos, 2021).

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Tripartite negotiations take place regularly, most recently in addressing the Covid-19 challenges.20

II THE ARCHETYPE

Danish labour law provides no universal legal definition of what constitutes an ‘employment contract’.21 As most provisions providing rights to employees are non-derogatory, the parties cannot determine the status of a relationship of work by contract. The assessment is subject to judicial review, by either the ordinary courts for rights in statutory acts or the industrial judiciaries for rights in collective agreements. A Typical versus Atypical Work Denmark has no general legal demarcation between typical and atypical work. Employment provisions apply to all work performed, unless specifically restricted in the relevant legal basis. Even though full-time, open-ended employment contracts are viewed as ‘standard’, the fact that work is performed on a casual or fixed-term contract does not in itself mean that it is not classified as employment.22 The risk of abuse of atypical contracts with a view to circumventing applicable provisions has been counteracted by strict reviews by the courts.23 Collective agreements traditionally promote standard work by obliging employers to conclude or advertise only fulltime or permanent contracts.24 Marginal work may be excluded from the scope of application of certain legal sources. The Salaried Employees Act applies to employees working more than eight hours per week on average, and for contracts of at least one month. The Act on an Employment Certificate, in force from 1 July 2023, applies to employees performing work for three hours per week on average, as well as when the weekly hours are unfixed.25 Some collective agreements apply only to work performed for more than fifteen hours per week.26 Similarly, the notice periods in the Salaried Employees Act apply only to contracts of more than one month.27 The boundaries for marginal work were amended with the implementation of the EU Directives on Part-Time Employment28 and Fixed-Term Employment.29 The EU directives likewise codified principles 20 21

22 23

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M. Søsted and N. V. Munkholm, ‘Covid-19 and Denmark’, Italian Labour Law E-Journal, 13(Special Issue 1) (2020). J. Kristiansen, ‘The concept of employee: The position in Denmark’ in B. Waas and G. H. van Voss (eds.), Restatement of Labour Law in Europe, Volume 1, The Concept of Employee, 133–48 (Oxford: Hart, 2017). Labour Court ruling of 24 August 2007 (A2007.293). Maritime and Commercial Court ruling U 1996.946 SH: with a view to counteracting abuse and circumventing the mandatory provisions in the Salaried Employees’ Act, the court overruled the formalities of not being permanently employed. For example, the 2020 collective agreement for bakers, Danish Chamber of Commerce and the Trade Union NNF, ss. 12 and 13; Industrial Arbitration ruling FV 2019.0007 for flight personnel. Statutory Act no. 1002 of 24 August 2017 on the relationship between employers and salaried employees, s. 1(2); Statutory Act no. 501 of 16 May 2023 on Employment Certificates and certain Working Conditions (2023 Act on an Employment Certificate) s. 1(1). The 2020 collective agreement for bakers, supra note 24. Salaried Employees Act, s. 2(4). Council Directive on Part-Time Work, Directive 97/81/EC, the UNICE, CEEP, and ETUC Framework Agreement on Part-Time Work, implemented by collective agreements and Statutory Act no. 1142 of 14 September 2018 on PartTime Employment. Council Directive 1999/70/EC of 28 June 1999 concerning the Framework Agreement on Fixed-Term Work concluded by ETUC, UNICE, and CEEP, implemented by collective agreements and the Statutory Act no. 907 of 11 September 2008 on Fixed-Term Employment.

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of equal treatment for persons in atypical employment, as well as prohibition against abuse of atypical contracts by requiring objective reasons for multiple contracts. Temporary agency work was originally frowned at as a way of circumventing mandatory employment provisions, but the EU directive providing a principle of equal treatment assisted the use of this form of work.30 Similarly, zero-hours contracts are not prohibited. Zero-hours contracts are assessed on their own terms, with a view to counteracting circumvention of mandatory provisions. A societal focus on the ‘precarious’ nature of zero-hours contracts31 in recent years has not yet resulted in general legislative initiatives. However, zero-hours contracts are being addressed in collective agreements. With the 2023 renewal of collective agreements in the private sector, the retail sector agreements now provide minimum weekly hours and a new flexible part-time scheme with a minimum eight hours of weekly work guaranteed, which then prohibits zero-hours contracts.32 Some collective agreements regulate terms for certain zero-hours contracts, such as for on-call temps, tilkaldevikarer, or reserves.33 Finally, the amended 2023 Act on an Employment Certificate now specifically applies also to contracts with no set weekly working hours.34 B Concept of Employee versus Independent Service Provider A person can provide work either as an employee/worker35 or as a self-employed person; this is known as the binary divide. There is no third category in Danish labour law. Employee status determines whether a person is entitled to the employment rights provided in employment legislation, to be covered by collective agreements, and to have the right of social partners to negotiate collectively and engage in industrial action against a company, as the company must have ‘employees’ performing the work concerned. There is no universal definition of ‘employee’ in Danish labour law. The assessment is a prima facie assessment of the relationship between the parties, in a case-by-case approach, based on the definition in each relevant legal basis.36 The scope of application of statutory acts varies; it is possible to have employee status under one act and self-employed status under another act. The most commonly used definition is ‘a person receiving remuneration for personal work performed in a relationship of service’.37 The Salaried Employees Act applies to persons in ‘a relationship of service and as such subject to the employer’s instructions’.38 Other 30

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Directive 2008/104/EC of 19 November 2008 on Temporary Agency Work, implemented by Statutory Act no. 595 of 12 June 2013 on the Legal Status of Temporary Agency Workers. S. Rasmussen, J. Na¨tti, T. P. Larsen, A. Ilsøe, and A. H. Garde, ‘Nonstandard employment in the Nordics – Toward precarious work?’, Nordic Journal of Working Life Studies, 9(Special Issue 6) (2019); H. K. Handel and A. Rasmussen, ‘Supermarkeder bruger ulovlige kontrakter [Supermarkets use illegal contracts]’, HK [Danish trade union for office and retail workers] (11 May 2017), https://bit.ly/3NxlwKe; P. Rasmussen, ‘Generation Standby: Unge er fanget i kontrakter med nul timer [Generation Standby: Young people are trapped in zero hours contracts]’, Fagbladet 3F [Trade Magazine 3F] (Fagligt Fælles Forbund [United Federation of Workers in Denmark]) (9 May 2017), https:// fagbladet3f.dk/artikel/unge-er-fanget-i-kontrakter-med-nul-timer; P. Rasmussen, ‘De ny daglejere [The new day laborers], 3F International (30 May 2017), https://bit.ly/3PztQfc; K. L. Kjærsgaard, ‘0 Timers kontrakter [0 hours contracts]’, Fagligfremtid [Academic Future] (16 January 2020), https://bit.ly/3XvpJ5C. Danish Trade Union Confederation, ‘Slut med kontrakter med 0 timer [Done with contracts with 0 hours]’, FH [News] (2023), https://fho.dk/ok23/ok23-explainer/slut-med-kontrakter-uden-timer/. M. Mailand and T. P. Larsen, Hybrid Work: Social Protection of Atypical Work in Denmark, WSI Study, nr. 11 (Du¨sseldorf: Wirtschafs- und Sozialwissenschaftliches Institut (WSI), 2018), 34. Act on an Employment Certificate 2023, s. 1(1). Terms are used interchangeably. Kristiansen, supra note 21; A. Lund-Sørensen and N. V. Munkholm, Key Concepts and Changing Labour Relations in Denmark, Nordic Future of Work project 2017–2020, Working Paper 4 (Oslo: Fafo Institute for Labour and Social Research, 2019), 23ff. Promoted in, e.g., the Act on an Employment Certificate, s. 1; Kristiansen, supra note 21. Salaried Employees Act, s. 1(2).

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legislative acts simply mention ‘employees’ without a definition,39 where the preparatory works may provide further guidelines.40 Some legislation is addressed solely to ‘employers’.41 Collective agreements define their own scope of application. Trade unions can negotiate collective agreements covering persons working in non-standard employment relations, such as freelancers, fee-earners, and consultants, as long as the work is performed on terms similar to employment.42 In case of disagreement on the status of a work relationship, the question is settled by judicial review. Ordinary courts have jurisdiction in matters of individual claims under statutory acts and individual contracts, and the Labour Court and industrial arbitration have exclusive jurisdiction in matters concerning the rights of workers and trade unions in industrial relations, where worker status is also decisive.43 With a view to avoiding circumvention of mandatory employee rights and employer duties, the courts apply a prima facie test. The judiciary is not bound by the parties’ contractual categorisation if the circumstances are more characteristic of an employment relationship than of self-employed work. Aspects outside the relationship can be given weight in the assessment, such as an underlying health or social security purpose,44 legislation counteracting risks of abuse,45 and developments in Court of Justice of the European Union (CJEU) case-law.46 In case-law from ordinary courts, five general ‘indicators’ can be identified: (1) (2) (3) (4) (5)

the degree of the employer’s right of instruction and control the nature of the financial arrangement any obligation to perform the work personally the degree of connectedness (dependency) in the relationship the social perception or presentation of the relationship.

These indicators are cumulative and non-exhaustive; the judiciary will make an overall assessment based on all relevant factors. The employer’s right to instruct and control the work is central to the traditional perception of an employment relationship and refers to the right of the employer to make decisions and the duty of the employee to follow these. The courts assess whether the person performing the work is obliged to undertake assignments, perhaps even at short notice47 – the performance of the work can be restricted ‘to such a degree’ that it is in reality a position of service48 – or whether, on the other hand, they can decline assignments and

39 40 41

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45 46

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The new Holiday Act, Statutory Act no. 60 of 30 January 2018, s. 1. LF 116 of 2017/1, General remarks, s. 2.2. Statutory Act no. 1084 of 10 September 2017 on Working Environment; Statutory Act no. 216 of 27 February 2017 on Workers Compensation for Occupational Injuries. For example, the collective agreement for freelancers at the Danish Radio and Television Company 2020, concluded with the Danish trade union for journalists, https://journalistforbundet.dk/oversigt-over-overenskomster. Labour Court Act. For example, the Holiday Act or the Act on Workers’ Compensation No. 977 of 9 September 2019 (Workers’ Compensation Act). For example, the Act on Bankruptcy and the Act on an Employees’ Remuneration Guarantee Fund. For example, the Act on an Employment Certificate, the Act on Equal Treatment of Men and Women in Employment, the Act of Non-discrimination in Employment; O. Hasselbalch, ‘Lønmodtagerbegrebet i EU-retlig kontekst [The concept of employee in the context of EU law]’, EU-ret og menneskeret [EU Law and Human Rights Journal], 25(1) (2018), 3–24. Ruling of the High Court of Western Denmark of 14 June 1996, U 1996.1232 V: a sales representative was considered an employee. Ruling of the Maritime and Commercial High Court of 9 May 2007, U 2007.2251 SH: an independently contracted dentist was considered an employee.

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organise their work independently.49 The fact that an employee enjoys more extensive freedoms to self-manage their tasks and their working time is not in itself incompatible with employment status,50 if the employee would in theory be under a duty to follow instructions. The financial arrangement criterion takes into consideration who provides the tools, materials, workshop, transportation, and additional running costs; who pays for (unforeseen) costs; and who takes the risk or the benefit for the quality of the result. Paying for costs is in itself not incompatible with employee status.51 The personal obligation criterion refers to whether the person is obliged to accept tasks52 as well as whether the person is entitled to delegate the work to other contractors, both of which are incompatible with status as employee.53 The close connectedness criterion assesses the intensity or dependency in the working relationship, such as whether it is a short- or long-term working relationship, whether the work is the main or a supplementing income, and whether the person works for more than one principal.54 The social perception criterion assesses the relationship from a social perspective, based on factors such as whether the worker wears a uniform or logos, drives a company car, and presents as coming from the principal’s company or as self-employed.55 In addition to the assessment of status by the ordinary courts in relation to statutory employment legislation, the industrial judiciaries assess the status of workers in relation to collective rights or collective agreements. The industrial judiciaries in one type of case assess the status of persons performing work with a view to ascertaining whether a trade union can lawfully engage in collective bargaining, including engaging in collective action. Trade unions can only negotiate collective agreements on behalf of workers and solo self-employed providing services on terms similar to employment. The assessment criteria are the same as those used by the ordinary courts. If the work performed is of the same character, under the same working conditions, and with the same remuneration as the permanently employed staff of the employer, and the service is provided on ‘terms that are more characteristic of employees than of selfemployed persons’, industrial action can be considered lawful, including secondary action, also for freelancers or other solo self-employed. 56 In another type of case, the industrial judiciaries assess the status of specific persons, for example freelancers or solo self-employed subcontractors, to test whether they perform work on employee-like terms, and thus fall under the scope of application of a particular collective agreement.57 The assessment criteria are the same as in the 49

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Ruling of the Western High Court of 17 September 2014, U 2015.197 V: a freelance support person to refugees was not considered an employee. Ruling of the Maritime and Commercial High Court of 6 May 1970, U 1971.731 HS: a sales representative was considered an employee. U 1971.731 SH. U 1996.1232. V and U 2015.197. V. Ruling of the High Court of Eastern Denmark of 27 June 1991, U.1991.786/2.Ø: a sales representative was not an employee as he could organise his own work and delegate tasks at his own expense. U 1971.731 HS and U.2015.197V. Ruling of the High Court of Eastern Denmark 23 January 2006 in case B-1845–04: an emergency service provider was considered an employee. Labour Court ruling of 24 August 2007, A2007.293: for the freelance journalists working on employee-like terms, the industrial action was considered lawful. Industrial Arbitration Ruling of 5 April 2010, Case FV 2009.0015: freelance journalists and photographers were considered to run genuine businesses and were not working on employee-like terms with the employer; Industrial Arbitration Ruling of 2 November 2020, FV 2020.0516: subcontracted solo self-employed builders were considered to be genuinely self-employed as the contract stated that it was a contract between two businesses, and the subcontracters were registered as companies, invoiced with sales tax, and registered their income for taxes as companies. The actual terms of work being comparable to those of employees of the user undertaking was in that regard not enough to establish work on employee-like terms.

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assessment by the ordinary courts. However, the formalities weigh in more heavily – such as the wording of the contract, a formal company registration, invoicing with sales tax, and registering taxable income as a company. This more formal test of status according to collective agreements is used to determine status for self-employed freelancers as well as for subcontracted solo self-employed.

III THE CHANGING NATURE OF WORK

A government strategy in 2018 recognised that the tendency in society is for more work to be performed as self-employed or freelancer, and for jobs that used to be carried out in-house to now be offered as assignments via different digital platforms.58 The changes are taking place at quite a slow rate.59 In 2022, 23.9 per cent of the workforce worked part-time,60 with 9.5 per cent working fewer than fifteen hours per week.61 In the creative industry and the hotel and restaurant sector, nearly one in three workers work fewer than fifteen hours per week.62 Regarding fixed-term work, 10.8 per cent of employees in Denmark in 2022 had a predetermined termination date.63 In 2021, temporary agency work accounted for approximately 1.0 per cent of the total Danish employment.64 A survey on atypical work from 1995 to 2015 indicated that in 2015 29.0 per cent of all employees in Denmark worked on ‘non-standard’ terms, and that the share of involuntary parttime and temporary workers had only marginally increased since 2000.65 The rate of temporary agency work has remained stable for a decades.66 Solo-self-employed is a new term referring to the legal standard of self-employed persons who do not employ other persons; in labour law they are more traditionally referred to simply as self-employed.67 This form of work is well-known in the agricultural and skilled worker sectors, as many farmers, carpenters, and bricklayers run their own one-person business. The share of solo-self-employed has been relatively stable from 1995 to 2015 at approximately 1.5 per cent of employees.68 Researchers estimate an increased use of zero-hours contracts,69 but the Labour Force Survey does not include data on casual contracts. A new form of work relationship is work via digital platforms. The total extent of the platform economy in Denmark has not yet been calculated. In December 2018 fifty-five

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Ministry of Business, Strategy for Danmarks digitale vækst [Strategy for Denmark’s Digital Growth] (2018), 16. S. Rasmussen, T. P. Larsen, A. Ilsøe, and P. Kongshøj, Atypical Labour Markets in Denmark, Nordic Future of Work Brief 5 (Oslo: Fafo, March 2019); T. P. Larsen and M. Mailand, Bargaining for Social Rights in Sectors (BARSORIS), FAOS (Forskningscenter for Arbejdsmarkeds- og Organisationsstudier [Research Center for Labour Market and Organisation Studies]) Research Paper 141 (Copenhagen: University of Copenhagen, 2014). Statistics Denmark, Labour Force Survey 2022 (n.d.), https://bit.ly/3qW96UA. Ibid.; and Rasmussen et al., supra note 31, at 16. T. P. Larsen and A. Ilsøe, Atypical Labour Markets in the Nordics: Troubled Waters under the Still Surface?, Nordic Future of Work Brief 4 (Oslo: Fafo, March 2019). Organisation for Economic Co-operation and Development (OECD), ‘Temporary employment (indicator)’ (2022), https://doi.org/10.1787/75589b8a-en. Industry Denmark’s annual report on temporary agency work in Denmark, www.danskindustri.dk/siteassets/medle msforeninger/vikarbranchen/billeder/vikarbranchens-arsrapport-2021.pdf. Rasmussen et al., supra note 31, at 21. Mailand and Larsen, supra note 33, at 33. Rasmussen et al., supra note 31, at 12. Ibid., 23. ‘FoWnordics: Pillar III – Self-employed, independent and atypical work’ (n.d.), www.fafo.no/en/pillar-iii; A. Ilsøe and T. P. Larsen, ‘Conclusion and perspectives’ in A. Ilsøe and T. P. Larsen (eds.), Non-standard Work in the Nordics: Troubled Waters under the Still Surface, Report from The Future of Work: Opportunities and Challenges for the Nordic Models, 214–20 (Copenhagen: Nordic Council of Ministers, 2021), 218, https://pub.norden.org /temanord2021-503/#53303.

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‘sharing-economy platforms’ were identified, including loans, trade, or lease services of private property, cars, or labour.70 A 2018 study shows that 1.0 per cent of Danes aged 15–74 years (42,367 people) offered their labour on a digital platform;71 the same rate is indicated in more recent surveys.72 Platform work is carried out primarily as a marginal supplementing income, and with a predominance of youth and a higher percentage of persons of a non-Danish ethnicity than in society at large: 75.0 per cent of the workers on selected platforms worked fewer than eight hours per week; 38.0 per cent of the service providers on the labour platforms were in the age range twenty to twenty-nine; 19.0 per cent of the platform workers were of non-Danish ethnicity;73 47.0 per cent of platform workers had employment elsewhere. The first approach of policymakers was to promote platform work as part of the digital collaborate economy as well as a new form of providing work for marginalised workers.74 Criticism is surfacing among labour law researchers, trade unions, and certain media.75

IV THE PROTOTYPES

A The Nature of the Parties and Their Respective Roles The first digital platform companies providing services were Uber in 2014 and Upwork in 2015.76 Uber was the first digital platform to receive political attention.77 Uber drivers were in 2015 charged with violating the Taxi Act, as well as tax legislation, by not registering their income. 70

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Danish Competition and Consumer Authority, ‘Digitale platforme – en introduction [Digital platforms – an introduction]’ (2019), 3, www.kfst.dk/media/4jvf1aih/digitale-platforme.pdf. K. Jesnes and F. Braesemann, Measuring Online Labour: A Subcategory of Platform Work, Nordic Future of Work Brief 2 (Oslo: Fafo, 2019); and A. Ilsøe and L. W. Madsen, Digitalisering af arbejdsmarkedet [Digitisation of the Labour Market], FAOS Research Paper 157 (Copenhagen: University of Copenhagen, 2017), 40. A. Ilsøe and T. P. Larsen, ‘Digital platforms at work: Champagne or cocktail of risks?’ in A. Strømmen-Bakhtiar and E. Vinogradov (eds.), The Impact of the Sharing Economy on Business and Society, 1–20 (London: Routledge, 2020). Defined by the ethnic variables of Statistics Denmark. A. Ilsøe, ‘The digitalisation of service work’, Transfer, 23(3) (2017), 333–48; A. Ilsøe, The Hilfr Agreement: Negotiating the Platform Economy in Denmark, FAOS Research Paper 176 (Copenhagen: University of Copenhagen, 2020); Ilsøe and Madsen, supra note 71; A. Ilsøe and L. W. Madsen, Industrial Relations and Social Dialogue in the Age of Collaborative Economy (IRSDACE), FAOS Research Paper 163 (Copenhagen: University of Copenhagen, 2018); Ilsøe and Larsen, supra note 72. K. H. Bentsen, L. L. Hansen, B. Jensen, C. Larsen, and P. E. Skov, Aktiviteter uden for det formelle arbejdsmarked: sort arbejde, gør det selv-arbejde og deleøkonomi [Activities outside the Formal Labour Market: Undeclared Work, Do-ItYourself Work and the Sharing Economy], Rockwoolfonden [Rockwool Foundation] (Odense: Odense Universitets Forlag [Odense University Press], 2018); N. V. Munkholm and C. H. Schjøler, ‘Platform work and the Danish model: Legal perspectives’, Nordic Journal of Commercial Law, 1 (2018), 116–45; N. V. Munkholm, ‘Platformsarbejde: selvstændig contra ansat i komparativt perspektiv [Platformwork: Independent contra employed in a comparative perspective]’, Juristen, 5–6 (2021) 205; N. V. Munkholm, supra note 19; N. V. Munkholm, M. J. Hotvedt, A. Westregaard et al., The Future of Nordic Labour Law: Facing the Challenges of Changing Labour Relations (Copenhagen: Nordic Council of Ministers, 2020); N. V. Munkholm, C. Jacqueson, and C. H. Schjøler, Lønmodtager/arbejdstagerbegrebet i dansk arbejds- og ansættelsesret – med fokus pa˚ platformsarbejde [The Concept of Employee/Worker in Danish Labour and Employment Law – with a Focus on Platform Work] (Copenhagen: Ministry of Employment, 2022), https://bit.ly/43KQ3Ky; M. S. Hvidt, ‘Online platformsarbejderes retlige status – et kontrastfuldt retligt billede og muligheden for en tredje kategori [Online platform workers legal status – a contrasted legal picture and the option of a third category]’, Ugeskrift for Retsvæsen [Weekly Law Reports], 13, U.2022B.103 (2022), 103–13; R. M. Lange and M. Magnussen, ‘Digitale daglejere [Digital hired laborer]’, Fagbladet 3F (2021); P. C. BechNielsen, ‘Her er Skattera˚dets Wolt-afgørelse I fuld længde [Here is the tax councils Wolt-ruling in full length]’, Radar (2022). Ilsøe and Madsen, supra note 74. M. Soested and N. V. Munkholm, ‘Uber and taxis in Denmark’ in R. Noguellou and D. Renders (eds.), Uber & Taxis: Comparative Law Studies (Louvain-La-Neuve, Belgium: Bruylant, 2018), 141–62.

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The breach of the Taxi Act was assessed for the first time in November 2016.78 As the passengers had no other connection with the drivers apart from using the Uber app, and as payments exceeded the direct costs, the transport services constituted ‘commercial transport of persons’ as defined in the Taxi Act.79 There was no basis for regarding the transportations as car-sharing arrangements. Uber drivers were therefore in breach of the Taxi Act for providing taxi services without a taxi licence.80 The Uber drivers in the 2016 case were fined DKK 6,000 (EUR 900) for three trips. Further, Uber BV in the Netherlands was charged with collaborative breach of the Taxi Act, and in March 2017 paid fines of DKK 30,000 (EUR 4,000) for the three trips. These rulings paved the way for charges against all 2,000 registered Uber drivers81 in Denmark for breach of the Taxi Act on each of their trips. Information about trips and drivers was obtained from Uber BV.82 The Tax Authority in addition found Uber drivers in breach of taxation legislation by not reporting their income from trips; the drivers were required to pay the outstanding taxes and a fine.83 As a response to the Uber rulings, the Taxi Act was amended in 2017 with a view to adapting the very strict regulation of taxi services to a more modern society.84 In 2017, Uber withdrew from operations in Denmark,85 as the Taxi Act required seat sensors and taximeters to be fitted to all vehicles, as well as mandatory new commercial driver education. The status of the Uber drivers as employees did not surface in the debate. The Tax Authority in 2018 reported to the parliament’s Tax Committee86 that the Uber drivers who were active in Denmark in 2014 and 2015 were considered to be self-employed and had run either commercial or non-commercial businesses in relation to the rules on taxation. Also in 2015, Denmark-based platform companies began to surface primarily within the transportation and cleaning sectors. Over the last years, the number of digital platform companies has increased; these companies now include, for example, knowledge-intensive platform companies.87 The most prevalent labour platforms facilitate labour on-demand and on-location, such as cleaning, performing of smaller manual tasks, or provision of transportation services.88 78

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Eastern High Court ruling of 18 November 2016, U 2017.796 Ø; Eastern High Court ruling of 7 November 2019, U.2020.232/2 confirmed in Supreme Court ruling of 13 September 2018, U.2018.3745 H. The (then) Taxi Act, s. 1(1). The assessment aligns with the CJEU assessment in the Uber Spain ruling, CJEU ruling C-434/15 Asociacio´n Profesional E´lite Taxi v. Uber Systems Spain SL. Similarly, Opinion of Advocate General Szpunar 11 May 2017 in C-434/15 Asociacio´n Profesional E´lite Taxi v. Uber Systems Spain SL. ‘Politiet har sigtet 1500 Uber-chauffører før afgørende dom [Police have charged 1500 Uber drivers before a final verdict]’, DR (28 August 2017), www.dr.dk/nyheder/indland/politiet-har-sigtet-1500-uber-chauffoerer-foer-afgoerende -dom. Supreme Court ruling of 13 September 2018, https://domstol.dk/hoejesteret/decided-cases-human-rights/2018/9/uberdrivers-sentenced-to-fines/#uber. ‘SKAT har fa˚et oplysninger om godt 2.000 Uber-chauffører [SKAT has obtained information on more than 2,000 Uber drivers]’, SKAT (30 September 2016), http://skat.dk/SKAT.aspx?oId=2234290&vId=0; Supreme Court ruling of 13 September, supra note 82. Taxi til fremtiden: regeringens udspil til modernisering af taxilovgivningen [Taxi to the Future: The Government’s Plan to Modernise the Taxi Legislation] (Copenhagen: Ministry of Transport, 2016), www.trm.dk/media/mt5iukcr/6488taxi-til-fremtiden.pdf, and Proposal L 24 2017-18, a Statutory Act on Taxi Driving. ‘Ny taxilov fa˚r Uber til at lukke i Danmark [New taxi law causes Uber to close in Denmark]’, Politiken (28 March 2017), http://politiken.dk/oekonomi/art5889910/Ny-taxilov-f%C3%A5r-Uber-til-at-lukke-i-Danmark. SKAT, Rapport vedrørende kontrol af Uber-chauffører, Indkomsta˚rene 2014 og 2015 [Report Regarding Verification of Uber Drivers, Income Years 2014 and 2015] (Copenhagen: SKAT, January 2018), 8. J. I. Steen, J. R. Steen, K. Jesnes, and R. Røtnes, The Knowledge-Intensive Platform Economy in the Nordic Countries (Oslo: Nordic Innovation, 2019). S. Rasmussen and P. K. Madsen, ‘Platformsøkonomien og prekariatet [The platform economy and the precariat]’, Tidsskrift for Arbejdsliv [Journal for Working Life], 19(1) (2017), 46–62, at 53; Ministry of Employment/Disruption Council [Disruptionra˚det], Kortlægning af arbejdsplatforme i Danmark [Mapping Work Platforms in Denmark] (January 2018), https://bm.dk/media/6186/baggrundspapir-kortlaegning-af-arbejdsplatforme-i-danmark.pdf.

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The term ‘platform company’ is not a legal term, and different authorities prefer different terminology. Labour platforms provide contact between a user, with one or more specific assignments, and a service provider. The platform company acts as intermediary via an app or a website, where users and service providers can register. Service providers are most often required to register as self-employed, that is, as independent business partners. A few platform companies employ workers as employees.89 Some platform companies offer a ‘welfare allowance’ to the hourly base price to compensate for the lack of social protection.90 The economic models vary, and so do any terms for minimum on-call-time, optional or mandatory pre-training, standards for the performance of tasks, use of logos or names, and the algorithmic set-up for distributing tasks among service providers, using rating and sanctions systems. In accordance with the usual method of assessment of employment status, persons performing services for a digital platform company can have their status assessed as either employee or selfemployed.91 No case-law has yet emerged about the labour or employment law status of service providers in platform companies. However, case-law on their status has emerged in other fields of law, most notably concerning the platform company Wolt,92 which delivers takeaway food and groceries to private customers and does not employ any of its couriers. In May 2023, after a four-year-long dispute with the tax authorities, it was confirmed that Wolt is the employer of the couriers for tax purposes, and as such is obliged to withhold and register income taxes for the couriers.93 In July 2023, a two-and-a-half-year-long dispute about workers’ compensation for injuries for Wolt-couriers concluded with the same result. Labour Market Insurance confirmed that Wolt is liable for injuries of its couriers, and for occupational health and safety and workers’ compensation, Wolt is considered to be the employer of the couriers.94 These developments do not have a direct effect on the assessment in relation to labour or employment law; however, the methods used in the assessments are very likely to have a spillover effect in any upcoming assessments of status under employment legislation or status in industrial relations. The criteria in the assessments are similar to the criteria used in employment law. The normal prima facie assessment in employment law would be based on the same criteria, and would assess the degree of independence versus the degree of control and instruction, taking into consideration all the elements of the relationship between the platform company and the service provider. At the surface, assessing only the contractual elements, the flexibility of the platform worker to accept or decline tasks and the freedom to choose their own working time, would be characteristic of status as self-employed. On the other hand, the platform company’s mandate to unilaterally sanction platform workers, to change the terms of service, the extent and content of rules of behaviour, as well as any pre-training on how to carry out the work, which are elements more 89

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For example, LegalHero (https://legalhero.dk/), an online platform offering legal services to SMEs, and Just Eat (www.just-eat.dk/), a platform company delivering takeaway food to private customers. Hilfr offers self-employed service providers a ‘welfare allowance’. Per the usual assessment by the ordinary courts, the terms of the contract are not decisive, and nor is registration with the Central Business Registry as self-employed. A Business Registration is a simple online registration with immediate effect, involving no material test of the nature of the company either before or after the registration. Wolt.com, https://wolt.com/da/dnk. J. B. Nielsen, ‘Afgørelse fra Skattestyrelsen: Wolts bude skal betragtes som lønmodtagere [Ruling from the Tax Board: Wolt’s couriers are assessed as employees’], DetailWatch (2 May 2023, https://detailwatch.dk/nyheder/ecommerce/ article15722204.ece. The May 2023 taxation ruling from the highest administrative appeals tribunal, Skattestyrelsen [Tax Board], is not publicly available. S. Danneskjold-Samsøe, ‘Wolt skal betale erstatning til bude der kommer til skade [Wolt must pay damages to couriers that are injured]’, FH (6 July 2023), https://fho.dk/blog/2023/07/06/3f-wolt-skal-betale-erstatning-til-bude-derkommer-til-skade/. The July 2023 occupational health and safety ruling from the highest administrative entity, Labour Market Insurance, is not publicly available.

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characteristic of employment status, was clear in the decisions on taxation law and workers’ compensation law. Also, the role played by the more invisible technology, as managerial power to distribute, control, organise, and sanction the service providers, is to a large degree delegated to the algorithm running the app or the website. The choices of the algorithm could in reality create a situation for the platform workers, also in relation to employment law and industrial relations law, where they are subject to ‘such a level of restrictions in the performance of work’ that it is comparable to a service relationship.95 The algorithm distributes tasks, organises the order of appearance of service providers, and sometimes calculates the price levels according to current demand. Algorithms using artificial intelligence (AI) will over time learn the norms of behaviour from the choices of the users of the platform app, including choices based on the biases of the users regarding service providers’ appearances or names. The optimisation mechanisms of the algorithm could on this basis learn to offer service providers of a certain skin colour, name, gender, or religious appearance less optimal tasks, or place them in a less optimal position on the lists in the app. Such a discrimination of a service provider would in an employment setting constitute unlawful treatment in breach of non-discrimination legislation.96 The algorithm’s system for distribution, sanction, and control affecting the independence of the service provider could therefore also be taken into consideration. An alternative business model used by labour-intensive platform companies is to organise the terms of work similarly to a temporary work agency (TWA). These platform companies introduce a principle of equal treatment when contracting with the user entity. This is the case for the platform companies Chabber, which offers catering personnel such as bartenders, chefs, waiters, and receptionists, and meploy, which offers temporary labour services to warehouses and the retail and production sector.97 If the user entity is covered by a collective agreement, Chabber and meploy freelancers will receive these rates for the work performed. If the user entity is not covered by a collective agreement, Chabber and meploy freelancers will receive whichever rates the workers at the user entity receive. No cases have yet emerged where Chabber or meploy service providers have filed claims against customers/ users. A third new format emerging in the market is developed by HK, the Danish trade union for commercial and clerical employees, an online service agency for freelancers.98 The freelancers find their own customers and negotiate their own terms for their service. The agency then employs the freelancer for the fixed task as a TWA and handles all invoicing, payments, and taxes. The agency charges 8 per cent of each invoice for its service. The agency is available to everyone, including non-members. No cases have yet been subject to judicial review concerning the service agency for freelancers. Further, many platform companies, even those that do not offer as wide a range of services as HK, offer tailor-made insurance products to their service providers in collaboration with existing major insurance companies.99

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U 2007.2251 SH. The Act on Equal Treatment for Men and Women in Employment and the Act Prohibiting Discrimination on grounds of race, skin colour, religion, age, disability, and so on both prohibit direct and indirect discrimination on the protected grounds in the workplace. Chabber, www.chabber.com/; meploy, https://meploy.me/. HK, ‘Servicebureau for freelancere’, www.hk.dk/raadogstoette/freelancer/bureau. Happy Helper, ‘Tryg forsikring [Secure insurance]’, https://happyhelper.dk/pages/trygforsikring, and Mover, www .mover.dk/.

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B Policy Initiatives In the aftermath of the Uber cases, which resulted in Uber withdrawing from the Danish market, the legislators were criticised for responding poorly to technological developments in the market.100 On a bigger scale, the question was how to properly embrace the new opportunities provided by the new technology and new business models. In 2017 the (then) government established the Disruption Council, Disruptionsra˚det, consisting of representatives from companies, social partners, experts, and the youth population.101 The overall purpose of the Council was to suggest ways to seize the opportunities of the technological developments in order to maintain wealth and security while maintaining a properly regulated and flexible labour market, without social dumping.102 The work was informed by several reports from stakeholders. The Danish Ministry of Business mapped the extent of digital platforms in Denmark and the potential economic consequences of increased use.103 Thirty-six companies were in 2017 offering some level of labour-intensive service in Denmark.104 The report formed the basis for the (then) government’s Strategy for Growth through the Collaborative Economy, in October 2017.105 The sixty-page strategy specifically addressed the issue of trust in the business model, taxation of activities in the collaborative economy, the relationship with the Danish labour market model, and being prepared for the future economy.106 The Panel on Digital Growth, Digitalt Vækstpanel, under the Ministry of Business, which consisted of the chief executive officers (CEOs), chairpersons, and managing directors of the largest and most influential companies in Denmark,107 produced a fifty-eight-page report with recommendations for Denmark as a Digital Frontrunner. The report included thirty-three specific recommendations and formed the basis for the (then) government’s Strategy for Denmark’s Digital Growth of January 2018, with thirty-eight initiatives to ‘cease the opportunities for digital transformation and create jobs and increased growth and prosperity in Denmark’.108 The Ministry of Employment in January 2018 produced a report specifically on labour-intensive digital platforms, explaining the relationship between platform work and the existing labour market models, as well as the legal implications of self-employed and employee statuses for the individual rights of the person, as well as in larger 100

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E.g. K. B. Larsen, ‘Joachim B. Olsen sviner partifællers taxilov: “Maskinstormere” [Joachim B. Olsen flouts the party’s tax law: “Machine stormers”]’, Ekstra Bladet (9 February 2017), https://bit.ly/445jEPX; M. K. Nielsen, Det liberale Danmark er ha˚rde ved den ny taxilov: ‘“Det er en skandale” [Liberal Denmark is tough on the new taxi law: “It’s a scandal”]’, Berlingske Business (9 February 2017), https://bit.ly/3Nz5sHQ; M. Jeppesen, ‘Uber-kaos i regeringen: Ny taxilov skaber intern splid [Uber chaos in the government: New taxi law creates internal discord]’, Avisen.dk (9 February 2017), https://bit.ly/3NvJUfs; M. Barsøe, ‘Taxabranchen lod en stinker sive [The taxi industry made a stink]’, Finans.dk (26 October 2017), https://finans.dk/debat/ECE9978380/taxabranchen-lod-en-stinker-sive /?ctxref=fpfinans%C3%82%C2%A0; T. Wollenberg, ‘Finans’ debatredaktør undervurderer groft ny taxilov [Finans’ debate editor grossly underestimates the new taxi law]’, Finans.dk (5 November 2017), https://bit.ly/3qZeiXO. Beskœftigelses-ministeriet [Ministry of Employment], ‘The Disruption Council – Partnership for Denmark’s future’ (n.d.), https://bm.dk/arbejdsomraader/kommissioner-ekspertudvalg/disruptionraadet/. Kommissorium for Disruptionra˚det – Partnerskab for Danmarks fremtid [Commission for the Disruption Council – Partnership for Denmark’s Future] (April 2017), www.regeringen.dk/media/3334/kommissorium.pdf. Ministry of Employment/Disruption Council, supra note 88. Erhvervsstyrelsen (Danish Business Authority), Platform Economy (20 January 2017), https://em.dk/media/10142/ platformsokonomi.pdf. Ministry of Business and Growth, Strategi for vækst gennem deleøkonomi [Strategy for Growth through the Collaborative Economy] (9 October 2017), www.regeringen.dk/publikationer-og-aftaletekster/strategi-for-vaekstgennem-deleoekonomi/. Ibid., 13–16. Digitalt Vækstpanel [Digital Growth Panel], Danmark som digital frontløber: Anbefalinger til regeringen [Denmark as Frontrunner: Recommendations to the Government], (May 2017), https://bm.dk/media/6128/digitalt-vaekstpanelanbefalinger.pdf, 53. Ministry of Business, supra note 58.

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society.109 The Disruption Council concluded its work in 2019 with a list of overall aims for the future of Denmark,110 and a sixty-two-page report, Prepared for the Future of Work,111 highlighting learning points and recommendations. The challenges for digital companies themselves were identified mainly as involving data ethics as well as lack of legislative standards. The focus points for the digital future of work were to provide the best possible terms for fair and equal competition, support digital transformation as well as ethical and responsible use of data, get the labour market ready for transformation, digitalization, and new forms of employment, and create an inclusive labour market for everyone. The Disruption Council compared platform work to ‘regular’ self-employed work in Denmark, but also underlined that many platform workers do not have access to the ‘employment rights usually awarded to workers covered by a collective agreement’ and are typically not protected by the standard employee rights.112 Initiatives aimed at fair competition between digital companies and other businesses were launched, resulting first in a taxation agreement between Airbnb and the Danish Tax Authority with a duty for platform companies to report taxes in return for higher levels of tax-free earnings.113 Second, the Danish Competition and Consumer Authority established a specialised Digital Platforms Division tasked with, among other things, enforcing the competition rules against digital platforms.114 The report also resulted in a reform of the unemployment insurance legislation with a view to embracing work performed in fragmented work patterns including work for digital platforms (see Section IV.C).115 The social partners were left to engage with other forms of labour market reform, including negotiating flexible collective agreements with platform companies. The Ministry of Business established an information website for collaborative economy businesses.116 All digital platforms, including labour-intensive platforms, are categorised as collaborative economy and new business models.117 The website guides platform companies to a few quite traditional elements in the assessment of employer–employee relationships, including that where the company instructs and controls the performance of work, this is indicative of an employment relation. If, on the other hand, a person has a high degree of freedom to organise their own work, this is indicative of self-employment. The reality, however, is that these indicators are a poor fit for many employees who are not subject to the direct instruction and control of managers, and do have a high degree of freedom to organise their own work. The presentation of 109 110

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Ministry of Employment/Disruption Council, supra note 88. Ministry of Employment/Disruption Council, Regeringens og Disruptionra˚dets: sigtelinjer for fremtidens Danmark [The Government and the Disruption Council: Guidelines for the Denmark of the Future] (January 2019), https://bm .dk/media/9601/sigtelinjer.pdf. Ministry of Employment, Prepared for the Future of Work – Follow-Up on the Danish Disruption Council, 2018/19:14 (February 2019). Ibid., 43. Agreement on better terms for growth and correct registration of taxes in the collaborative and platform economy, https://em.dk/media/9787/dele-og-platformskonomisk-aftale-1-rettede.pdf; ‘Historisk aftale med Airbnb træder i kraft fra 1. juli 2019 [Historic agreement with Airbnb enters into force from 1 July 2019]’, Skatteministeriet [Ministry of Taxation] (4 April 2019), https://bit.ly/3Npbdba. Konkurrence- og Forbrugerstyrelsen [Competition and Consumer Authority], ‘Konkurrence- og Forbrugerstyrelsen øger fokus pa˚ digitale platforme [The Danish Competition and Consumer Authority is increasing its focus on digital platforms]’ (1 May 2019), www.kfst.dk/pressemeddelelser/kfst/2019/20190501-konkurrence-og-forbrugerstyrelsenoeger-fokus-paa-digitale-platforme. Ministry of Employment, Prepared for the Future of Work, supra note 111, 46. ‘Deleøkonomi [Sharing economy]’, Nye Forretningsmodeller [New Business Models] (n.d.), https://nyeforretnings modeller.dk/deleoekonomi. ‘Formidling af arbejdskraft [Mediation of labour]’, Nye Forretningsmodeller (last updated 2 October 2019), https:// nyeforretningsmodeller.dk/formidling-af-arbejdskraft.

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traditional criteria can create the false assumption that only persons in traditional employment relationships are considered employees, which is not the state of law on the issue. In January 2019, running to January 2021, the government established a council for the sharing economy, Deleøkonomisk ra˚d, with the purpose of advising the minister of business with regard to development in the area of the collaborative economy.118 The council consisted of fifteen representatives from digital platforms, social partners, experts, and consumers. The council delivered its final report with thirteen recommendations.119 The report included a section on special challenges with the digital platforms delivering services in the form of labour, in particular the challenge of determining status for the service providers as either employees or independent businesses. The council’s recommendation no. 2 was a mapping of the case-law on status as employee or independent contractor across all judiciaries and administrative units.120 Also in 2019, the government established the Data Ethics Council, Dataetisk ra˚d,121 and tasked it with contributing to the discourse on the ethical dilemmas of using digital solutions and data in relation to, for example, privacy, transparency, and the rule of law for use of algorithms.122 Society’s use of data should be developed in an ethically responsible manner that takes into account the fundamental rights of the citizens, the rule of law, and the fundamental values of society. The Council also advises the Digitalisation Authority.123 The Data Ethics Council focusses on responsible use of new technology and the rule of law for algorithms, which will affect how platform companies use algorithms.124 A change of government took place in the summer of 2019. In its strategy ‘Denmark can more I’,125 one of the attention points was on a stronger labour market and to ensure that platform companies providing labour services do not undermine the Danish model.126 This requires further investigations as to the legal framework. The Ministry of Employment in October 2021 commissioned an expert report mapping how status of employee is determined in case-law, suggesting avenues forward to address problems, mapping the interplay between competition law and industrial relations law, and analysing attention points in relation to algorithmic management.127 The 300 page report formed the basis for political negotiations to use a rule of presumption to improve the legal certainty for platform workers and other persons performing services in the grey zone between status as employee and status as independent contractor. The status for platform workers was in the end not addressed in the final proposal for reform of the labour market.128 The government changed again in the fall of 118

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Erhvervsministeriet, Beskæftigelsesministeriet, Skatteministeriet [Ministry of Business, Ministry of Employment, Ministry of Taxation], ‘Bilag 1. Kommissorium for Det deleøkonomiske ra˚d [Appendix 1. Terms of reference for the sharing economy council]’ (26 October 2018), https://em.dk/media/12909/kommissorium-raadet-fordeleoekonomi.pdf. The Sharing Economy Council, ‘Velfungerende rammer for deleøkonomien i Danmark [A well-functioning framework for the sharing economy in Denmark]’ (2021), https://em.dk/media/14218/anbefalinger-raadet-fordeleoekonomi.pdf. Ibid., at 28. Data Ethics Council, https://dataetiskraad.dk/. As recommended by Digitalt Vækstpanel, supra note 107. ‘About the Data Ethics Council’, https://dataetiskraad.dk/baggrund-og-formaal. Aligned with the EU Digital Services Act, Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market for Digital Services. Ministry of State, Ministry of Finance, Ministry of Employment, ‘Danmark kan mere I – Danmark skal være rigere, grønnere og dygtigere [Denmark can more I – Denmark will be richer, greener and more proficient]’ (2021), https:// fm.dk/udgivelser/2021/september/danmark-kan-mere-i/. Ibid., at 19. Munkholm, Jacqueson and Schjøler, supra note 75. P. C. Bech-Nielsen, ‘Ny reformaftale: Regeringen slagter egen formodningsregel for platformsarbejdere [New reform agreement: The government butchers their own rule of presumption for platform workers]’, Radar (2022).

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2022. Since early 2022, the approach has been to await the negotiations of the EU Commission’s 2021 proposal for a Platform Work Directive.129 C Regulatory Initiatives The Disruption Council in 2019, in full correspondence with the Danish model, left the issue of regulating working terms to the social partners. However, it did carry out a few associated legislative interventions. The Disruption Council identified the poor match between new work patterns and the unemployment insurance system. The existing rigid categorisation of persons as either employees or self-employed did not reflect the modern pattern of fragmented or atypical employments.130 Based on the recommendations of a tripartite committee, a new system for unemployment insurance came into force in January 2018.131 The Unemployment Insurance Benefit system changed the focus from the employment status of a person to the activities of a person. All income earned – both as employed and as self-employed – can be accumulated towards being eligible for unemployment benefits. If a person becomes unemployed – either from losing their employment or from closing down a business as self-employed – the calculations for being eligible for benefits will be based on the universal income from all sources. A related legislative initiative was the work on the concept of ‘employee’ in the new Holiday Act 2018, in force from September 2020.132 This development was not a direct result of the work of the Disruption Council, but was recommended in 2017 by the tripartite Holiday Act Committee.133 The purpose of the new Holiday Act was to align the Danish Holiday legislation with the rights provided in the EU Working Time Directive, CJEU case-law, and the EU Charter of Fundamental Rights. As part of its recommendations, the Committee closely addressed the interpretation of the scope of application of the Holiday Act. The concept of ‘employee’ in the Holiday Act must be aligned with the concept of ‘worker’ in EU law. Accordingly, the concept of ‘employee’ as a starting point refers to ‘anybody who in exchange for remuneration performs personal work in a relationship of service’. With regard to persons in ‘atypical employment’, this group of employees is expected to continue to develop, is not homogenous, and cannot be uniformly defined.134 The ‘employee’ status for persons in atypical employment must first be interpreted in line with the development of the underlying EU Working Time Directive as interpreted by the CJEU. The legislators then stated: [F]or self-employed (who are not employees), freelancers, external consultants and fee-earners [honorarlønnede], it will be a specific and individual assessment in each case. It is most congruent with the protective purposes of the Act that status as employee is only lost when there is a basis for constituting independence in the performance of work for another person. The determining factor is whether the person in reality is self-employed.135

The legislators by this introduced what could be considered a tentative default status as employee for persons in non-standard work. This is purely from the wording of the preparatory 129

130 131 132 133 134 135

Proposal for a directive of the European Parliament and of the Council on improving working conditions for platform work, COM(2021) 762 final, of 9 December 2021. Proposal for Amendment to the Act on Unemployment Insurance, L88, 2017–18. Amendment Act No. 1670 of 26 December 2017 to the Act on Unemployment Insurance. Statutory Act on Holidays No. 1025 of 4 October 2019. Report 1568 of 2017, www.regeringen.dk/media/3803/ferielovsudvalgets-betaenkning.pdf. Proposal L116 FT 2016–17, s. 2.2. pp. 15 and 39. Author’s translation.

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works, stating that status as employee can be ‘lost’. This brought in two novel elements: (1) specifically referring to a default status as employee as the starting point for persons in nonstandard employment and (2) turning the assessment method towards assessing status as selfemployed. This shifts the focus from the employee having to prove their status as an employee, to the employer having to prove that the ‘employee’s’ true status is self-employed. This could be seen as an innovative approach to the assessment of employee status.136 No case-law has yet emerged under the new Holiday Act, and the legislators have so far not ventured any further in this direction as concerns are being aired that a presumption of employee status will have too wide an application and will make it more difficult for genuinely self-employed service providers to function in the market. Strong voices from certain trade unions continue to recommend a presumption, however, as a way to counteract ‘bogus’ self-employment.137 In addition to these few legislative initiatives, the trade unions have engaged in concluding collective agreements for platform work. The social partners have followed three strategies for covering platform workers with collective agreements: (1) a tailor-made collective agreement for Danish platform company Hilfr.dk; (2) an accession agreement with Danish platform company Voocali; and (3) a sector agreement for food delivery companies. The tailor-made agreement with Hilfr.dk is innovative. The platform company Hilfr was founded in 2017 by three young Danes who saw the opportunity to make use of digital technology to match small cleaning jobs in private homes with a wider audience of private service providers. Hilfr is the second largest platform offering cleaning services in Denmark, with 216 cleaners and 1,700 customers.138 The founders initiated contact with the largest trade union 3F, the United Federation of Danish Workers, and was assisted by the Danish Industrial Employers Association, Dansk Industri. The entrepreneurs saw the collective agreement as a way to develop their business, ensure proper working conditions on the platform, and give their platform a competitive edge in the market.139 The 2018 agreement was tailor-made to the Hilfr platform.140 In the agreement, the parties aimed to be innovative about the categorisation of platform workers as either employees or self-employed. The agreement established141 that cleaners connected with the Hilfr platform could perform work as either FreelanceHilfrs or SuperHilfrs. FreelanceHilfrs were self-employed persons who were not covered by the agreement and instead operated on their own agreed-to terms. SuperHilfrs were covered by the agreement and were employees. Cleaners obtained default status as employees, or SuperHilfrs, after having worked 100 hours via the Hilfr platform. Cleaners wishing to remain freelancers could opt out, and cleaners who had not yet worked 100 hours could in certain situations opt in. In essence, the agreement introduced a presumption of employee status when fulfilling certain criteria, but with a fully individual opt-in-opt-out mechanism between the individual cleaner and the platform company. This mechanism was novel. One of the platform owners stated that because of the full flexibility of working for platform companies, it would not have made sense to assume employer responsibility for persons only working three or four times 136 137

138 139 140 141

The approach somewhat resembles Assembly Bill No. 5, ch. 296 on worker status. Trade Union for Academics (2022), www.akademikerne.dk/ny-undersoegelsesrapport-stoetter-op-om-etregeringsindgreb-mod-falske-selvstaendige/; United Federation of Workers in Denmark (2021), https://fagbladet3f .dk/artikel/regeringen-gaar-til-kamp-mod-falske-selvstaendige; HK, trade union for retail, office and professionals (2021), www.hk.dk/aktuelt/blogs/baloti-blogger/2021/09/07/formodningsregel. Hilfr, https://hilfr.dk. Ilsøe, The Hilfr Agreement, supra note 74. Ibid. Collective Agreement between Hilfr ApS. CBR No. 37297267 and 3F Private Service, Hotel and Restaurant (2018), https://bit.ly/3OKSKaJ.

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for the platform. This format matched the flexibility as well as the wish to provide proper working conditions.142 The opt-in-opt-out mechanism has not yet been contested, although it was in contrast to the normal principle of binding agreements where employers derogating the provisions by individual agreement are in breach of agreement. SuperHilfrs were provided with minimum levels of pay and working conditions, a right to paid holidays, employer paid sick leave benefits, a pension plan with employer contributions, and protection against arbitrary ‘dismissal’. Deletion or depersonalisation of the employee’s profile on the platform had to be based on substantial reasons relating to the company or the employee, and two weeks’ notice had to be given in writing. In addition, all SuperHilfrs were covered by an employer paid health care plan. The Hilfr agreement was in force from 1 August 2018 to 31 July 2019. Since 2019, the parties have been renegotiating the terms with an extension of the agreement during negotiations. The involved parties are testing the ground for developing a sector-level agreement, drawing on the experiences from the pilot Hilfr agreement. Based on the experiences with Hilfr, negotiations with Wolt and Just Eat (food-delivery platform companies) have been initiated.143 The second strategy involved concluding an accession agreement144 with Voocali.com, an interpretation platform that offers services to public and private entities, connecting users and interpreters via its website. The Voocali agreement was negotiated with the trade union HK Privat. The agreement aligned pay and working conditions of Voocali interpreters with the existing Collective Agreement for White Collar Workers in Trade, Knowledge and Services,145 between HK Privat and Dansk Erhverv,146 the Danish Chamber of Commerce.147 The agreement entails148 that freelance interpreters are entitled to a guaranteed fee per job, a no-show fee, transportation costs, and dismissal protection. There are no restrictions against assignments for other employers, the interpreters can take their user ratings with them, and Voocali registers taxes. The Voocali agreement does not cover occupational pensions, retraining programmes, or a complaints mechanism for ratings, topics that are envisaged for future negotiations. Fee levels cover salaries, holiday pay, hardship supplements, sickness pay, employee fringe benefits, pension contributions on the part of the employer, additional holiday days, retraining and education, and insurance. The Voocali agreement was in force for one year on a trial basis. The third strategy was the conclusion of a sector agreement for the food delivery sector. The agreement was concluded in 2021 between the Danish Chamber of Commerce, Dansk Erhverv, and the National Confederation of Workers in Denmark, 3F.149 The agreement applies to couriers, who must be employed, and ensures hourly rates, pension contributions, paid holidays, 142

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M. Jensen, ‘Rengøringens “Airbnb” indga˚r Danmarks første digitale overenskomst [The cleaning “Airbnb” is part of Denmark’s first digital collective agreement]’, DR (10 April 2018), www.dr.dk/nyheder/penge/rengoeringens-airbnbindgaar-danmarks-foerste-digitale-overenskomst. A. Ilsøe, J. Kristiansen, S. K. Andersen, C. Jacqueson, and M. S. Hvidt, Hilfr-aftalen – et nybrud i det danske aftalesystem: En juridisk-sociologisk analyse [The Hilfr Agreement – A Breakthrough in the Danish Language Agreement System: A Legal-Sociological Analysis], FAOS Report (Copenhagen: University of Copenhagen, 2020), https://faos.ku.dk/pdf/Hilfr-aftalen___et_nybrud_i_det_danske_overenskomstsystem.pdf. HK Privat public statement, ‘HK Privat og tolkeplatformen Voocali.com indga˚r overenskomst og freelanceaftale [HK Privat and the interpretation platform Voocali.com concludes a collective agreement and a freelance agreement]’ (2018), https://bit.ly/47xVeAW. Aftale mellem Voocali og HK Privat [Agreement between Voocali and HK Privat], https://bit.ly/3qphzQj. Danish Chamber of Commerce, www.danskerhverv.dk/engelsk/. Appendix 4.1 – Freelancer Agreement, https://bit.ly/3NTQLR1. Appendix 7.4 to the Agreement between Voocali and HK Privat, https://bit.ly/3PBxDsi. Landsoverenskomst 2021–2023 Madudbringningsoverenskomst mellem Dansk Erhverv arbejdsgiver og 3F Transportgruppen [National collective agreement 2021–2023: Food delivery agreement between the Danish Chamber of Commerce Employer, and the National Federation of Workers in Denmark, Transportgroup], https://bit.ly/3OMhFLl.

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sick leave pay, and parental leave benefits. Just-eat.dk was the first platform company to be covered by the new food delivery agreement.150 No other food delivery platform companies have joined Just-eat.dk in being covered by the agreement. By 2023 these are the only collective agreements concluded with platform companies in Denmark. The agreements are concluded exclusively with Danish owned and operated companies, and exclusively at the initiative of the platform companies themselves. No collective agreements have been concluded with hostile platform companies, and attempts to engage in bargaining have not been followed up by industrial action. This can in part be attributed to the level of legal uncertainty about the status of the self-employed service providers, which was accelerated by a ruling of the Competition Authorities in August 2020 declaring the Hilfr agreement to potentially be in breach of competition law.151 This development is further outlined in Section V. When engaging with the interested platform companies, the social partners are observant of the platform companies’ different natures and business models. As one of the union negotiators wrote, in relation to the Voocali agreement: ‘We have concluded a deal on the things that we could agree upon. Both parties have had to recognise that there are many unresolved questions regarding the qualification of employment and self-employment.’152

V ‘UBERISATION’

The main issue about the classification of platform work under labour and employment law in Denmark was left unaddressed by the Disruption Council and later government initiatives. There is no specific statutory regulation of platform work in Denmark and no regulation is being discussed. There is so far no case-law from judiciaries on the employee status of platform workers. The collective agreement coverage is very limited. However, as the platform companies operate in the same legal setting as any other company in Denmark, the setting is not entirely ‘unregulated’. The question is rather how the relationship between the platform company and the service provider will be assessed under generally applicable employment rules. Although platform work blurs the lines between employment and self-employment, this is a well-known challenge of classification of persons performing work un uncharacteristic terms. This issue is still left to the labour market parties and the courts in accordance with the usual methods used in the Danish market. The Competition and Consumer Authority task force on platform companies focussed particularly on whether platform companies are in breach of competition law.153 The task force examined the status of service providers on the two largest cleaning platforms, HappyHelper and Hilfr. In its ruling concerning Hilfr in August 2020,154 both FreelanceHilfrs 150

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A. H. Eriksen, ‘Banebrydende overenskomst: Nu kan danskere bastille takeaway med god samvittighed [Groundbreaking collective agreement: Now Danes can order takeaway with a clean conscience]’, Fagbladet 3F (2021), https://fagbladet3f.dk/artikel/nu-kan-danskere-bestille-takeaway-med-god-samvittighed. Competition and Consumer Authority, ‘Minimumspriser pa˚ Hilfrs platform [Minimum prices on Hilfr’s platform]’ (August 2020), https://bit.ly/3DJgfej. K. Baloti, ‘Nye veje i aftaledækningen af platforme [New ways in the agreement coverage of platforms]’, HK (2 October 2018), www.hk.dk/aktuelt/blogs/baloti-blogger/2018/10/02/nyaftale. The task force has since 2018 changed to a general focus on tech-companies, including digital platforms. Competition and Consumer Authority, ‘Tech-virksomheder [Tech-companies]’, www.kfst.dk/konkurrencefor hold/tech-virksomheder/. Konkurrencera˚dets afgørelse den 26. August 2020, Minimumspriser pa˚ Hilfrs platform [Competition Council ruling of 26 August 2020, Minimum prices on Hilfr’s platform], www.kfst.dk/media/qv5hoinx/20200826-minimumspriser-p %C3%A5-hilfrs-platform.pdf.

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and SuperHilfrs were considered to be self-employed, regardless of the terms in the collective agreement with Hilfr, extending employee status and working conditions to SuperHilfrs. The Competition and Consumer Authority’s assessment took a quite traditional approach and compares the working conditions of SuperHilfrs with those of ‘traditional’ or ‘normal’ employees, criticising in particular the lack of physical control over the work performed, the possibility to negotiate higher salaries with customers, and the potential economic risk taken by the SuperHilfrs in case of complaints. These elements weighed heavily in the overall assessment of the Competition Board, and overruled other elements such as pension contributions, salaries in case of cancellations, protection against unilateral termination of or changes to the contract, salaries paid out as personal income, paid holidays, and so on. Hilfr adapted its terms for SuperHilfrs, with a view to ensuring that they can continue to be covered as employees under the collective agreement. The assessment by the Competition and Consumer Authority has since 2020 cooled off the bargaining initiatives, as platform companies are now less inclined to conclude collective agreements for their service providers out of concern that they will later be deemed in breach of competition law by the Danish Competition and Consumer Authority. Any discrepancy between the social partners and an administrative authority is unfortunate as it can create (more) uncertainty as to the legal status not only of platform workers but also of those obliged by a collective agreement. The parallel process between the Competition and Consumer Authority’s task force on digital platforms and the social partners has been criticised for being uncharacteristically unaligned.155 The 2022 Guidelines from the EU Commission on collective agreements for self-employed,156 which aims to ensure, that EU Competition Law does not stand in the way of e.g., concluding collective agreements with platform companies, has by 2023 not yet resulted in official guidelines from the Danish competition and consumer authorities, nor in any new legislation. The discrepancy in the method for assessing status of platform workers between the Competition Council and the social partners in Denmark thus continues to be a concern for the bargaining efforts of social partners. The recent assessments on the status of Wolt couriers from the Tax Council and the Labour Market Insurance157 use a more modern assessment method that aligns better with the assessment methods used by the social partners. Whether the methods of other administrative entities assessing the status of the same platform workers could have any effect on the Competition and Consumer Authority’s approach remains to be seen.

VI QUO VADIS?

A Responses of the Social Partners In relation to new technologies, including platform work, the social partners have aimed to assume their well-known role as primary regulators. Danish platform companies have participated in creating novel solutions specifically tailored to non-standard work relationships in platform work. 155

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C. Jacqueson, J. Kristiansen, M. S. Hvidt, A. Ilsøe, and S. K. Andersen, Platformsarbejde mellem arbejdsret og konkurrenceret [Platform Work between Labour Law and Competition Law] (Copenhagen: University of Copenhagen, 2021), https://bit.ly/47g1TQ5; Munkholm, Jacqueson and Schjøler, supra note 75. Communication from the commission, Guidelines on the application of Union competition law to collective agreements regarding the working conditions of solo self-employed persons, 2022/C 374/02. See supra notes 93 and 94.

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There are no data available as to the union density among platform workers. There are no data available on the rate of platform workers covered by collective agreements in general.158 During the first year of the Hilfr agreement, the responses of the users were noticeable. When booking a cleaner, a user can choose between a FreelanceHilfr and a SuperHilfr at a slightly higher hourly rate. In early 2019 approximately 35 per cent of all assignments were carried out by SuperHilfrs, despite SuperHilfrs making up only about 14 per cent of the total number of Hilfr cleaners (one in seven).159 This indicates a preference to use SuperHilfrs, despite the services being performed at a higher rate.160 The Hilfr agreement showed that it is possible to engage in negotiations with platform owners, with a view to establishing the working conditions for service providers along the existing Danish standards for work, and it is possible to create a collective agreement for platform workers with novel elements adjusted to the special working situation of those platform workers.161 The pilot agreement tested, among other things, a way to clarify the status of persons providing work via digital platforms by way of collective agreement. The agreement aligned the basic working terms of platform workers with the general labour market, with regard to minimum pay standards and dismissal protection. Furthermore, the agreement aligned the duties of the platform company with other employers in Denmark. The pilot project did not provide a model for negotiating with more uncooperative platforms, however. Hilfr initiated the negotiations itself, and negotiations took place in a cooperative setting. In contrast, HappyHelper, which provides similar services, has refused to enter into negotiations. The pilot project also did not test industrial action used against digital platform companies. As mentioned, the framework for lawful industrial action does not require a trade union to have current members at a company as long as work within the area of the trade union is performed by employees, but the industrial action may be less effective if only a few platform workers are on strike, and secondary action may also be less effective as the platform companies are less dependent on external services.162 The Labour Court will in the end assess the lawfulness of any industrial action, including that involving the employment status of workers at a platform company, in a similar way to the earlier assessments concerning freelance journalists. The usual Danish methods of negotiating with hostile employers have been less successful against digital platform companies for several reasons. With the lack of political majority to introduce a Danish rule of presumption, the social partners are instead diverting their attention to negotiations at the EU level to finalise the Platform Work Directive. For the first time, the trade unions are supporting an EU Directive aiming to regulate the labour market in the Member States.163 158 159

160 161 162 163

Ilsøe, The Hilfr Agreement, supra note 74, at 9. S. Rudd and O. Hall, ‘Kun hver syvende rengøringsmedarbejder er pa˚ banebrydende overenskomst [Only every seventh cleaning worker is on a pioneering collective agreement]’, DR (27 November 2019), www.dr.dk/nyheder/ penge/kun-hver-syvende-rengoeringsmedarbejder-er-paa-banebrydende-overenskomst. Ilsøe, The Hilfr Agreement, supra note 74, at fn. 139. Munkholm, supra note 19, at III. Munkholm and Schjøler, supra note 75. M. D. Holmbo, ‘Fagbevægelsen vil platformes brug af soloselvstændige til livs med EU’s hjælp: De bryder spillereglerne pa˚ det danske arbejdsmarked [The trade unions want to end the platforms’ use of solo selfemployed with the help of the EU: They breach the rules of play at the Danish labour market]’, Avisendanmark (2022), https://avisendanmark.dk/erhverv/fagbevaegelsen-vil-platformes-brug-af-soloselvstaendige-til-livs-med-eu -s-hjaelp-de-bryder-spillereglerne-paa-det-danske-arbejdsmarked.

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B Responses of Work-Related Social Protection, Insurances, Health Care, Minimum Wages The social security system consists of a range of benefits awarded in case of unemployment (unemployment insurance or basic cash benefits), sickness (sick leave benefits), leave in relation to pregnancy and childbirth (maternity/parental leave benefits), occupational injuries (workers’ compensation), and retirement (early retirement pensions and old-age retirement pensions). In addition, a number of benefits in kind are offered to everyone regardless of their connection to the labour market, including residence-based universal health care, universal family benefits, heavily subsidised public full-time childcare from age zero, free secondary and tertiary education, as well as up to six years of study allowances for tertiary education students.164 In 2018, the unemployment insurance system, Arbejdsløshedsforsikringen, was amended with a view to adapting it to the changed labour market.165 Income earned from different forms of work activity, including self-employment, can be accumulated towards being eligible for unemployment benefits. The public system for receiving cash benefits was not amended.166 Persons who are not members of an unemployment insurance fund can apply for basic cash benefits, Kontanthjælp, from the local municipality. Eligibility for basic cash benefits is means-based,167 with a requirement to be available for work that must be documented by a number of working hours. The system is still based on a categorisation as either employee or self-employed; it is not possible to accumulate working hours across categories. The Ministry of Employment has stated that for the purpose of being entitled to receive unemployment benefits and basic cash benefits, work performed via digital platforms is to be included as self-employed working hours.168 The system for sick leave benefits and parental leave benefits was not changed.169 Persons applying for sick leave benefits must choose whether to apply as employed or self-employed. For employees, the employer pays the first thirty days of sick leave benefits, then the local municipality takes over the payments. Self-employed persons pay the first two weeks of sick leave benefits themselves, then the local municipality takes over the payments,170 if the person has conducted business to a substantial degree (more than 50 per cent of full working time, that is, a minimum of eighteen and a half hours per week). The right to receive benefits during parental leave171 applies to all parents, and both employees and self-employed persons are as a starting point entitled to receive such benefits.172 Parental leave benefits are paid out by Payment Denmark, Udbetaling Danmark. Employees173 and self-employed persons174 are eligible for parental leave benefits on terms similar to being eligible for sick leave benefits. Employees have a right to take parental leave, which can be enforced vis-a`-vis the employer, whereas self-employed persons 164 165 166 167 168

169 170 171

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Munkholm, supra note 19. Amendment Act No. 1670 of 20 December 2017 to the Act on Unemployment Insurance. Act on Active Social Policy No. 981 of 23 September 2019. Section 11(2) of the Act on Active Social Policy. Ministry of Employment, Statement in Collaborative Economy and the Basic Social Assistance System, Statement No. 9433 of 14 June 2018, briefing to the Parliament’s Employment Committee, www.ft.dk/samling/20171/almdel/ BEU/bilag/378/1911149.pdf. Statutory Act on Sick Leave Benefits No. 1263 of 2 September 2022. Sick Leave Benefits Act, s. 42. Statutory Act No. 1391 of 30 September 2022 on Entitlement to Leave and Benefits in the Event of Childbirth (Parental Leave Act). The Salaried Employees Act provides an additional right to half salaries to mothers for the fourteen weeks following giving birth. Likewise, collective agreements, individually negotiated terms, and companylevel ‘fringe benefits’ may provide additional rights to salaries during parental leave. Parental Leave Act, s. 2(1) and (2). Parental Leave Act, s. 27(1), although additional requirements apply. Parental Leave Act, s. 28(1).

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must plan their own work schedules and their own periods of leave. Benefits compensate for the loss of income during leave, meaning that the person must be in current employment. Employees must literally be employed on the day before the leave and with work planned on the first day of leave.175 Workers in casual work arrangements, such as platform workers, thus face a particular problem as this criterion is difficult to fulfil. Casual workers are viewed as ‘in employment’ only in periods during which the worker is actually currently carrying out assignments for the employer. If the last assignment ends a day earlier than the day before the leave, the criterion of being ‘in employment’ is not met.176 In reality, access to sick leave and maternity leave/parental leave benefits is difficult for platform workers, regardless of their classification. As for self-employed persons, they have to meet the requirement of performing work to a substantial degree, that is, a minimum of eighteen and a half hours per week. Self-employed persons also finance the first two weeks of leave themselves. Concerning occupational injuries, statutory acts mandate employers to take out private occupational accident insurance.177 The Workers’ Compensation Act applies to work performed for an employer;178 any form of work is covered and any size employer is obliged.179 An employer is not obliged to insure self-employed persons. Instead, such persons can take out voluntary insurance for themselves.180 If self-employed persons have not taken out insurance against occupational injuries, they are not entitled to compensation for loss of ability to work or to compensation for permanent injuries. Many platform companies offer a special occupational injury insurance that can be taken out by platform workers with self-employed status (see Section IV.A, especially note 99). In July 2023, Labour Market Insurance assessed that in relation to workers’ compensation Wolt is considered the employer, although the couriers are contracted as independent contractors.181 Finally, the pension system in Denmark is based on a three-pillar system: state-funded public old-age pension, employer/employee-funded mandatory occupational pension plans, and employee-funded voluntary private pension plans. The statutory public old-age pension scheme182 is universal, residence-based,183 and non-contributory. The public old-age pension secures a decent minimum standard of living and consists of a flat-rate benefit irrespective of former work patterns. About 90 per cent of all workers have supplementary pensions, in the form of either occupational pension plans or individual pension plans. Occupational pension plans are provided in collective agreements and are often industry-specific, with an appointed pension provider.184 Occupational pension schemes apply only to employees in a company covered by a collective agreement, but the agreement can extend the rights to persons covered by non-standard terms. Genuinely self-employed persons are not covered. The employer contributes to the pensions in addition to the set salaries: usually 5 per cent to 15 per cent in 175 176

177 178 179

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Section 2.1 in Guideline No. 9510 of 26 June 2018. Section 2.1.2.10 and Ruling 100-15 in Guideline 9510 of 26 June 2018; Appeal Committee Ruling 100-15 on the right to sick leave benefits. Workers’ Compensation Act, ss. 48 and 50. Workers’ Compensation Act, s. 2(1). Supreme Court ruling U.1920.529 H; see M. N. Sørensen, Platformsøkonomien og arbejdsskadesikringsloven [The Platform Economy and the Worker’s Compensation Act], Dissertation No. 27, Rettid (Aarhus University, 2018), https://law.au.dk/fileadmin/Jura/dokumenter/forskning/Rettid/Afh_2018/afh27-2018.pdf. Workers’ Compensation Act, s. 48(2). See supra note 94. Act on Social Pensions No. 527 of 25 April 2022. Act on Social Pensions, ss. 2 and 3. Except for civil servants, Tjenestemænd, who are a special group of public employees (approximately 6.50 per cent of public employees and approximately 1.95 per cent of the entire workforce).

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private employment and 10 per cent to 17 per cent in public employment. Self-employed platform workers must make their own private pension arrangements, and finance the pension contributions out of their own earnings. Voluntary private pension schemes can be established by anybody, self-employed persons and employees alike, according to the terms set by the private pension provider. The Hilfr and the Voocali agreements both provided occupational pension rights for the platform workers covered by the agreements. All other platform workers must arrange for their own private pension schemes in order to obtain similar pension levels as 90 per cent of the work force. C Key Reform Issues Over the Next Five to Ten Years Development of any further statutory regulation specifically addressing platform workers seems unlikely at the moment. The increased focus of the EU Commission on including platform workers and other new forms of work under certain employee rights and duties could present solutions that will work in Denmark in time.185 The social partners have increased their efforts at the negotiation tables with more platform companies. Although the social partners and the legislators have been actively engaging with the new digital economy, a number of issues are still outstanding. First is the issue of categorising work performed on non-standard terms, that is, work that is characteristic of neither employment nor self-employment. As has been illustrated, this categorisation has implications for the individual worker’s earnings, job-security, fundamental rights such as non-discrimination, and social security status. This topic is not just of interest to the individual worker; it is also of overall societal importance as it relates to the distribution of social costs between ‘employers’ and the state, and to the protection of fundamental societal values such as equal treatment as well as economic equality. The issue of classification was not central to the work of the Disruption Council, and the issue was left to the social partners. The 2017 government’s focus was on the potential for growth in the collaborative economy, also including platform work, and on paving the way for a business environment that operates on fair terms between platform companies and more traditional companies. The fair terms addressed taxes and prohibition of price-fixing, but did not criticise the core of the business model, which makes it possible to offer cheaper services by engaging workers as self-employed rather than employees. The variation in terminology can itself be manipulated on both sides (from ‘precarious’ to ‘flexible and modern’). The landmark conclusions of the Hilfr agreement, with its novel flexible elements, the Voocali agreement, connecting platform work to existing collective agreements, and the food delivery sector agreement could pave the way for new solutions and further social partner negotiations in the digital collaborative economy. In 2016, LO (now FH) called in a report for an examination of the definitions of employment relationships and self-employment and the possible need for a revision.186 An extensive report was drawn up in 2021–2 at the initiative of the Employment Ministry; it highlighted existing challenges for new forms of work relationship, including false self-employments, and, to address 185

186

Even at EU level the CJEU case-law is not yet clear in treading a path for assessment of employee status in EU labour law and EU competition law; see Allonby, Case C-256/01 Allonby [2004], para. 71; Confederacio´n Espan˜ola, C-217/ 05 Confederacio´n Espan˜ola de Empresarios de Estaciones de Servicio [2006], vis-a`-vis agents and their principal; FNV, Case C-413/13 FNV KIEM [2014]; Uber Spain, Case C-434/15 Uber Systems Spain SL [2017], para. 39; Uber France SAS, Case C-320/16 Uber France SAS [2018], para. 22; Yodel C-692/19 Yodel Delivery Network [2020]. LO, ‘Platformsøkonomi – lovgivningsmæssige udfordringer og fagbevægelsens løsningsforslag [Platform economy – legislative challenges and the trade union movement’s proposed solution]’, Case 15-2096 (3 May 2016).

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these challenges, provided several avenues forward, including a general definition of ‘employee’ and a presumption mechanism. Likewise, the diligent work on the scope of the new Holiday Act in 2018 could open an avenue of extending labour rights to persons in non-standard employment. The government has not yet succeeded in negotiating majority support for introducing a new rule of presumption for workers in non-standard work relationships. It is recommended to continue the efforts to gain political majority for modernisation and clarification of the definition of employee in Danish labour and employment law, perhaps with inspiration from the 2018 Holiday Act, where employee status is presumed and can be rebutted if status as self-employed is proved. This could apply not only to platform work but also to other forms of non-standard work relationship outside the platform economy. Meanwhile, the procrastination by both social partners and legislators has left the issue of the rights of platform workers in a legal vacuum. This void has in the meantime been filled by other actors on the market. The ruling of the Competition and Consumer Authority was unfortunate, and created even further lack of legal certainty for all parties involved, in particular for the platform companies and the service providers themselves. This unsolved topic in Denmark calls for new and clear legislative initiatives – either in competition law or in industrial relations law – with a view to ensuring that competition law and labour law do not work against each other in creating a fair digital market for both consumers and workers. Yet another question of unclear status connects to the lawfulness of industrial action against platform companies. So far, the negotiations have taken place in a cooperative atmosphere. However, it should be possible to engage in industrial action against less cooperative platform companies, completely in line with the usual method of the Danish model, with a view to forcing them to sign a collective agreement for their platform workers. This would align well also with the existing systems for covering non-standard work by collective agreements. Reflecting further on this, it could admittedly present a dilemma: on the one hand, the new work relationships on digital platforms provide larger degrees of flexibility and autonomy for the parties, which is valued by service providers and platform companies alike; on the other hand, the negotiations of the terms may be forced into happening by way of industrial action against the platform company. Using force as a motivator to enter negotiations may not always cultivate a creative, accommodating, and innovative negotiation climate. This could be solved by the trade unions, the employer associations, and the platform companies themselves, as part of a forward-looking solution. So far, the lack of general approaches to the categorisation issue as well as policymakers refraining from making clear statements in this regard have led to a variety of methods of assessment from the legal actors. A vacuum will always be filled with something. A number of authorities have indicated that platform workers are presumed to have self-employed status. This includes the Competition and Consumer Authority in August 2020 concerning cleaning platforms, the Tax Authority in 2018 concerning Uber drivers, the general statement by the Disruption Council in 2019, and the Ministry of Employment in 2018 concerning unemployment insurance and basic cash benefits. Newer administrative rulings point in the direction of employee status. This includes the Tax Authority ruling and the Labour Market Insurance ruling for Wolt in 2022. These later assessments could be seen as developments, indicating that the authorities are making more informed assessments of platform worker status that take more elements in the special relationship into consideration, including, inter alia, the role played by the algorithm. On the other hand, even after the EU Commission’s new Guidelines on collective bargaining for solo self-employed, the Danish Competition and Consumer Authority has not taken a clear stand on the topic. For the time being – without the assistance of clear

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policy statements, more legislative interventions, or principled rulings on labour and employment law status – it is really difficult for the usual legal actors in the labour market to make reforms in new directions for the status of platform workers. Second, from a social and societal point of view, the categorisation of persons in non-standard work relationships could take a step further with a view to including all forms of work relationship, where the relationship is not clearly one of self-employment. The current assessments of status are done case-by-case, which on the one hand allows for a dynamic adjustment of existing terms to new forms of work, which could lead to more forms of non-standard work being covered by labour and employment regulation. On the other hand, case-by-case assessment is a slow method of reform, and often involves the application of very traditional criteria, depending on the actual judges in session, that may not fit the reality of more modern work relationships between parties. The criteria currently in use were developed during a century with traditional factory and office work relations. Neither the terminology nor the criteria themselves have found a more modern method of application. Instead, overall societal values and social interests may be better protected by extending employment acts and collective agreements to all work relationships that are of a non-standard character, unless the work relationship is proven to be a contract between two businesses. Third, a separate reform relates to the protection of fundamental rights in non-standard employment, in particular the use of machine-based decision-making. This includes attention towards clarifying data ethics in the framework for digital services involving work from employed as well as self-employed persons, with regard to use of AI and automated decision-making, and transparency in algorithmic design as well as in the terms for sanctions unilaterally imposed by the platform. It is thus necessary to clarify the responsibilities of platform companies vis-a`-vis algorithms. The initiatives from the EU in this regard, the AI Act, and the proposed Platform Directive may provide steps forward in this regard. Fourth, a separate point is to ensure better protection of the fundamental right to equal treatment, non-discrimination, and protection from harassment. Legislators could consider clarifying the responsibilities for ensuring equal treatment and non-discrimination for work performed via digital platforms, regardless of whether a person is employed or self-employed. The legal framework is already in place; the challenge is that the discrimination carried out on digital platforms is invisible, in the first instance as customer preferences – which are not visible – and in the second instance as the algorithm’s attempts to copy these customer preferences – which are even less visible. The problem thus lies in how to enforce the rules on equal treatment and non-discrimination on digital platforms – for employed as well as for self-employed. Fifth, further reforms are necessary in the social security system if it is to be made available to persons working on non-standard terms in the new digital economy. For sick leave and maternity/parental leave benefits, the criterion of having to be in ‘current’ employment could be adapted to include casual and on-demand work performed via digital platforms. Likewise, the criterion for self-employed workers to have performed self-employed work to a substantial degree seems a high threshold given the flexibility offered by the digital market. Likewise, the need to selffinance two weeks of sick leave in reality places the economic burden entirely on the platform worker. Regarding occupational pension plans for self-employed and other non-standard workers, the trade unions for self-employed as well as those for workers could collaborate to create occupational pension schemes obliging platform companies to pay pension contributions at par with other employers in society. A solution with mandatory pension plans also for workers in the digital economy would improve overall equality in society among seniors. For workers’

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compensation, the new ruling from the Danish Labour Market Insurance sets a new standard of liability for occupational injuries when performing work via platform companies that is likely to have a spillover effect on other platform companies. For the individual worker, these social security schemes are clearly important in terms of providing support in times of need. For society, the elements of the social security system support our overall egalitarian society where nobody falls through the cracks. For societal financing models, if fewer employers contribute to the system, choosing instead to engage primarily independent contractors or use zero-hours contracts, it creates lack of solidarity in financing the social security system as well as unequal competition terms between companies operating on the market in Denmark. The key to achieving the core reform tasks lies in a partnership between government and public authorities and the social partners, with a view to continuing to engage with and provide innovative solutions to the new forms of work relationship and business models. Labour regulation mechanisms have shown that they can engage with the new digital reality and, as shown in the Hilfr and Just-eat agreements, find creative solutions that match the core elements of the new business models while at the same time providing basic rights to workers.

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11 Poland: Old and New Legal Concepts in the Changing World of Work Leszek Mitrus

I THE ARCHETYPE

Polish labour law is mainly statutory law, while collective labour agreements play only a secondary role. The basic concepts are regulated by the Labour Code (LC).1 Under Article 2 LC, an employee is a person employed on the basis of an employment contract, an appointment, an election, a nomination, or a cooperative employment contract, while, according to Article 3 LC, an employer is an organizational unit, even if it has no legal personality, or an individual, provided it employs employees. Moreover, Article 22 § 1 LC provides that by establishing an employment relationship, an employee undertakes to perform specific work for the benefit and under the guidance of an employer, and an employer undertakes to employ an employee in return for remuneration. This definition is quite short and does not indicate all the features of an employment relationship. Those are – as determined by the jurisprudence and the legal literature – voluntary character, personal work performance on a continuous basis, subordination, and work performance for the benefit of an employer who carries the risk related to the employment. The legal nature of a contract cannot be determined on the basis of a single factor, only on a comprehensive assessment of the factual situation. There are three types of employment contract: a contract for a trial period, a fixed-term contract, and a contract for an indefinite period of time.2 Alongside employment contracts there are also other legal forms of work performance. Article 3 of the Entrepreneurs Law (EL) of 6 March 20183 provides that economic activity is an organized profit-gaining activity carried on in one’s own name and in an uninterrupted manner. Article 4, item 1 of the EL defines an entrepreneur as a natural person, a legal person, or an organizational unit that is not a legal person and is endowed with legal capacity under a separate statute. In principle, under Article 17 of the EL, economic activity should be registered in the National Court Register, or in the Central Register and Information on Economic Activity, operated by the Ministry of Economic Development. Upon registration, a natural person becomes an entrepreneur in legal terms. Another option for natural persons is to provide to a small extent an unregistered activity (see Section IV). In practice, the EL concerns selfemployment, although this notion is not expressly used in its wording.

1

2

3

The LC of 26 June 1974, consolidated text: Journal of Laws 2022, item 1510, with further amendments. For the English version see The Labour Code. Kodeks pracy, translated by A. Jamroz˙y, 6th ed. (Warsaw: C. H. Beck, 2019). See also L. Mitrus, ‘The concept of “employee”: The position in Poland’ in B. Waas and G. H. van Voss (eds.), Restatement of Labour Law in Europe. Volume I. The Concept of Employee, 525–42 (Oxford: Hart, 2017), 525 and following, with further references. Consolidated text: Journal of Laws 2023, item 221, with further amendments.

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A particular feature of the Polish labour market is its widespread use of civil law contracts to render services. During the mass unemployment in the 1990s, which was caused by a severe economic transformation, unemployed persons quite often took up paid activities that did not provide employee protection but at least secured some income. The legal basis of such activities became a mandate contract (Art. 734 of the Civil Code [CC]4) or an unnamed civil law contract to which provisions on mandate apply accordingly (Art. 750 CC). Further civil contracts are a contract for specific work (Art. 627 CC) and an agency contract (Art. 758 CC), although these are less widespread in comparison to mandate contracts.5 In order to determine the legal nature of a particular contract, Polish labour law introduced the ‘primacy of facts’ principle. According to Article 22 § 11 LC, employment under the conditions specified in the abovementioned § 1 is considered employment on the basis of an employment relationship, regardless of the name of the contract concluded between the parties. Article 22 § 12 LC provides that employment contract cannot be replaced with a civil law contract where the conditions of the performance of work specified in § 1 remain intact. However, the liberal approach towards employment under civil law contracts and self-employment by state institutions, including the labour inspectorate and jurisprudence, did not deter the proliferation of this particular form of employment.6 Civil law contractors are not regarded as employees, even if, in practice, civil law contracts quite often are disguised employment contracts. As a consequence, statutory protection of civil law contractors is limited indeed. They enjoy health and safety protection (Art. 304 LC), but have no other rights.7 For example, they do not have the right to overtime remuneration or holiday leave. They do not enjoy protection against dismissal, either. In practice, civil law contractors are in a precarious position, even if they perform the same duties as employees. In recent years, the legislature has introduced some amendments in order to improve their situation. Thus, civil law contractors have been granted anti-discrimination rights with regard to occupational activities.8 Moreover, social security protection was extended, with regard to social insurance coverage and some parental rights. Further major amendments concerning civil law contractors refer to minimum remuneration for work and the right to unionize. The Law of 10 October 2002 on minimum remuneration for work is the basis for the statutory minimum wage.9 The amount of minimum remuneration is updated each year by the Social 4

5

6

7

8

9

The Law of 26 April 1964 Civil Code, consolidated text: Journal of Laws 2022, item 1360. For the English version, see The Civil Code. Kodeks cywilny, translated by E. Kucharska, 4th ed. (Warsaw: C. H. Beck, 2019). See also K. Naumowicz, ‘Report on the state of Polish legislation of modern forms of work’ in S. Bellomo and F. Ferraro (eds.), Modern Forms of Work: A European Comparative Study, 3–18 (Rome: Sapienza University Press, 2020), 11 and following; D. Owczarek and J. Czarzasty, ‘Nowe formy pracy a atypowe formy zatrudnienia w Polsce [New forms of work and atypical forms of employment in Poland]’ in D. Owczarek (ed.), Nowe formy pracy w Polsce [New Forms of Work in Poland], 31–7 (Warsaw: Instytut Spraw Publicznych [Institute of Public Affairs], 2018), 31 and following. Ł. Pisarczyk and U. Torbus, ‘Precarious work in Poland: How to tackle the abuse of atypical forms of employment?’ in J. Kenner, I. Florczak, and M. Otto (eds.), Precarious Work: The Challenge for Labour Law in Europe, 133–54 (Cheltenham: Edward Elgar, 2019), 140. See also A. M. S´wia˛tkowski, ‘The protection of working relationships in Poland’ in F. Pennings and C. Bosse (eds.), The Protection of Working Relationships: A Comparative Study, ch. 8 (Alphen aan den Rijn: Wolters Kluwer Law & Business, 2011), 115 and following. M. Dobrzyn´ska, ‘Praca platformowa. Wyzwania dla bezpieczen´stwa i higieny pracy w Polsce [Platform work: Challenges for occupational health and safety in Poland]’, Praca i Zabezpieczenie Społeczne [Work and Social Security], 6 (2020), 16 and following. The Law of 3 December 2010 on the implementation of some European Union regulations in the field of equal treatment, consolidated text: Journal of Laws 2016, item 1219. Consolidated text: Journal of Laws 2020, item 2207, with further amendments. It might be emphasized that, according to Art. 65, item 4 of the Constitution of Poland, a minimum level of remuneration for work, or the manner of setting its levels, shall be specified by statute.

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Dialogue Council or the government. Originally, the Law applied only to employees, but in 2016 its personal scope application was broadened.10 The legislator’s aim was to take into account mandate contracts (Art. 734 CC) and contracts on performance of services to which the provisions on mandate apply accordingly (Art. 750 CC), if services were rendered for the benefit of an entrepreneur or other organizational entity. The amendment was dedicated to those individuals who themselves do not employ employees or civil law contractors. Consequently, since the amendment, minimum remuneration applies not only to employees but also to some other persons who perform work for the benefit of another party (i.e. civil law contractors and self-employed persons). It might be added that employees’ minimum remuneration is calculated on a monthly basis, while for non-employees the minimum hourly rate applies.11 Another major amendment of the Polish legal system was the modification of the personal scope of the right to unionize. Previously, Article 2 of the Law of 23 May 1991 on trade unions12 indicated an exhaustive list of individuals who could organize trade unions (employees, members of agricultural production cooperatives, individuals who performed work on the basis of an agency contract, individuals seconded to work establishments to serve their substitute military duty) or join them (pensioners, retirees, or unemployed persons). In other words, under statutory law the freedom of association had been limited.13 In 2015 the Constitutional Tribunal ruled that the abovementioned regulation was unconstitutional14 and incompatible with International Labour Organization (ILO) Convention No. 87 concerning the Freedom of Association and Protection of the Right to Organize.15 In the Tribunal’s opinion, the personal scope of application of the right to unionize was too narrow. Subsequently, the Law on trade unions was amended in 2018.16 The exhaustive list of individuals who were entitled to create trade unions was repealed, and the new category of ‘person who performs paid work’ was introduced. It refers to employees in the meaning of Article 2 LC and to other workers who perform work in return for remuneration, on a legal basis other than an employment relationship, who do not employ other persons, and who have occupational interests that can be collectively represented. Thus, the right to unionize of civil law contractors and self-employed persons was recognized by statutory law. The amendment also affected the collective bargaining system. Currently, both employees and other workers who meet the criteria determined by the abovementioned amendment can create and join trade unions, and can also be covered by collective labour agreements.17 However, as mentioned earlier, statutes are of major importance in Polish labour law, meaning that it is unlikely that collective bargaining will become more popular in the short term or will

10

11

12 13

14

15 16

17

Amendment to the Law on minimum remuneration of 22 July 2016, Journal of Laws 2016, item 1265. The amendment took effect on 1 January 2017. For further analysis, see, e.g., A. Tomanek, ‘Status osoby samozatrudnionej w s´wietle znowelizowanych przepiso´w o minimalnym wynagrodzeniu za prace˛ [The status of a self-employed person in the light of the amended minimum wage regulations]’, Praca i Zabezpieczenie Społeczne [Work and Social Security], 1 (2017), 15 and following. Consolidated text: Journal of Laws 2022, item 854. Z. Hajn, ‘The right of association in trade unions – the right of employees, or the right of working people’ in J. Stelina and Ł. Pisarczyk (eds.), Studia Iuridica tom 60 [vol. 60]. Collective Labour Law, 107–18 (Warsaw: Warsaw University Press, 2015), 107 and following, https://wuw.pl/data/include/cms/Studia_Iuridica_60_2015.pdf. Judgment of 2 June 2015, K 1/13, 80/6/A/2015. For a discussion of the ruling, see, e.g., L. Mitrus, ‘European trade unions in age of flexicurity and segmented labor markets: The case of Poland’, Comparative Labor Law & Policy Journal, 38(Fall) (2016), 67 and following. Ratified by Poland, Journal of Laws 1958, No. 29, item 125. The Law of 5 July 2018 on the amendment to the Law on trade unions and several other statutes, Journal of Laws 2018, item 1608. The amendment took effect on 1 January 2019. See also K. W. Baran, ‘Model of collective labour agreements in the Polish legal system’, Praca i Zabezpieczenie Społeczne [Work and Social Security], 2 (2019), 6 and following.

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contribute to the improvement of the labour market situation.18 There has been no legislative action concerning the impact of modern technologies on the collective reality with regard to trade unions, collective actions, the assembly right, and so on. Thus, in recent years the legislator opted for some ad hoc legislative modifications of the status of civil law contractors. However, civil law contractors are de facto misclassified employees. Therefore, in my opinion, it would be better to strengthen their protection by recognizing their employee status (e.g., by introducing the presumption of an employment contract), instead of granting them only some specific rights, thus implicitly denying other rights and accepting the precariousness of their position. In the doctrine it has also been submitted that we have to deal with the ‘Polish third way’, that is, the statutory acceptance of ‘civil law employment’, instead of introducing the clear differentiation between employment and genuine self-employment (i.e. entrepreneurship). This legislator’s approach is a source of theoretical confusion and pathology on the labour market.19 To sum up: the Polish labour market is deeply segmented. On the one hand, employees enjoy full labour law and social security protection. On the other hand, there are civil law contractors whose status is quite often similar to that of employees but who are protected to a much smaller extent and are therefore in a precarious position. It is not uncommon that concluding a civil law contract instead of an employment relationship implies irregular employment and leads to substantial abuses of labour law. Moreover, there is no clear division between genuine and false selfemployed workers. It goes without saying that national regulations and traditional legal concepts are not flexible enough and, thus, not suitable to reflect the complexity of the modern world of work, particularly in light of the emergence of different legal forms of paid work performance.

II THE CHANGING NATURE OF WORK

In Poland there are only two expressly recognized forms of atypical employment: temporary agency work and remote work. In 2020 new regulations on remote work were introduced in order to countervail the Covid-19 pandemic. The amendment to the LC of 1 December 202220 introduced the permanent regulations on remote work and repealed the LC chapter on telework. Temporary work is subject to the Law of 9 July 2003 on employment of temporary workers.21 Article 1 clarifies that the Law sets out the principles of employing temporary agency workers by an employer who is a temporary work agency, as well as the principles for assigning workers and individuals who are not temporary agency workers to carry out work for a user undertaking. A temporary agency can employ employees on the basis of fixed-term employment contracts, and can also hire non-employees on the basis of civil law contracts. Article 2 of the Law provides that a user undertaking is an employer, or an entity that is not an employer within the meaning of the LC, that assigns tasks to a temporary agency worker and supervises their performance. A temporary agency worker is a worker employed by a temporary agency who works exclusively for the purposes of carrying out temporary work, for and under the direction of the user undertaking. Temporary work means performing the following tasks for a specific user 18

19

20

21

For further analysis, see L. Mitrus, ‘Poland’ in B. Waas and C. Hießl (eds.), Collective Bargaining for Self-Employed Workers in Europe: Approaches to Reconcile Competition Law and Labour Rights, Bulletin of Comparative Labour Relations Vol. 109, 197–214 (Alphen aan den Rijn: Kluwer Law International, 2021), 213 and following. For further in-depth analysis, see A. Sobczyk, Podmiotowos´c´ pracy i towarowos´c´ usług. Analiza prawna [Subjectivity of Work and Commodity of Services: Legal Analysis] (Krakov: Jagiellonian University Press, 2018), 33 and following. The Law of 1 December 2022 on the amendment of the Labour Code and some other laws, Journal of Laws 2023, item 240. Consolidated text: Journal of Laws 2023, item 1110.

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undertaking, for a term no longer than is specified in the Law: seasonal, periodic, or casual work; or work that the employees of the user undertaking would not be able to perform on time; or work that falls within the scope of duties of an absent employee from the user undertaking. There are statutory restrictions on temporary work that concern the type of work to be performed and the applicable time limits. Under Article 8 of the Law, it is not allowed to assign a temporary worker certain activities: work that is particularly dangerous under the provisions on health and safety protection; work in a position occupied by an employee of the user undertaking who is participating in a strike; and work in a position that in the three months prior to hiring the temporary agency worker was occupied by an employee who was dismissed in the framework of collective redundancies. Moreover, it is prohibited to entrust a temporary worker to work in a position that requires them to carry a gun. In practice, the last limitation applies only to private security agencies. Article 20 of the Law imposes time limits concerning the recourse to temporary work. As a rule, over a period of thirty-six successive months, a temporary work agency may assign a temporary agency worker to carry out temporary work for a particular user undertaking, for a total period not exceeding eighteen months. It seems that temporary agency work is quite popular in Poland.22 Previously, telework was the second form of atypical employment expressly recognized by Polish law. It was regulated by the LC chapter ‘Employment in the form of telework’ (Art. 675– 6717 LC).23 Article 675 § 1 LC provided that work could be carried out regularly outside the employing establishment with the use of electronic communication means within the meaning of the provisions on rendering information society services (telework). According to Article 675 § 2 LC, a teleworker was any person who carried out duties on the terms specified in § 1 and delivered the results of their work to an employer, in particular using information and communication technologies (ICT). Thus, under Polish law, there were three components that defined telework: it should be regular; it should be performed outside the seat of the employer; and it should have recourse to ICT. The admissibility of telework at a particular establishment was provided in a collective labour agreement concluded by an employer and a trade union(s). If there was no trade union organization at the establishment, the conditions of using telework were determined by the employer in the company work rules, in consultation with representatives of employees selected through the procedure adopted by the employer (Art. 676 LC). Moreover, the performance of telework was agreed upon between the parties to a specific contract of employment, upon concluding this contract or during the employment (Art. 677 LC). In other words, since the consent of a particular employee was required, telework always had a voluntary nature. In practice, telework was not widespread. It seems that the major reason for this was the rigidity and complexity of the statutory provisions on telework.24 New regulations on work performance were introduced by the Law of 2 March 2020 on particular measures for preventing, countervailing, and fighting Covid-19, other infectious

22

23

24

For further analysis, see, e.g., L. Mitrus, ‘Atypical employment relationships: The position in Poland’ in B. Waas and G. H. van Voss (eds.), Restatement of Labour Law in Europe. Volume II. Atypical Employment Relationships, 647–72 (Oxford: Hart, 2019), 662 and following. See also A. Piszczek, ‘Przeciwdziałanie naduz˙yciom w zatrudnieniu tymczasowym [Counteracting abuses in temporary employment]’, Praca i Zabezpieczenie Społeczne [Work and Social Security], 4 (2019), 45 and following. As inserted by the Law of 24 August 2007 on the amendment of the Labour Code and some other laws, Journal of Laws 2007, No. 181, item 1288. See also A. Sobczyk, Telepraca w prawie polskim [Telework in Polish Law] (Warsaw: Wolters Kluwer, 2009), 24 and following.

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diseases, and crisis situations caused by them (the so-called anti-crisis shield).25 Its binding force was limited to the period of the pandemic and the three months immediately following. Article 3 of the Law stated that, in order to counteract Covid-19, an employer could order an employee to perform the work agreed in the employment contract, for a limited time, outside the usual place of work performance. Remote work could be ordered if the employee had the skills and technical possibilities needed to perform such activity, and if the type of work allowed remote work performance. The means and materials were provided by the employer. The employee could use their own equipment, if protection of confidential information and personal data was safeguarded. Upon the employer’s instruction, the employee performing remote work could be obliged to keep records of their activities. The employer could at any moment withdraw the instruction to perform remote work and restore ‘traditional’ work performance at the business’s establishment. In practice, remote work implied work at the employee’s home, and it was commonly known as home office or homeworking. It could be ordered by the employer without any involvement of trade unions and it should be distinguished from ‘regular’ telework. Remote work turned out to be quite popular during the pandemic since companies needed to change their work organization on short notice. However, remote work performed at home has triggered academic discussion and public debate on the protection of employees’ health and safety, including work–life balance and mental health issues. It has also sparked discussion concerning the managerial powers of the employer, with special reference to the division between working time and rest periods, and protection of employees’ privacy.26 The idea to lay down permanent regulations on remote work became the topic of discussion. Both social partners and the government were in favour of such development. New regulations on remote work – that replaced telework and ‘anti-Covid remote work’ – were introduced by the abovementioned amendment to the LC of 1 December 2022. The new Chapter IIc ‘Remote work’ replaced the abovementioned Chapter IIb ‘Employment in the form of telework’. Currently, Article 6718 LC provides that ‘work can be performed fully or partly in the location designated by the employee and each time agreed with the employer, including at the employee’s address, in particular by means of direct distance communication (remote work)’. Thus, the legislator introduced a new legal definition of remote work. The provision at stake does not refer expressly to the type of work to be carried out remotely. Moreover, it does not require that remote work is to be performed exclusively by using modern communication technologies. Therefore, under the amendment to the LC, remote work covers both ICT-based work and ‘traditional’ work performed outside the establishment (e.g. at the employee’s home) for the benefit of the employer, for example some manufacturing or dressmaking activities. Remote work at a particular establishment should be regulated by the collective labour agreement or the company work rules. The employer and the employee should agree the remote work performance, upon the conclusion of the employment contract or during its existence. Ad hoc remote work upon an employee’s request, for a period of no longer than twenty-four days within each calendar year, is also admissible. The general remark is, however, that Polish labour 25 26

Consolidated text: Journal of Laws 2020, item 1842. See also, e.g., K. W. Baran and D. Ksia˛z˙ek, ‘Comment on Art. 3’ in K. W. Baran (ed.), Tarcza antykryzysowa 1.0–3.0. Szczego´lne rozwia˛zania w prawie pracy, prawie urze˛dniczym i prawie ubezpieczen´ społecznych. Komentarz [Anti-crisis Shield 1.0–3.0: Special Solutions in Labour Law, Clerical Law and Social Security Law. Comment], 39–54 (Warsaw: Wolters Kluwer, 2020), 39 and following; J. Zagrobelny, ‘Comment on Art. 3’ in A. Sobczyk (ed.), Regulacje Covid-19 w prawie pracy [Covid-19 Regulations in Labour Law], 1–6 (Warsaw: C. H. Beck, 2020), 2 and following; D. Jaskulska and B. Rutkowska, ‘Remote working in Poland: Legal and social perspectives (opportunities and threats)’, Praca i Zabezpieczenie Społeczne [Work and Social Security], 3 (2022), 28 and following.

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law to a limited extent only reflects the changing nature of work. The idea to enact provisions on remote work reflects the technological progress and the developments in the labour market.

III THE PROTOTYPES

Polish regulations on legal forms of work performance are quite rigid. There are no express provisions on job sharing, employee sharing, or shared workplaces. There are no express regulations on crowd employment, portfolio work, or labour pooling. Interim management is not widespread, but it is possible to conclude a so-called manager contract with highly skilled workers or top managers. For example, they can be hired for an indefinite or a fixed period in order to restructure a company. Telework could have been be regarded as ICT-based work. A voucher system exists only in the framework of combating unemployment; for example, there are vouchers dedicated to covering the cost of training or the apprenticeship of unemployed persons. However, it is not a type of regular employment but an incentive for unemployed persons to take up actions in order to find a new job. Moreover, de lege lata, under Polish law, zero-hours contracts are inadmissible.27 There are no statutory provisions concerning algorithmic management. Although there is no legal framework dedicated to ‘workers on demand via app’, platforms like Uber and Uber Eats, as well as their local equivalents Bolt and Pyszne.pl, do exist. Their business model is to enable immediate online contact between service providers and clients reporting demand for a specific type of service. Thus, like in other countries, in Poland platforms operate as intermediaries between interested parties. They also offer technical support and infrastructure for ‘workers on demand via app’. Crowd work and work on demand have not been addressed by the legislature. Yet, these phenomena have been accepted by entrepreneurs.28 In practice, different patterns of business model exist, including those rooted in the gig economy. New forms of work gradually develop, but old legal concepts are necessary to attempt to analyse the status of gig economy workers. De lege lata, modern forms of work performance have to be analysed against the background of the legislation in force. In 2018, the Commission for the Codification of Labour Law submitted to the Minister of Family, Labour and Social Policy the draft of the new LC and the draft of the Collective Labour Code.29 The Commission, which consisted of fifteen members, appointed by the government, as well as representative trade unions and employer organizations, initiated its activities in September 2016. Its task was to elaborate the abovementioned drafts within eighteen months, with a view to their replacing the LC of 1974. From the perspective of the present chapter, it should be emphasized that the drafters intended to make statutory regulations on employment contracts much more flexible, for example by introducing the new types of employment contract and by addressing the issue of dependent self-employment. The problem of uberization was not the subject of any proposal submitted to the Commission. Thus, although there has been an attempt to elaborate a new LC(s), it has not referred to the electronic platform phenomenon. Moreover, owing to the reluctance of some social partners, the Ministry of Family, Labour and

27

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L. Mitrus, ‘New forms of employment in Poland’ in R. Blanpain, F. Hendrickx, and B. Waas (eds.), New Forms of Employment in Europe, Bulletin of Comparative Labour Relations Vol. 94, ch. 26 (Alphen aan den Rijn: Kluwer Law International, 2016), 305 and following. A. M. S´wia˛tkowski, ‘The phenomenon of digital labour platforms’, Studia z zakresu prawa pracy i polityki społecznej [Studies in Labour Law and Social Policy], 4 (2020), 219. The drafts of the Labour Codes and their substantiation are available at https://bit.ly/3Y6Byzu.

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Social Policy decided not to proceed with the drafts of the LC and the Collective Labour Code. They did not become the subject of legislative proceedings in the Parliament.30 There have been no legislative actions on working time in the context of the evolution of the twenty-first-century labour market. According to Article 128 § 1 LC, working time is the time when the employee remains at the disposal of the employer in a work establishment, or in any other place designated for the performance of work. The specific issues are regulated by section 6 of the LC (Arts. 128–15112 LC), as well as collective labour agreements and workplace regulations. The LC does not regulate the right to disconnect, although currently it is a subject of academic debate.31 We should also recall the European Parliament Resolution of 21 January 2021 with its recommendation to the Commission on the right to disconnect.32 According to Article 2 of the proposed new directive, ‘to disconnect’ means ‘not to engage in work-related activities or communications by means of digital tools, directly or indirectly, outside working time’. In my opinion, from a theoretical point of view, the right to disconnect (or the right to be offline) can be defined as the worker’s right to be left alone by the employer outside working hours. Polish labour law is rooted in the twentieth century and it did not ‘invent’ the prototypes that could be used as a firm point of departure for regulating either the gig economy or the status of platform workers and on-demand workers. Against this background, the proposal for a Directive of the European Parliament and of the Council on improving working conditions in platform work should be mentioned.33 Should the Directive be enacted, Poland – being a Member State of the European Union – would be obliged to transpose it. In other words, in the future the European Union could trigger legislative actions on platform work at the national level.

IV ‘UBERISATION’

As mentioned in Section III, there has been no legislative response to the development of digital platforms in Poland. Neither the status of platforms nor the status of persons who cooperate with them is regulated in the LC. Definitely, platforms do not consider themselves as employers and do not act as employers. They do not take responsibilities connected to labour rights and social security protection. There are no other parties that might be regarded as entities responsible for human resources management, either. Neither Uber drivers nor Uber Eats riders enjoy employee status. Instead, in practice, various non-standard forms of cooperation between economic entities are used. The legal status of those individuals who get income by cooperating with electronic platforms is not clear at all.

30

31

32 33

For further analysis, see, e.g., L. Mitrus, ‘Aktualne problemy rekodyfikacji prawa pracy [Current problems of labour law recodification]’, Forum Prawnicze [Legal Forum], 4 (2021), 37 and following; Ł. Pisarczyk, ‘Model reprezentacji intereso´w pracowniczych w projekcie kodeksu zbiorowego prawa pracy [A model of employee interest representation in the draft code of collective labour law]’, Pan´stwo i Prawo [State and Law], 9 (2019), 18 and following; J. Stelina, ‘Podstawowe załoz˙enia projektu kodeksu zbiorowego prawa pracy [Basic assumptions of the draft code of collective labour law]’, Pan´stwo i Prawo [State and Law], 9 (2019), 3 and following. See, e.g., M. Kurzynoga, ‘Propozycje Parlamentu Europejskiego unormowania prawa pracowniko´w “do odła˛czenia” [Proposals of the European Parliament to regulate the right of employees “to disconnect”]’, Praca i Zabezpieczenie Społeczne [Work and Social Security], 5 (2022), 3 and following; J. Tlatlik, ‘Kwestia regulacji “prawa do odła˛czenia” w polskim porza˛dku prawnym z perspektywy aktualnych przepiso´w KP [The issue of the regulation of the “right to disconnect” in the Polish legal order from the perspective of the current provisions of the Code of Civil Procedure]’, Monitor Prawa Pracy [Labour Law Monitor], 1 (2022), 17 and following. 2019/2181 (INL). European Commission, Proposal for a Directive of the European Parliament and of the Council on improving working conditions in platform work, Brussels, 9 December 2021, COM(2021) 762 final.

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Some interesting factual circumstances were revealed during an inspection of the Uber and Uber Eats platforms carried out by the State Labour Inspectorate in 2019.34 It turned out that very few wage earners had concluded a civil law contract with Uber or Uber Eats. Some of them acted as self-employed persons, who theoretically could be regarded as independent one-man companies. In any case, their working time was not determined by Uber. Uber operatives were not obliged to be available on particular days or to work on a continuous basis. They were entitled not to log in via apps and not to perform work on each day. In practice, they could decline to take up work if they did not intend to do any. Moreover, individuals who worked as Uber couriers were obliged to use their own equipment, for example bikes or thermal bags used to deliver food to clients. Several individuals claimed to perform their activities on the basis of Article 5 of the EL. According to this provision, the activity pursued by a natural person whose revenue due on such activity does not exceed in any month 50 per cent of the amount of statutory minimum remuneration, and who did not pursue any economic activity in the period of the last sixty months, shall not be considered economic activity. Thus, an individual who pursues economic activity on a small scale is not regarded in legal terms as an entrepreneur. Article 5 of the EL constitutes a legal basis of ‘micro-entrepreneurship’ for those individuals who perform selfemployed activities to a small extent and with a relatively low income. Such persons are not obliged to register their activities; therefore, their work cannot be regarded as irregular. On the other hand, they do not enjoy any social security protection. It is highly disputable whether the ratio legis of ‘micro-entrepreneurship’ is compatible with work performed via an electronic platform. Moreover, for the State Labour Inspectorate it would be difficult indeed to check whether Uber operatives get income that continuously does not exceed half of the statutory minimum remuneration. Work via electronic platforms is performed mainly by young persons, mostly by students. In Poland, many Uber or Uber Eats operatives are foreigners, mainly from Eastern European and Asian countries (India and Vietnam included). The inspection carried out by the State Labour Inspectorate revealed some violations of rules concerning employment of non-EU nationals, especially permitting them to perform work without the required work permit. The only legislative action concerning electronic platform activities was aimed at regulating the taxi service market and fighting the grey zone in passenger transport. Here we mean the Law of 16 May 2019 on the amendment of the Law on road transport and some other laws.35 Under this so-called lex Uber, both drivers and entrepreneurs who act as an intermediary in the transport service should obtain an appropriate licence. The exam requirements for drivers have been amended; for example, the exam no longer verifies the driver’s knowledge of the topography of the local town. Moreover, under the amendment it is permitted to use a mobile application for charging clients, instead of ‘regular’ taxi perimeters and cash registers. The new regulations apply to taxi drivers and drivers who occasionally transport people with a vehicle designed to transport not more than nine people, including the driver. The idea of ‘lex Uber’ is to secure fair competition among entrepreneurs who perform activities in the field of passenger transport, and also to strengthen passengers’ safety. The amendment to the Law on road transport does not concern the legal status of Uber drivers or 34

35

The inspection was encouraged by the Ombudsman, as a reaction to media information on the poor working conditions of Uber operatives. See the Response of the Chief Labour Inspector of 21 June 2019 (UNG:GIP-19–36640) to the Ombudsman’s intervention of 27 February 2019 (III.7041.6.2019.LN) concerning courier work performance by foreigners in the framework of the Uber Eats service scheme. Journal of Laws 2019, item 1180.

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their rights connected to work performance. In other words, the legislature did not contribute anything to improve the situation of workers in the gig economy. The lex Uber took effect on 1 January 2020, and the entrepreneurs who act as intermediaries in the transport of persons would ordinarily have had to obtain an appropriate licence during the transitional period, that is, before 1 October 2020. However, owing to the Covid-19 pandemic, this deadline was postponed. Although the phenomenon of platform work is continuously evolving, in Poland no gigeconomy-related litigations have been reported. There were some inspections of Uber activities by the State Labour Inspectorate, but these actions did not lead to improvement of the position of platform workers. It turned out that it was not even easy to identify subjects responsible for law observance, or to evaluate the nature of the legal relationships between Uber and its operatives. Under Polish law, the legal status of individuals who work in the gig economy is not clear. De lege lata, Uber operatives cannot be regarded as employees in the meaning of the abovementioned Article 22 § 1 LC.36 It seems that Uber drivers and Uber Eats bikers do not ‘work for Uber’ but follow the ‘cooperation with Uber’ business model. Therefore, individuals working via application fall into the grey zone, or even work in the framework of irregular employment. The latter option may occur especially in relation to the illegal employment of foreigners who do not possess appropriate work permits. The statutory protection is inadequate. It seems that Uber and other electronic platforms are de facto immune from labour law standards. It is to be concluded that working via electronic platform does not constitute a gateway to labour and social security rights. On a general level, the development of the gig economy is deepening the precarious position of numerous labour market participants. Regretfully, we have to deal with this continuous erosion of labour standards and labour law protection.

V QUO VADIS?

So far, there has been no substantial modification of Polish labour law in order to take into account technological development and its impact on the world of work. There has been no adequate legislative response to the ‘uberization’ phenomenon and the emergence of electronic platforms. Regarding the gig economy, there have been no amendments concerning workrelated protection, social security, or health care systems. The question arises: what direction can labour law evolve in so that it can take into account the growing complexity of the labour market? It seems that international, European, and constitutional standards should be a starting point for further discussion. Article 20 of the Constitution of the Republic of Poland of 2 April 199737 expressly provides that a social market economy, based on freedom of economic activity, private ownership, and solidarity, dialogue, and cooperation between social partners, shall be the basis of the economic system of the Republic of Poland. According to Article 24 of the Supreme Law, work shall be protected by the Republic of Poland. The state shall exercise supervision over the conditions of work. The Constitution provides that a minimum level of remuneration for work, or the manner of setting its levels, shall be specified by statute (Art. 65, item 4). Moreover, under Article 66, everyone shall have the right to safe and hygienic conditions of work. The methods of 36

37

However, the evaluation of Uber operatives’ status may be different under Ch. II (Arts. 3–5) of the abovementioned draft of the EU Directive on platform work. Art. 3 refers to correct determination of employment status. Art. 4 introduces the legal presumption of an employment relationship between a digital labour platform and a person performing platform work, and provides the assessment criteria. Should the Directive be enacted, Poland will be obliged to establish a framework of measures on the rebuttable presumption of employment relationship in the framework of digital platform activities. Journal of Laws 1997, No. 78, item 483, with further amendments.

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implementing this right and the obligations of employers shall be specified by statute. An employee shall have the right to statutorily specified days free from work as well as annual paid holidays; the maximum permissible hours of work shall be specified by statute.38 Poland’s Supreme Law introduces a firm basis for the protection of work performance. Constitutional protection of work cannot be limited to the employment relationship only, however.39 Therefore, not only employees within the meaning of the LC should enjoy statutory protection, though the extent of the rights of employees and other categories of person who perform work may differ. As already mentioned, individuals who work for Uber or other electronic platforms do not enjoy employee status. Thus, on a statutory level, not all wage earners are sufficiently protected. There is no doubt that fair and decent working conditions should be granted to everyone, irrespective of their formal status. The widespread phenomenon of precarious work requires a legislative response. The first step should be modernizing the old legal concepts and adapting them to the current situation in the world of work. More flexible regulations should be introduced in order to countervail the deep segmentation of the labour market. Provisions concerning employment contracts should become less rigid. What is of major importance, namely the legal status of civil law contractors and bogus self-employed workers, should be clarified. One of the options for further development would be to introduce a category of ‘worker’ as an intermediate group between employees and genuine self-employed persons (entrepreneurs). Such an idea has not been declared by the legislature. It seems, however, that the development in recent years has contributed in practice to a spontaneous emergence of such a ‘worker’ category. I mean the abovementioned amendments concerning the status of civil law contractors, especially with regard to minimum remuneration for work, as well as the rights to unionize and to engage in collective bargaining. De lege lata, however, there is no coherent concept of ‘workers’ and their protection. In my opinion, introducing such a legal category would make it easier to determine the status of platform workers and to attempt to regulate their work-related protection. I am not sure, however, whether there is sufficient government political will and social partners’ consensus to introduce such a major modification. The government’s refusal to initiate legislative proceedings on the 2018 LC(s) drafts clearly shows that it would be extremely difficult to reshape labour market regulations and to recognize the status of gig economy workers. Another matter of concern is the fact that the digitalization of work is a challenge for trade unions and employers organizations, as well as the entire industrial relations system.40 In practice, platform workers are not unionized. Theoretically, the amendment to the Law on trade unions (see Section I) gives platform civil law contractors and self-employed persons the right to unionize. However, in reality they do not create or join trade unions. Therefore, they are not protected by any collective bargaining scheme.41 As mentioned at the very beginning of the chapter, in Polish labour law, statutory regulations are of major importance and collective labour 38 39

40

41

The English version of the Constitution of Poland is available at www.sejm.gov.pl/prawo/konst/angielski/kon1.htm. For further in-depth analysis, see, e.g., A. Sobczyk, Prawo pracy w s´wietle Konstytucji RP. Tom I. Teoria publicznego i prywatnego prawa pracy [Labour Law in the Light of the Constitution of the Republic of Poland. Volume I. Theory of Public and Private Labour Law] (Warsaw: C. H. Beck, 2013), 46 and following. For further analysis, see, e.g., J. Unterschu¨tz, ‘Digital work – real bargaining: How can the sustainability of social dialogue can be ensured in the digital era?’ in J. Kenner, I. Florczak, and M. Otto (eds.), Precarious Work: The Challenge for Labour Law in Europe, 222–42 (Cheltenham: Edward Elgar, 2019), 226 and following. It should be emphasized that in Poland the union density is low indeed. It is estimated that only 10 per cent to 12 per cent of workers are unionized.

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agreements play a secondary role. It does not seem that this pattern might change in the near future. Therefore, in my opinion, any improvement of the situation of gig economy workers must be the result of legislative actions. It might be emphasized that in Polish legal doctrine there is an ongoing discussion on the legal nature of platform work.42 Social partners also contribute to this debate. It has been pointed out that the most important role in preventing and counteracting the dominance of labour platforms on the global labour market is being played by scientific institutions working for transnational trade union organizations. However, they do not have the decisive authority to shape the legal framework for work performance in this post-industrial era.43 Also, at the national level it is the legislature, in cooperation with social partners, that should initiate and complete the legislative process on modernizing labour law with a view to regulating electronic platform activities and protecting gig economy workers. It is hoped that the planned EU Directive on improving working conditions in platform work will contribute to both of these aims. To conclude: in Poland, precarious work is a major challenge, and the gig economy is deepening the precarious position of many wage earners. In the literature it has been correctly indicated that the precariat phenomenon in Poland may be considered the result not only of segmentation of the labour market but also of a 1990s long-term employment policy, before Poland’s accession to the European Union, which boils down to a philosophy of ‘work at any price’ without paying attention to the legal bases of employment and, more importantly, without taking into account the long-term effects – in particular in terms of lack of security against risks and the principle ‘work is not a commodity’.44 In my opinion, previous mistakes should not be made again. In the future there should be no philosophy of ‘digital work at any price’. The phenomenon of electronic platforms that is currently changing the world of work requires concerted and comprehensive legislative actions. Regretfully, it seems unlikely that such efforts will be undertaken in the near future.

42

43 44

See, e.g., B. Bednarowicz, ‘“Uberyzacja zatrudnienia” – praca w gospodarce wspo´łdziałania w s´wietle prawa UE [“Uberization of employment” – work in the collaborative economy in the light of EU law]’, Monitor Prawa Pracy [Labour Law Monitor], 2 (2018), 13 and following; G. Gospodarek, ‘Status “niezalez˙nego usługodawcy” a tro´jpodmiotowy model s´wiadczenia usług w gig economy – cz. 1 [The status of an “independent service provider” and the three-party model of service provision in the gig economy – part 1]’, Praca i Zabezpieczenie Społeczne [Work and Social Security], 2 (2019), 9 and following; G. Gospodarek, ‘Status “niezalez˙nego usługodawcy” a tro´jpodmiotowy model s´wiadczenia usług w gig economy – cz. 2 [The status of an “independent service provider” and the three-party model of service provision in the gig economy – part 2]’, Praca i Zabezpieczenie Społeczne, 4 (2019), 21 and following; B. Surdykowska, ‘Wpływ zmiany technologicznej na przyszłos´c´ pracy. Czy działanie platform internetowych zmieni rozumienie poje˛cia zatrudnienia? [Impact of technological change on the future of work: Will the operation of online platforms change the understanding of the concept of employment?]’, Praca i Zabezpieczenie Społeczne, 6 (2016), 8 and following; A. M. S´wia˛tkowski, ‘Digitalizacja prawa pracy [Digitization of labour law]’, Praca i Zabezpieczenie Społeczne, 3 (2019), 11 and following; A. M. S´wia˛tkowski, Elektroniczne technologie zatrudnienia ery postindustrialnej [Electronic Employment Technologies of the Post-Industrial Era] (Krakov: Ignatianum, 2019). S´wia˛tkowski, supra note 28, at 221. B. Godlewska-Bujok and A. Patulski, ‘Precariat: Next stage of development or economic predominance in a new scene?’ in J. Kenner, I. Florczak, and M. Otto (eds.), Precarious Work: The Challenge for Labour Law in Europe, 22–37 (Cheltenham: Edward Elgar, 2019), 32.

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12 Technological Disruption and the Evolution of Labour Law in Hungary Jo´zsef Hajdu´

I INTRODUCTION

Hungarian legislation follows both European and international trends in the field of labour law while showing characteristics inherent in national regulation, which was influenced palpably by German jurisprudence. As for the routes of modern labour law, Hungary underwent a transition from state socialism to democracy and a market economy in the early 1990s. This societal change affected the regulation of the working environment. The state-owned company sector – which was dominant in the socialist era – has practically ceased to exist, with the exception of large public utility companies, and a privately owned economy has sprung up. Legacies during the transition period account for important similarities in the labour market institutions, including weak law enforcement, declining trade union density and collective bargaining coverage, eroded national and sectoral social dialogue, low levels of legally stipulated employment protection, and trends of labour market liberalisation upon joining the EU (in 2004).1 After 2008, Hungary faced a rise in precarious work in the traditional economy via an increased use of temporary agency work, fixed-term contracts, and service contracts (under the Civil Code [hereinafter CC]).2 In addition, low incomes pushed many workers to seek additional work via household work, family support work, or platform work. Such work may be on the edge of informal employment, as ‘invisible workers’ are sometimes employed without a legal status and therefore do not have social security entitlements or labour protection and access to interest representation.3 Currently, the Hungarian labour markets and labour law are undergoing major transformations as a result of economic, societal, and technological changes. Consequently, the digital revolution is promoting new forms of employment mediated by digital equipment (e.g. e-work) and online platforms. The scale of these changes is hard to assess because the traditional labour market statistics and indicators are unsuited to measuring digitalised work, especially platformbased online work.4 1 2

3

4

D. Bohle and B. Greskovits, Capitalist Diversity on Europe’s Periphery (Ithaca, NY: Cornell University Press, 2012). T. T. Meszmann, The Rise of the Dual Labour Market: Fighting Precarious Employment in the New Member States through Industrial Relations (PRECARIR). Country Report: Hungary, Research Reports 12 (Bratislava: Central European Labour Studies Institute (CELSI), 2016). T. T. Meszmann, Industrial Relations and Social Dialogue in the Age of Collaborative Economy (IRSDACE), National Report: Hungary, Research Reports 27 (Bratislava: CELSI, 2018), 1–41. Organisation for Economic Co-operation and Development (OECD), Policy Brief on the Future of Work: Online Work in OECD Countries (Paris: OECD, 2018), www.oecd.org/future-of-work/Online_Gig_Work.pdf.

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II THE ARCHETYPE: THE TRADITIONAL EMPLOYMENT RELATIONSHIP

Labour law is that branch of the uniform Hungarian legal system that regulates the social relations connected with performing human work, that is, the relations established between people in the work situation. Within labour law the following can be identified: (a) individual labour relations, (b) collective labour relations, and (c) the legal relations that organise and protect labour relations (labour administration). Labour law is not part of civil law. However, the key feature of the new Hungarian Labour Code5 (hereinafter LC) is that it intends to align the regulation of the working environment with that of contractual law enshrined in the CC.6 Hungarian work regulation – in a wider sense – has traditionally been divided into two clusters: (1) employment relationships (under the scope of the LC) and (2) civil law relationships (covered mainly by the CC).7 Theoretically, parties in Hungary may freely choose between employment contracts or civil law contracts (e.g. mandates, supply contracts, etc.) and other types of work contract (e.g. contracts of independent commercial agents). If the nature of the work allows the parties to perform it equally in an employment relationship and a civil law (selfemployed) relationship, then the declared will of the parties is going to be the decisive factor in relation to the assessment of the legal nature of the parties’ relationship. In this case, they have the freedom to choose the type of contractual relationship. However, there is one serious limitation of this freedom: it cannot be a bogus contract. The share of standard employment is high, reaching almost 70 per cent in Hungary.8 The LC is the main source of employment and labour relations in the private (competitive) sector.9 However, there are some other very important labour-related provisions, among them the Strike Act, the Equal Treatment Act, the Occupational Health and Safety (OHS) Act, the Labour Inspection Act, the Data Protection Act, and so on, as well as collective bargaining agreements (kollektı´v szerzo˝de´s), the works’ council agreement (u¨zemi mega´llapoda´s), and individual employment contracts. The CC – which is subsidiary legislation in certain contexts– is also applicable to some employment-related issues (e.g. study contracts, competition clauses, manager’s liability, etc.). Furthermore, the decisions of the Curia (Supreme Court) also refine daily practice – now called ‘the limited precedent system’,10 which is a brand new approach in Hungary.11 5 6 7

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Entered into force on 1 July 2012. J. Hajdu´ and A. Kun (eds.), Munkajog [Labour Law] (Budapest: Patrocinium, 2014), 33–6. J. Hajdu´, ‘Social security protection of the self-employed persons in Hungary’ in K. To´th (ed.), Nagy Ka´rolyemle´kko¨nyv [In memoriam Nagy Ka´roly], 175–97 (Szeged: Acta Universitatis Szegediensis, 2002). Policy Department A: Economic and Scientific Policy, Precarious Employment in Europe – Part 1: Patterns, Trends and Policy Strategies (Brussels: European Parliament, 2016), www.europarl.europa.eu/RegData/etudes/STUD/2016/ 587285/IPOL_STU(2016)587285_EN.pdf. Note: For the public sector, other acts are applicable. T. Wessing, ‘The precedent system makes a comeback in Hungary’, Lexology (24 August 2020), www.lexology.com /library/detail.aspx?g=984e38b6-5161-4e5c-a504-6021bdd0334b. The core of the newly introduced (Act CXXVII of 2019, which entered into force on 1 April 2020) limited precedent system is an apparently modest provision: It requires Hungarian courts to expressly consider in their judgments not only statutes but also the interpretation thereof adopted in published decisions by the country’s highest court, the Curia. These decisions will be precedents in the sense that lower courts will be allowed to deviate from them only if they expressly justify their reasons for doing so. According to the official commentary to the legislation, reasons justifying deviation from precedents may include instances when ‘a new circumstance arises in the course of the assessment of the particular case which raises doubts about the applicability of the previous rule’ or ‘new economic and political conditions come to light which make it impossible to apply the existing rule unchanged’. Under the new legislation, precedents can also serve as independent grounds for appellate review. Previously, the only permitted ground for appeal to the Curia against a binding second instance judgment was the allegation of a ‘violation of

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In the context of individual and collective labour law disputes in Hungary, courts (mainly Administrative and Labour Courts)12 protect employees’ rights by interpreting the provisions of the LC, collective bargaining agreements, and employment contracts, often in favour of the employees. Overall, litigation trends reflect a decrease in the number of lawsuits initiated by blue-collar employees, while more and more white-collar employees, particularly executives and key employees, are initiating labour disputes against their employers before courts in Hungary.13 In 2010, the elected right-wing government launched the re-legislation of labour law. There was a conceptual shift in the idea of the new (2012) LC. The core objectives were: (1) to achieve increase in employment rates via the promotion of employers’ competitiveness by flexibilisation of employment protection, and to convert Hungary into one of the most competitive economies in Europe; (2) to support enterprise adaptability and innovation; (3) to introduce clearer, simplified regulations; (4) to improve labour market flexibility; and (5) to align labour law with civil law. In addition, the government aimed quietly to cut the traditional rights of unions to a minimal level,14 which would allow little more than their mere existence in workplaces.15 In the Hungarian LC, twofold flexibility can be detected: (a) LC-based consensual flexibility (implemented by contracting individual parties and/or social partners) and (b) typological flexibility (incorporation of several atypical forms of employment into the LC under the EU flexicurity initiative). As LC-based consensual flexibility, the key feature of the new LC is that it intends to align the regulation of the working environment with that of contractual law enshrined in the CC. Therefore, Article 277 of the LC, as a principle, allows collective agreements16 – or a works agreement in cases where there are no unions – and individual labour contracts to derogate from the LC in both directions (in melius, in peius [for better, for worse]) and for both parties, if there is no altering provision of the LC. To achieve this goal the LC offers consensual flexibility to parties and social partners, that is, the new LC allows agreements to deviate to the benefit of the employer and not only to that of the employee (e.g. the LC 2012 stipulates that the basic holiday allowance is twenty days and that employees are to receive additional holidays based on their age, but, at the same time, it allows for a collective agreement (works agreement) to reduce or even cut all additional holidays based on age, meaning, in practice, that it stipulates twenty days basic holiday only as a minimum standard, and all additional holidays may be subject to agreement). This simple example shows that this shift towards flexibility may result in a considerable deterioration of previous minimum standards set by the LC.

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statute’. Now, parties may also cite deviation from a published decision of the Curia in their review application to the same Court. See also ‘Change in administrative and labour procedures’ judicial system’, Courts of Hungary (29 April 2020), https://birosag.hu/en/news/category/about-courts/change-administrative-and-labour-proceduresjudicial-system-information. Administrative and Labour Courts were abolished as of 31 March 2020. In labour court cases, on first instance the competent Regional Courts, on second instance the Regional Courts of Appeal, on review procedure the Curia proceeds. Labour Law and Employment in Hungary – 2020 Guide, https://bit.ly/477WDxD. The legislation weakened the position of unions, elevating the rights of works councils. The most important change is that in case of a lack of unions at the workplace, a works agreement can be concluded with the works council. Works agreements can regulate all issues that a collective agreement could – even to the benefit of employers – with the exception of remuneration. The shift of the rights to be informed and consulted from unions to works councils is a clear ‘signal’ that unions will suffer a substantial loss of entitlements and prestige. A. To´th, The New Hungarian Labour Code – Background, Conflicts, Compromises, Working Paper (Budapest: Friedrich Ebert Stiftung, 2012), 2, www.fesbp.hu/common/pdf/Nachrichten_aus_Ungarn_june_2012.pdf. Collective bargaining agreements are usually established at company level; however, some industrial collective bargaining agreements are also applicable.

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As for typological flexibility, the application of manpower, that is, the performance of work, may take place for different purposes and in different ways. As a result of this, the performance of work may appear in the framework of several types of formerly unknown legal relations either in labour law or in civil law. As mentioned earlier, the uniform standpoint of Hungarian jurisprudence is that work performed under civil law contract does not belong in the domain of labour law.17 At the same time, it should be noted that the delineation between legal relations belonging to civil law and those belonging to labour law is not always unambiguous and simple. The boundaries of both legal branches are blurred. Historically, the precarious form of bogus self-employment emerged during the transformation years (early 1990s), as a cost-saving, profit-maximising, and/or survival strategy of larger firms to outsource the ‘replaceable’ – at the beginning mainly blue-collar – workers from company payrolls. The term ‘forced entrepreneurs’ (ke´nyszerva´llalkozo´) was coined to indicate that former employers offered incomes to workers only as service providers and not within employment relationships. Informal subcontracting occurs via the channels of small companies or individual entrepreneurs – typically, for service-related jobs, for an invoice.18 The numbers of individual entrepreneurs and associated forms of the self-employed have modestly decreased since 2009. However, there are no exact and reliable statistical data that would outline the share of the bogus self-employed.19

III THE CHANGING NATURE OF WORK

According to the Hungarian labour jurisprudence, atypical (forms of) employment is a special (atypical) form of work, under the LC, that differs – at least in one element – from the standard or traditional employment relationship (e.g. in terms of the location, time, and schedule of work). The LC (2012) is in line with the general trend of many recent labour law reforms across Europe20 in that it aims to allow more flexible regulation of work to help firms to regain competitiveness, while at the same time opening up the possibilities for cost cutting. However, in Hungary, the most common employment form in all business sectors is still the so-called typical employment, which is for an indefinite period and full-time (eight hours a day).21 Historically, flexibilisation in Hungary meant, first, softening the application of the rules of ‘traditional’ employment relationships through flexibilising the contracting obligations of employers, allowing them more and more divergence from the stipulated employment contract, especially in the field of the workplace and the employee working sphere, and flexibilising working time regulations. Second, flexibilisation meant greater applications of atypical forms of employment (especially fixed-term employment and the ‘automatic’ use of a trial period).

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The title of the contract is often misleading, so the labour inspectors or judges at court examine rigorously the contents of the contract and the intentions of the parties. ‘Mie´rt nem sikeresek a ke´nyszerva´llalkozo´k? [Why are forced entrepreneurs not successful?]’, PIAC & PROFIT (15 May 2015), https://piacesprofit.hu/cikkek/kkv_cegblog/miert-nem-sikeresek-a-kenyszervallalkozok.html. P. Muller, J. Julius, D. Herr et al., Annual Report on European SMEs 2016/2017: Focus on Self-Employment (Brussels: European Commission, 2017), https://doi.org/10.2873/742338, at 19. See Commission of the European Communities, Green Paper: Modernising Labour Law to Meet the Challenges of the 21st Century, 22.11.2006, COM(2006) 708 final (Brussels: European Commission, 2006), https://eur-lex.europa .eu/legal-content/EN/TXT/PDF/?uri=CELEX:52006DC0708&from=DE. Hajdu´ and Kun, Munkajog, supra note 6, at 271–97.

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Finally, in 2000 a new form of atypical employment was introduced in the previous LC (1992), that of temporary agency work, resulting in a less protected position for workers.22 During the codification of the new Hungarian LC, the legislators recognised the necessity of the ‘atypical’ forms of employment and incorporated many of them into three independent chapters (XV–XVII) in the new LC (they had been in separate legal norms previously) and also created (more precisely took over) new atypical employment forms. According to Hungarian law, two categories of the atypical work can be distinguished: (1) atypical work within the scope of the LC and (2) atypical types of work contract outside the LC.23 (1) The atypical types of employment contract inside the LC are established for: (a) definite periods of time (fixed-term contracts), (b) part-time contracts, (c) on-call contracts (call for work), (d) job-sharing, (e) employee sharing, (f) outworking, (g) telework, (h) simplified employment and occasional work, and (i) agency work. (2) The atypical types of work contract outside the LC include: (a) temporary work via school and pensioner cooperatives, (b) self-employment, (c) outsourcing, (d) subsidised work (public work), etc. Since the atypical type of work is abundant in Hungary, only those relationships will be discussed here that show some uniqueness or are under reconsideration, namely, (i) telework and (ii) simplified employment and occasional work. A Atypical IT-Based Employment Contracts Inside the Labour Code (i) Telework before covid-19. Before and under Covid-19 the definition of telework (distance work/home office, etc.) in Hungary implied that the following three conditions were met simultaneously: (1) work is done at an alternative workplace such as the worker’s own home, a telehome, teleworking centre, teleoffice, or means of transportation; (2) the employee works far from the workplace independently and on a regular basis that is one or two days or every day a week; (3) communication with the employer is realised electronically. That is, the employee receives assignments electronically and then returns the accomplished work electronically, as well.24 Telework in Hungary can be characterised by aiming at employment policy goals and supporting these goals (sometimes stating exaggerated expectations) with the legislative policy.25 Hungary was among the few countries to have implemented the 2002 European framework agreement on telework through legislation.26 However, the telework employment relationship was first regulated in 2004.27 22 23

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G. Kiss, Munkajog (Budapest: Osiris Kiado´, 2005), 14–15. This categorisation is based on whether the provisions of the particular atypical work are in or out of the LC. However, in many cases the out-of-LC work relationships rely on the LC as an auxiliary legislation (e.g. school and pensioners’ cooperatives, public work). Arts. 196–7 of the LC on telework. (Note: It was amended in 2021 and has been in force since 1 June 2022.) Act 4 of 1991 on promotion of employment and care for the unemployed. Section 19/C first provided the possibility to promote telework as a means of employment policy: such forms of employment could be subsidised where work was done at locations away from the premises of the employer, by means of IT equipment. All aspects of telework were regulated, such as costs, compensation and efficiency, working time, health and safety at work, and data confidentiality; however, the spirit of a voluntary agreement was missing. Neither the voluntary character nor the reversibility of telework – both of which feature in the EU framework agreement – was successfully incorporated in the law. See also A´. Ha´rs and L. Neumann, ‘Telework in Hungary’, Eurofound (3 February 2008), www.eurofound.europa.eu/da/publications/article/2008/telework-in-hungary. See Act 22 of 1992, Section 192/C-193/A. (Since 1 July 2012, ss. 196–7 of Act 1 of 2012 cover the employment relationship of the employee working as a teleworker.) See also Z. Banko´, ‘Telework in Hungary – Legislative, jurisdictionary and

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As a short historical background, an institutional, governmental telework programme was first developed in Hungary in 1998, when the government created the Telework Coordination Public Association, the funding owners being the Ministry of Labour and Futuris Hungarian Modernisation Inc.28 In February 2003 the issue of telework got a new impetus when the Ministry of Labour funded the Telework Council.29 The LC states the special contents of a work contract aimed at telework: the contract should contain that the parties agree that the employee is employed in the form of telework.30 The employer – in addition to the items listed in section 46 – informs the employee (a) about the rules of supervision by the employer, (b) about the rules restricting the use of information technology (IT) or electronic devices, and (c) about the organisational unit the employee belongs to, in relation to his or her work.31 The rule about equal treatment of teleworkers is that the employer must provide all the information to employees working in the framework of telework that they provide to other employees.32 The employer insures that the employee is allowed to enter the employer’s premises and maintain contact with other employees.33 Another such dispositive provision is that the work schedule of the employee is flexible if the parties do not agree otherwise.34 after covid-19. The Covid-19 pandemic situation has tested many aspects of the entire operation of businesses in Hungary. For most companies, the ability to manage remote work35 has become one of those. Within a very limited time and with limited resources, they have been forced to switch to fully paperless operations, adopting digital ways of document handling and utilising new channels for remote communication – all while also safeguarding compliance with increased security standards.36 Experience during the coronavirus pandemic has shown that telecommuting can be advantageous for employers and employees alike. According to the results of a survey on the home office in Hungary in June 2020,37 56.48 per cent of the respondents believed that employees in the future will spend significantly more time in the home office, and may never go back to how things were before mid-March 2020. Given the opportunity to work remotely in the long term,

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labour market policy experiences’, Hungarian Labour Law E-Journal, 2016/2 (2016), www.hllj.hu/letolt/2016_2_a/ A_06_Banko_hllj_2016_2.pdf; T. Gyulava´ri, A szu¨rke a´lloma´ny. A gazdasa´gilag fu¨ggo˝ munkave´gze´s a munkaviszony e´s az o¨nfoglalkoztata´s hata´ra´n [The Grey Matter: Economically Dependent Labour Is on the Border between Employment and Self-Employment] (Budapest: Pa´zma´ny Press, 2014), 108. Banko´, ‘Telework in Hungary’, supra note 27. In that time there was considerable interest on the side of employees; the organisation registered more than 15,000 potential teleworkers in 1998. Nevertheless, employer interest was scarce. The primary mission of the Telework Council is ‘to aid the ministry in formulating its strategy, providing background information for its decision making, developing proposals, creating projects, actions and grants, and helping it with the promotion of telework in Hungary’. LC s. 196, para. (2). Ibid., para. (3). Ibid., para. (4). Ibid., para. (5). G. Berke and G. Kiss, Kommenta´r a munka to¨rve´nyko¨nyve´hez [Commentary on the Labour Code] (Budapest: CompLex, 2012), 497; Banko´, ‘Telework in Hungary’ supra note 27. Remote work in Hungary has been divided into two categories: (1) telework and (2) home office work. However, at the beginning of the pandemic, employers realised that the Hungarian LC does not regulate the home office properly; moreover, the concept of the home office is not even mentioned in the LC. ‘Govt consults with economic players on telecommuting legislation’, Hungary Today (20 July 2020), https:// hungarytoday.hu/govt-consults-economic-players-telecommuting-legislation/. J. Gosztola and B. Nagy, ‘Re´mesen kontrollma´nia´s a legto¨bb magyar fo˝no¨k: itt a nagy home office kutata´s [Most Hungarian bosses are terrible control freaks: Here is the great home office research]’, Pe´nzcentrum (8 June 2020), https://bit.ly/3YbinEX.

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52.68 per cent of the respondents would even be willing to give up some of their employee rights that come with having a fixed workplace. Should the home office become permanent, a significant share of respondents (37.07 per cent) think there would be a need for monthly teambuilding activities, in contrast to the 15 per cent who do not consider them at all necessary. The legal environment needed to be adjusted to the pandemic-related economic and social challenges as well as to the changes on the labour market. Modifying the regulation of telecommuting in the interest of boosting employment therefore became a timely matter in the summer of 2020.38 The proposed amendment to the LC dealing with telework (home office) regulations was submitted to the Parliament in September 2020. The aim was flexibilisation and adjustment of home office work to the changes in labour market. According to the regulation, employers cannot unilaterally order employees to work from a home office. An employee can ask their employer if they may be allowed to work in a home office; if the employer permits this, the employer and the employee will decide together which days might be used for home office work. The employer might pay a tax-free lump sum for overhead expenses (gas, electricity, water, internet fee) for the employee who is working in their home office. The planned amount of the lump-sum overhead expenses will be 10 per cent of the minimum wage (in 2020 it was HUF 16,000, equivalent to approximately EUR 46).39 According to the final amendment,40 the legislature decided not to set up a separate legal institution about the home office; instead, it expanded the rules of telework so that occasional or ‘hybrid’ work from home could be flexibly regulated with this regulation. Therefore, if an employer is thinking about requiring staff to work from home, they can do so within the legal framework of the ‘renewed’ telework provisions.41 The agreement on telework shall continue to be part of the employment contract, so the employer cannot unilaterally order it, nor can the employee demand to work from home. The parties may, however, derogate from the provisions of the LC; therefore they can establish a home office system according to their needs, determining what part of the working time the employee shall spend at their home office and what part at the company’s premises. A new element in the regulation of telework is that, unless the parties agree otherwise, the employee works at the main office / company premises for a maximum of one-third of the working days in the current year.42 (ii) Simplified Employment and Occasional Work first step. In August 2005, the so-called Blue-Book for Casual Workers was introduced; it was later renamed the Booklet for Casual Workers (Alkalmi Munkava´llalo´i Ko¨nyv, AMK). This was initially envisaged as a simplified method to turn private households into lawful employers, following the German model of ‘mini-jobs’; however, it became more common in agricultural, construction, and other industries employing casual/seasonal workers. It allowed taking up casual jobs for a duration of up to 5 days at a time, for a maximum of 15 days in a month and 120 days in a year. Taxes and social insurance contributions were to be paid by the employers in 38

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‘Jo¨n a home office szaba´lyoza´sa: az otthoni munka´e´rt rezsia´tala´ny ja´rhat [Regulation of the home office is coming: You can pay an overhead rate for working at home]’, Portfolio (2 September 2020), https://bit.ly/44GRfQJ. ‘Ko¨zeleg a home office szaba´lyoza´sa [Home office regulation is coming]’, Infostart (2 September 2020), https:// infostart.hu/belfold/2020/09/02/kozeleg-a-home-office-szabalyozasa. The amendment took place in 2021 and entered into force on 1 June 2022. D. Kun, ‘Home office vs. telework in Hungary: Rights and obligations’, Helpers Finance (16 August 2021), https:// helpersfinance.hu/home-office-vs-telework-in-hungary-rights-and-obligations/. Amended LC s. 196, para. (3)(c).

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the form of a stamp that needed to be stuck into the booklet on the days of work. Not only was the employers’ administration burden eased but taxes and contributions were also lower than for ‘regular’ employment. Casual employment with the use of the booklet qualified as an employment contract, implying an appropriate insurance and pension base. second step. In 2010, the Hungarian government introduced the Simplified Employment Act (2010/LXXV) to facilitate seasonal and casual employment notifications, reports, and payments. The regulations of the Act were an anticipatory measure for tackling undeclared work. The Simplified Employment Act was enacted to simplify the complicated, slow, and dysfunctional administrative burdens for seasonal employment. It freed both the employee and the employer of the administrative burdens, as employment status had to be stated in a mutually agreed simplified work contract (enclosed with the Act) and could be declared by a simple text message (SMS) or electronically via the so-called client gate system (U¨gyfe´lkapu Magyarorsza´g) after being registered once in the system. It distinguished only two categories of simplified employment: seasonal agricultural work, including seasonal tourism services, and other casual/temporary work (i.e. domestic work). third step. The new LC (2012) kept the basic concept, but incorporated the casual (occasional) work relationship into the LC under the title: simplified work. According to sections 201–3 of the LC, employers and employees covered may enter into simplified employment or occasional work relationships. In practice, employment may be established in a simplified manner for seasonal work in agriculture and tourism or for casual work. In this case, simplification means that only the most important rules of labour law (e.g. minimum wage) need to be applied to employment. Administration of the start and the end of employment is also less. Simplified employment is still a good opportunity for small and medium-sized employers.43 B Atypical Contracts for Work Outside the Labour Code (i) School and Pensioners’ Cooperatives as Special Agency Work school cooperatives. A school cooperative is an economic organisation with special rules that works with full-time students in secondary or higher education to find and manage jobs for them according to their school schedules. It consists of at least seven members. Membership of the cooperative is compulsory for the secondary school or university whose pupils or students make up the cooperative. At least 90 per cent of the members must be natural persons who are pupils or students of the educational establishment. Between 2012 and 2016 the school cooperative44 was one type of atypical employment relationship in the LC.45 A school cooperative46 (employer) and its full-time students or pupils (quasi-employees) could enter into a fixed-term employment relationship, whereby the cooperative’s students could be dispatched to perform work/services for a third party (customer) at that 43 44 45

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Hajdu´ and Kun, Munkajog, supra note 6, at 281–2. The first Hungarian Student Cooperative was founded in 1911. M. M. Balogh, ‘Az iskolaszo¨vetkezeti munka tb-vonatkoza´sai [The social aspects of school cooperative work]’, Ado´ Online [Tax Online] (26 October 2016), http://ado.hu/rovatok/tb-nyugdij/az-iskolaszovetkezeti-munka-tbvonatkozasai. In short, the school cooperative is a hidden temporary work agency (TWA) that has a significant competitive advantage over an ordinary TWA: it is exempt from paying social security contributions and social tax.

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third party’s premises.47 During the period of work performed by the employees (exclusively students), the customer would exercise and discharge the employer’s rights and obligations, for example, OSH, employment of women, young workers, and persons with reduced ability, and working time, rest period, and the records of these.48 The state’s main aim in establishing student cooperatives was to bridge the difficulties of studying and working together. Thanks to the school cooperative system, youngsters are able to build their careers earlier, which can provide experience and a reference for their future fulltime employment. At the same time they can earn money to provide for their needs and learn how to be responsible for themselves. As a significant change, all of the provisions relating to school cooperatives were repealed on 1 September 2016, as a result of which the legislation was incorporated into the text of the Act on Cooperatives. With this, the legislator intended to prevent the unfavourable outcome of infringing EU procedure on the grounds that paid vacation is not provided to employed students according to the regulation in force.49 At the same time, the legislator inserted the basic provisions (leave, minimum wage, break, resting period, etc.) of the LC into the Act on Cooperatives.50 pensioners’ cooperative. The ‘pensioners’ cooperative’ (ko¨ze´rdeku˝ nyugdı´jas szo¨vetkezet) was introduced in Hungary in July 2017.51 This type of cooperative is literally based on the logic of the traditional cooperatives,52 but in practice it is a special – highly state subsidised – form of hidden TWA.53 The government’s basic aim with pensioners’ cooperatives is to employ retired persons, to reduce labour shortages,54 keep more pensioners economically active – getting income from work as well as their old-age pension benefits55 – and provide pensioners with a tax 47

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J. Windisch, ‘Ki ve´di a dia´kot, ha nya´ron dolgozni megy? [Who protects students if they go to work in the summer?]’, hvg.hu (8 July 2016), http://hvg.hu/itthon/20160708_diakmunka_szovetkezet_veszelyek_tanacsok. European Monitoring Centre on Change (EMCC), ‘Hungary: Young people and temporary employment in Europe’, Eurofound (8 December 2013), https://bit.ly/3q4hYHG. A´. Ke´ri, ‘Dia´kmunka szeptemberto˝l: ı´gy mu˝ko¨dhet majd az iskolaszo¨vetkezet [Student work from September: This is how the school cooperative will be able to function]’, Ado´zo´na [Tax Zone] (11 May 2016), http://adozona.hu /munkajog/Igy_dolgozhatnak_a_diakok_szeptembertol_mut_D5MIKK. Kova´cs Re´ti Szegheo˝ (KRS), Labour Law Newsletter August 2016 (August 2016), www.krs.hu/sites/default/files/ tudastar/krs_labour_law_newsletter_august_eng.pdf. Since July 2017, ninety-one public benefit pensioner associations have been established, and these offer preferential job and tax conditions as well as flexibility. According to a survey conducted by the National Society of Public Benefit ¨ ZE´SZ), the members of existing associations typically work three to five days a week, four Pensioner Associations (KO to six hours a day and usually in the morning, but they are also open to doing night shifts. Employers also benefit from outsourcing work to pensioner associations as payroll taxes are lower than when employing jobseekers of working age. Ro´bert Iva´n Ga´l, Pensioner Cooperatives Combine Work and Retirement in Hungary, ESPN Flash Report 2018/9 (Brussels: European Social Policy Network, March 2018), https://ec.europa.eu/social/BlobServlet? docId=19162&langId=en. In the original meaning, the cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. Cooperatives bring people together in a democratic and equal way. Whether the members are customers, employees, users, or residents, cooperatives are democratically managed by the ‘one member, one vote’ rule. Members share equal voting rights regardless of the amount of capital they put into the enterprise. International Cooperative Alliance, ‘What is a cooperative?’ (n.d.), www.ica.coop/en/cooperatives/what-is-a-cooperative. In Hungary there are two types of such bogus (quasi-)cooperative TWA: (1) the students’ cooperative (dispatching secondary school and mainly university students) and (2) the pensioners’ cooperative (dispatching retired persons). Wolf Theiss (E. Bohati and B. Buzasi), ‘Hungary: Co-operatives for pension age employees’, Taylor Vinters (29 September 2017), www.taylorvinters.com/news/hungary-co-operatives-pension-age-employees/. Members can receive both income from work and old-age pension benefits and benefit from preferential taxation. Historically, work as well as claiming a pension (either old-age or disability) was common in Hungary. The plain

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subsidy. This helps retain community contact with the elderly (active ageing), too, as well as serving the best interests of the general public by encouraging the elderly to transfer their skills, professional knowledge, and life experience to younger people. However, it should be underlined that public and private sector retired employees fall under different regulations.56 (ii) Hungarian White Card: Residency for Digital Nomads in Hungary Starting from 2022, a new purpose of stay is available to those who want to live and work in Hungary. Digital nomads57 will be able to apply for a ‘white card’, which is a special type of residency designed specifically for them.58 The white card can be requested by third country nationals who want to live and work in Hungary but are employed by a company outside Hungary, or running such a company, and who perform their work with the help of advanced, digital technology. The basic eligibility conditions are: (1) only third country nationals can apply (European Economic Area (EEA) nationals are subject to different regulations, e.g. EU nationals can simply apply for an EU registration card); (2) they cannot work for a Hungarian company or hold any shares in a profitable company in Hungary; and (3) they must have sufficient resources.59 The white card is valid for one year. When it expires, it can be renewed once for another year. If they want to stay longer, they will probably need another type of residence permit.60

IV THE PROTOTYPES

Technological innovation has brought manifold changes in the legal fabric of the employment relationship. Here three different aspects will be discussed: (1) digitalisation of employmentrelated documents, (2) the Hungarian Digital Success Program (HDSP), and (3) the preliminary approach to platform work in Hungary.

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reason was the low amount of the pension benefit. The 2016 national micro-census registered 126,000 people aged 60 years or above who had paid work while receiving some type of pension benefit. This is 5.8 per cent of the pensioner population in this age group; see CSO (Central Statistical Office), Ezu¨stkor – Ido˝skoru´ak Magyarorsza´gon, 2016 [Silver Age – Elderly People in Hungary, 2016] (Budapest: Ko¨zponti Statisztikai Hivatal, 2017); R. I. Ga´l, Pensioner Cooperatives Combine Work and Retirement in Hungary, ESPN Flash Report 2018/9 (European Social Policy Network, March 2018), https://ec.europa.eu/social/BlobServlet?docId=19162&langId=en, 1. While private sector retirees can continue to work and earn income at the same time as receiving their pension, public sector retirees generally cannot. However, a regulation change in May 2023 means that, as an exception, public sector retirees can continue working at the same time as receiving their pension if the post-retirement work is for a social and child protection institution, a child welfare service provider, a public education or vocational training establishment, the Education Office, or a government office for the organisation of school-leaving examinations and secondary school study competitions. People who choose to travel the world while working online are referred to as ‘digital nomads’, and Hungary has now decided to create a new type of residency just for them. ‘Fehe´r ka´rtya´val csa´bı´tana´k a digita´lis noma´dokat Budapestre [Digital nomads may be lured to Budapest with a white card]’, Wolters Kluwer (2 November 2021), https://jogaszvilag.hu/napi/feher-kartyaval-csabitanak-a-digitalisnomadokat-budapestre/. The Hungarian Immigration Office will check if they have sufficient resources to sustain themselves in Hungary. This means they are expected to have a monthly income equivalent to at least EUR 2,000. They must prove that they have had this income for at least six months before their entry to Hungary, and they must continue to have it throughout their residency if they want to renew it. ‘Fehe´ r Ka´rtya [White card]’ (17 January 2023), www.bmbah.hu/index.php?option=com_k2&view=item& layout=item&id=1713&Itemid=2099&lang=hu#.

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A Formal Requirement of Employment-Related Documents With the constant development and advancement of digital technologies, the use of paperbased documents is gradually decreasing in all areas of life. This has affected the form of legal documents used in public administration and court procedures, as well as for contracts. This trend has inevitably affected the employment sector, as both employers and employees have an increasing need to reduce the volume of paper-based documents used in employment relationships. At the same time, the use of electronic documents has raised several practical questions. The LC (2012) provides that legal statements in the context of an employment relationship can be made without formal requirements, unless otherwise stipulated by law or the parties’ agreement. The law requires that the key documents concerning employment relationships be in writing, such as: (1) documents establishing, modifying, or terminating an employment contract; (2) information notices setting out working conditions; and (3) notices on collective redundancy. In addition, on an employee’s request, an employer must make its statement in written form. Although the LC may not be explicit with regard to written form, it defines the requirements that electronic documents must fulfil in order to qualify as written statements. An electronic document can qualify as a written statement if it can: (1) appropriately record the information contained therein unaltered (to enable retrieving its contents later); (2) identify the person making the legal statement; and (3) record the date on which the legal statement was made. Apart from the above, the law prescribes no stringent requirements regarding electronic documents. In particular, it does not require parties to use electronic or so-called qualified electronic signatures. Court practice seems to confirm that emails, text messages, and even entries on social media sites can be considered electronic documents and accepted in an employment context.61 However, in the case of a dispute, the employer must be able to prove, among other things, that: (1) the statement was made on time; (2) the employee had the chance to access its contents; and (3) it was made by an authorised person. As for signature requirements, the LC does not explicitly require a handwritten signature on written documents, or refer to the CC’s requirement that a legal statement must be signed by the person making it. In addition, neither the law nor court practice requires the parties making statements to sign them electronically. Court practice seems to favour flexibility as it requires neither handwritten signatures nor qualified electronic signatures.62 In sum, the courts tend to accept some flexibility in relation to the use of electronic documents. Owing to this and the increasing importance and significance of electronic communication methods, the risks associated with the use of electronic documentation are likely to be further reduced in future.63

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In a recent case, a court ruled that a preliminary information notice of a collective redundancy sent to an employee by email could be considered written notice, as it would fulfil the LC’s requirements. In another case, an employee challenged the validity of a mutual termination agreement as the paper-based document had not been signed by the employer’s representative; rather, the business stamp of the employer and the signature stamp of the managing director had been used. The court accepted that the document was valid as the employer’s managing director had signed it with a ‘signature stamp’ (i.e. no handwritten signature was required). D. Gindl and D. Gera, ‘Hungary: Use of electronic documents in employment relationships’, Scho¨nherr (8 April 2018), www.schoenherr.eu/content/hungary-use-of-electronic-documents-in-employment-relationships/.

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B The Hungarian Digital Success Program (HDSP) (i) The Background and Aim of the HDSP Hungary was among the first countries in Europe to recognise the importance and irreversibility of digital transformation:64 instead of protecting people and enterprises from digitalisation, the government wished to prepare them for the expected changes.65 One of the key tasks for the HDSP, launched at the end of 2015,66 is to boost the creation of value-added employment opportunities by taking advantage of digitalisation and, as such, to create more jobs than the number of jobs terminated in the wake of the digital transformation. Three interconnected prerequisites of this programme were: (1) creation of a sufficient number of digital jobs (digital economy);67 (2) availability of a digitally competent labour force;68 and (3) existence of a high-quality network infrastructure.69 In forthcoming years, besides making the Internet available and affordable for everyone,70 developing the infrastructure, digitalising the country, and continuing with other already-commenced activities, the Hungarian government will be striving to make enterprises and employees better-prepared for the digital transformation.71 Owing to the limited length of this chapter, we are going to focus on the second point. This is a complex phenomenon because of the low level of general digital skills of citizens (and particularly of active employees), the low participation in adult education, the low proportion of people with higher levels of digital skills, and the quantitative and qualitative shortcomings of IT training. 64

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In 2014, Hungary adopted its National Info-communication Strategy 2014–20. The implementation started in 2014 and was confirmed with the adoption of the Digital Success Programme (DJP) at the end of 2015 and the DJP 2.0 in 2016. In 2018, within the framework of the DJP, the government prepared the Digital Agricultural Strategy and the Digital Sports Strategy. In 2019, Hungary adopted its 5G strategy and it plans to develop strategies on the health industry, artificial intelligence (AI), fintech, and blockchain. The implementation of several large-scale projects has continued. Examples include the Superfast Internet Programme, the Modern Enterprises Program, the Support for Business Digital Development Programme, and developments in e-government and e-health. On 31 October 2018, an Artificial Intelligence Coalition was established by 124 founders. There are some stimulating needs: Hungary is among the worst-performing EU Member States in the integration of digital technology in businesses. Uptake of ICTs is low across all the indicators measured in this dimension. Hungary has the lowest share of enterprises sharing information electronically in the EU. Only 7 per cent of companies rely on big data solutions (12 per cent in the EU), 11 per cent use cloud computing (18 per cent in the EU), and 15 per cent have social media activities on at least two channels (21 per cent in the EU), according to the 2020 Eurostat ‘Digital economy and society statistics – enterprises’, https://ec.europa.eu/eurostat/statistics-explained/index.php /Digital_economy_and_society_statistics_-_enterprises. Government Decree No. 2012/2015 (XII.29) on the Digital Success Programme. Hungary, in terms of both ICT sector gross domestic product (GDP) share and the number of individuals employed in the sector, plays a leading role in the EU and ranks much higher than other countries in the region. The so-called digital economy (which, besides the ICT sector, incorporates the digital activities of other sectors) has a GDP share of 21 per cent, while its share of employment amounts to 15 per cent. Basic digital skills remain below the EU average (Hungary ranks twenty-first out of twenty-eight) and basic software skills are modest (Hungary’s ranking is twenty-second out of twenty-eight). Only half of people aged between sixteen and seventy-four have basic digital skills (57 per cent in the EU as a whole). Monitoring Progress in National Initiatives on Digitising Industry: Country Report – Hungary (July 2019), https://ec .europa.eu/information_society/newsroom/image/document/2019-32/country_report_-_hungary__final_2019_0D30BE02-9661-9403-6F972D2CCBB689B0_61210.pdf. For example, the value-added tax (VAT) on internet services dropped to just 5 per cent from 1 January 2018. According to the Ministry of Economy, the 13 percentage points drop – from the previous 18 per cent – left approximately HUF 22 billion (EUR 70 million) in the pockets of consumers. (Note: In January 2017, VAT on internet services was reduced from 27 per cent to 18 per cent, and the above-mentioned further 15 per cent drop was set to give a huge boost to consumers.) ‘VAT on internet services will drop to just 5 percent from January 1st’, About Hungary (27 December 2017), http:// abouthungary.hu/news-in-brief/vat-on-internet-services-will-drop-to-just-5-percent-from-january-1st/.

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The lack of information communication technology (ICT) professionals in the job market remains a significant issue in Hungary, with the Digital Workforce Programme as well as multiple EU-funded programmes aiming to tackle this issue. For example, several Hungarian universities and research institutes are involved directly or indirectly in activities associated with educational and training projects linked to AI research, development, and application. They are among the founding members of the Hungarian Artificial Intelligence Coalition.72 Another example is the Programme Your Future project, which focusses on the younger generation of women to make ICT-related jobs and careers in the ICT sector more attractive to them, and to raise the percentage of women in IT higher education. Many entrepreneurs in Hungary still see the need to go digital as a burden, rather than as a means to become more competitive. The government aims to change this perception and convince small and medium-sized enterprises (SMEs) to get rid of their distrust of digital technologies. In the Modern Enterprises Program, there is a large focus on awareness-raising activities.73 The least digitally developed sectors are agriculture, construction, tourism, and the food and beverages industry. Paradoxically, all these sectors play a key role in the Hungarian economy. A specific emphasis is put on digitising SMEs in these sectors through the development of specific sectoral strategies. Therefore, Hungary is committed to the advancement of new digital technologies and to investing strategically in digital technologies in this area through EU-coordinated programmes. Hungary is a member of the EuroHPC [High-Performance Computing] Joint Undertaking and has also signed the Declaration on Cooperation on Artificial Intelligence. To boost the digital transformation of the Hungarian economy, it is important for the government to continue carrying out the awareness-raising and funding programmes that target SMEs.74 (ii) The Digital Labour Force Programme (DLFP) The DLFP was launched in 2018. The scheme incorporates the legal and development policy guidelines and measures, for all education levels and labour markets, that are necessary to make a digitally competent labour force available.75 As for definition, in the DLFP, ‘digital labour force’ refers to employees who have a high level of professional or a high level of user knowledge of IT as a basic profession or in addition to their other profession. During work, the digital workforce uses IT solutions that go beyond the basic 72

In October 2018, the Minister of Innovation and Technology initiated the foundation of the national Artificial Intelligence Coalition. The coalition has 124 founding members including representatives of all relevant stakeholders along the entire value chain, including researchers, developers, and users. It represents stakeholders of all sizes and types as well, from start-ups and SMEs to large multinational corporations, research organisations, academia, state representatives, and other bodies. The coalition has the following specific goals:

• provide a constant professional and cooperation forum for AI developers, the market, and state participants representing the AI user side, as well as the academic and professional organisations;

• develop a Hungarian AI strategy, with the aid of which the development and application of AI-based technology will be able to achieve results in a favourable economic and regulatory environment;

• analyse the social and economic impacts related to the spread of AI. 73

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‘Modern Enterprises Program’, Interreg Europe (26 August 2018), www.interregeurope.eu/good-practices/modernenterprises-program. Hungary’s Artificial Intelligence Strategy 2020–2030 (May 2020), https://ai-hungary.com/files/e8/dd/ e8dd79bd380a40c9890dd2fb01dd771b.pdf. J. Hajdu´ and A. Luka´cs, ‘Digitalisation of labour force in Hungary (targeting for innovation and digitally competent workforce)’, Acta Universitatis George Bacovia – Juridica [Journal of the University of George Bacovia – Legal], 9(2) (2020), 495–532.

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digital competencies and the digital competencies required to perform work in an average IT user (e.g. office) environment.76 The most common competencies are: (a) appropriate soft skills (e.g. English language skills, communication and coordination skills, creativity, problem solving); (b) being able to use IT solutions to solve a specific (not only IT) problem; and (c) regularly and purposefully complementing their other professional skills with digital modules. the personal scope of the dlfp. The demand for a digital labour force fundamentally affects the entire labour market, that is, those who are already in the labour market as well as those who are of active age but not currently in the labour market (e.g. temporarily unemployed persons, etc.). However, the main target groups of the DLFP are: (1) employees of active age (these constitute the largest group); and (2) employees in the SME sector.77 In this context, the DLFP includes the following activities in particular: (1) application of new economic, IT, and data analysis methods to forecast labour market needs; (2) development of a labour market forecasting system based on real data, monitoring both the demand and the supply sides of the labour market, with the involvement of the Sector Skills Councils;78 (3) development of a labour market feedback system to link employment data with training data in order to monitor the effectiveness of trainings; (4) labour market monitoring of the digital economy; and (5) updating occupational structure forecasts in order to develop an up-to-date occupational structure model. measurement, monitoring, and forecasting. The expectations of the labour market regarding digital skills are so new that a widely accepted, properly regulated reference framework and procedure for their measurement and certification have not yet been developed in Hungary. Similarly, there is a lack of a unified methodology for formulating expectations considering digital competencies; therefore, the digital knowledge of Hungarian employees and the digital expectations of employers are not known for certain. There is an inevitable need to develop new methodological bases for measuring, monitoring, and analysing the Hungarian digital and traditional labour markets, and to develop and operate a comprehensive sectoral monitoring system. It is also essential for the development of the digital economy that the proportion of employees with high-level digital competencies in non-IT professions should increase significantly. In this context, the DLFP includes the following activities in particular: (1) launching short-term, general IT training programmes for those who wish to complete IT training in addition to their existing job or for reasons other than employment; (2) expanding the circle of applicants for IT training with a shared-funded Training Embedded in Employment (Hungarian abbreviation: FA´K) programme; (3) launching a short-term IT training programme directly to persons who, for whatever reason, have dropped out of higher education 76

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‘Kutata´s az informatikus munkaero˝hia´nyro´l [Research on IT workforce shortage]’, IVSZ (n.d.) http://ivsz.hu/projek tek/kutatas-az-informatikus-munkaerohianyrol. The economic weight of SMEs is significant in the Hungarian economy; their participation in the labour market is remarkable. In 2016 SMEs employed 1.9 million people, while all other forms of enterprise combined employed an additional 1 million people. See A kis-e´s ko¨ze´pva´llalkoza´sok helyzete haza´nkban, 2016 [The Small and Medium-Sized Enterprises Situation in Hungary, 2016] (KSH, 2016), www.ksh.hu/docs/hun/xftp/idoszaki/pdf/kkv16.pdf. As part of the complete renewal of vocational training, sector skills councils began operating in 2019. Their task is to replace supply-driven training practices with a demand-driven vocational and adult training system. Their members are the representatives of the key companies in each sector, and one member is delegated by the employee representatives. The council has at least seven and at most nineteen members, depending on the nature of the sector.

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or are looking to change their career; and (4) modifying the regulation of all forms of training (e.g. vocational) in line with labour market needs, and so on.79 (iii) Platform Work in Hungary preliminary approach of platform work. The rise of flexibility and precarity in the traditional economy was accompanied by the rise of atypical and platform work within it. The phenomenon of Internet-based job placement as part of the gig economy exists in Hungary.80 The Hungarian gig companies advertise themselves as offering flexible working arrangements, but, as many examples in the gig economy show,81 even if this is true in form, the situation is more nuanced when one intends to actually earn a living from this kind of work. For example, at NetPince´r, the earning potential is strongly influenced by the courier group to which a worker is assigned by the system. Those in higher ranking groups can take up shifts earlier, and have access to better shifts. Unsurprisingly, the system encourages couriers to work as many shifts as possible, delivering to as many addresses and as quickly as possible. Shifts thus become fragmented, with long times between the busiest periods. Those who are not willing to self-exploit will be ranked lower by the algorithm, so they will only be able to take on worse shifts. There is constant competition among couriers. For the busier days and periods, there will be enough applicants anyway, given that companies are over-insuring themselves – overall, they employ more couriers than they usually need. This way, deliveries can go uninterrupted, but couriers have to compete among each other to make a living, while there is no compensation for idle time.82 In Hungary, however, this form of employment is still relatively new; it affects a small proportion of society, and there has not yet been much trade union organising among the workers of the gig economy. Many people, aware of the painful experience of a large part of humanity, feel that any job that provides some kind of a livelihood is better than starving to death without work.83 According to the estimates of the COLLaborative Economy and EMployment (COLLEEM) project conducted by the European Commission’s Joint Research Centre, a share of the Hungarian adult population (6.7 per cent) makes some earnings from platform work. This 79

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‘Hungary – Digital Workforce Programme’, Digital Skills & Jobs Platform (19 May 2021), https://digital-skillsjobs.europa.eu/en/actions/national-initiatives/national-strategies/hungary-digital-workforce-programme. A good example of this in Hungary are food delivery services such as NetPince´r [literally: NetWaiter] and Wolt. NetPince´r was launched in 1999 as Hungary’s first online food ordering aggregator. It was a platform through which a user could browse the menus of several restaurants and place an order with one of them; the order was then transmitted to the restaurant, which delivered the food using its own couriers. Over the years, there have been some minor changes, with the introduction of online payment, different advertising formats for restaurants, etc., but the formula has remained essentially the same. The big change – at least in Hungary – came in 2018. NetPince´r had already been acquired by the German Food Panda in 2014 and by the German Delivery Hero in 2016 (which, incidentally, has led to a growing concentration of the European and global food delivery market). The basic pattern of doing platform business is the same as in several other countries. There are two different categories of contracted person: (1) workers with a registered employment status (e.g. professional back-office team: logistics, IT, marketing, HR, sales) and (2) platformers/gig-workers (e.g. self-employed couriers). The ratio of the two groups shows significant differences (e.g. in NetPince´r 300 employees and 4,300 couriers in 2020). See M. Spoke, ‘History repeats itself for gig economy workers – and not in a good way’, Forbes (21 January 2020), www .forbes.com/sites/mattspoke/2020/01/21/history-repeats-itself-for-gig-economy-workersand-not-in-a-good-way/? sh=592e8e67591f; J. Woodcock, ‘The algorithmic panopticon at Deliveroo: Measurement, precarity, and the illusion of control’, Ephemera, 20(3) (2020), www.ephemerajournal.org/contribution/algorithmic-panopticon-deliveroomeasurement-precarity-and-illusion-control-0; ‘Report highlights perils of the digital gig economy’, Phys.org (29 January 2020), https://phys.org/news/2020-01-highlights-perils-digital-gig-economy.html. S. A´. Kiss, ‘“You don’t own a business; you own a bike or a Suzuki” – the realities of forced self-employment’, LeftEast (3 June 2021), https://lefteast.org/gig-work-cee-hungary-forced-self-employment/. Ibid.

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ratio is well below the rates of such countries as Spain (11.6 per cent), Portugal (10.6 per cent), and Germany (10.4 per cent).84 The Hungarian legislation does not recognise a specific category of platform work and does not offer targeted regulation acknowledging the specificities of platform work. It might also be questionable why the legislator,85 tax authorities, labour inspection authorities, and other relevant institutions turn a blind eye to the phenomenon of platform work. Perhaps the new platform work directive86 will provide an answer to these open issues. Moreover, platform workers receive marginal attention from trade unions. This, together with the fact that digital platforms do not consider themselves employers, has contributed to the situation that platform workers mostly have less formal, non-standard work arrangements. Delineating between dependent employment and independent contractor status has a long history in Hungarian employment law. Jurisprudence makes a distinction between a ‘contract of service’ (employee) and a ‘contract for services’ (independent contractor). However, the emerging new work practices (e.g. platform work) do not always lend themselves to a straightforward assessment of whether the individual engaged is an employee or an independent contractor.87 In Hungary, the most widespread form of on-demand platform work is bogus (undeclared) self-employment. This is where a self-employed individual (platformer) fails to declare some or all of their income to the tax and social security authorities. Self-employment is also a common labour market status for on-demand platform workers. etui survey: internet work v. platform work. A survey by the European Trade Union Institute (ETUI) in five Central and Eastern European countries – Bulgaria, Hungary, Latvia, Poland, and Slovakia88 – distinguished between two types of working activity: (1) internet work as a broad category that ‘covers all activities aimed at generating income through the use of websites or mobile apps’ but not necessarily through online platforms – renting and selling activities belong to this category as well as taxi driving, delivery work, blogging and running social media accounts, freelance work involving either short tasks or longer, more creative projects, and so on; (2) platform work including all paid activities carried out through online platforms but excluding renting apartments and the sale of products. 84

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O. Serfling, Crowdworking Monitor Nr. 2 (February 2019), www.hochschule-rhein-waal.de/sites/default/files/docu ments/2019/05/08/discussion_papers_in_behavioural_sciences_and_economics_no5.pdf. I would like to mention one indirect legislative action that indirectly impacts the majority of platformers. Act XIII of 2022 on Fixed-Rate Tax of Low Tax-Bracket Enterprises and on Small Business Tax (hereinafter ‘KATA Act’) was published on 18 July 2022 and the changes to the KATA tax system took effect on 1 September 2022. Now, KATA is a flat-rate tax system where small Hungarian businesses pay a fixed monthly amount to cover all their Hungarian tax obligations. This taxation can also be applied by those who are self-employed (including platform workers). These changes were necessary to reduce misuse of the system and deliver enhanced benefits to those for whom the KATA tax system was created. As a basic aim, this amendment was not expressis verbis intended to harm platform workers; however, it has ended up having a negative impact on the majority of them. See S. Power, ‘Hungarian government revises KATA tax system’, EuroCompany Formations (21 July 2022), www.eurocompanyformations.com/blog/hungar ian-government-revises-kata/. Proposal for a Directive of the European Parliament and of the Council on improving working conditions in platform work, Brussels, 9.12.2021 COM(2021) 762 final 2021/0414 (COD). S. Battye, A. Burke, J. Sheehan, and J. Bassett, ‘Ireland: Beware bogus self-employment’, Mondaq (9 March 2020), www.mondaq.com/ireland/employee-rights-labour-relations/901724/beware-bogus-self-employment. A. Piasna and J. Drahokoupil, Digital Labour in Central and Eastern Europe: Evidence from the ETUI Internet and Platform Work Survey, Working Paper 2019.12 (Brussels: European Trade Union Institute (ETUI), 2019), www .etui.org/sites/default/files/WP2019-12-20Digital-Labour-Web-version.pdf.

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According to the categorisation of the ETUI survey, more workers in Hungary are involved in the broader category of internet work than in platform work. It shows that a relatively large share of the adult population tried at least once to generate income via the Internet, but their ratio dramatically drops when it comes to regular working activities. Platform work contributed the most to workers’ monthly income in Hungary, with nearly one in five (18.9 per cent) reporting that it was their only source of income, and 44 per cent indicating that they generated half of their monthly income through platforms. The ETUI survey found that in Hungary more people generate around 50 per cent of their income via platform work (part-time platformers) than work for platforms on a monthly basis (3.4 per cent v. 3.0 per cent).89

V ‘UBERISATION’

A good case to illustrate this complex interplay among institutions, private market actors, soft and hard forms of regulation, and customers is how Uber entered into the Hungarian market in the early 2010, soon after its foundation in San Francisco (March 2009). Its business model became a hot topic immediately. There were two main concerns about its activities: first, Uber paid its company tax outside Hungary; and second, its business model was based on unfair competitive advantages. Uber claimed that it is not a taxi company, merely a high-tech firm and application developer that links customers with individual service providers who are (self-employed) entrepreneurs. Rival taxi companies began protesting against Uber for several reasons: (1) Uber did not pay the obligatory deposit to government regulators that every other taxi company had to pay; (2) Uber did not have to comply with the strict environmental requirements because it claimed that it did not operate a car fleet; (3) Uber claimed that it did not have any obligations towards its quasi-employees; and (4) Uber’s taxi drivers did not have to take the same exams and tests that every other taxi driver had to. Of course, the root of all these issues was the fact that Uber refused to be acknowledged as a taxi company. This transport platform intended to carry out its operation in the status ‘of [a] neutral intermediary that solely matches supply of and demand for independent contractors . . .. By . . . maintaining this claim . . ., platform operators [e.g. Uber] seek to avoid basic entitlements resulting from employment contracts such as social security, minimum wages as well as work time and security regulations’.90 Taxi drivers represent a traditionally strong interest group in Hungary and in this case they found a powerful ally in the Hungarian government because of Uber’s tax evasion. The taxi drivers’ trade unions organised demonstrations and petitions against Uber and the owners of the taxi companies promoted their campaigns, too. The Hungarian Trade Union for Taxi Drivers (Magyar Taxisok Szakszervezete) blocked Budapest in January 2016 with a demonstration. Following this demonstration, the Hungarian Parliament adopted a new regulation that virtually prohibited providing services in the way that Uber did. Uber lost its operation in Hungary and announced its decision to leave the country on 13 July 2016. However, it is worthy of note that the employment status and the working conditions of the taxi drivers working for traditional taxi companies are rather similar to those of the Uber drivers. Therefore, the public debate around Uber focussing mainly on unfair competition and tax avoidance overshadowed deeper problems related to job quality, working conditions, and 89

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C. Mako´, M. Ille´ssy, and S. Nosratabadi, ‘Emerging platform work in Europe: Hungary in cross-country comparison’, European Journal of Workplace Innovation, 5(2) (June 2020), 147–72. G. Grabher and E. van Tuijl, ‘Uber-production: From global networks to digital platforms’, Environment and Planning A: Economy and Space, 52(5) (2020), 1005–16, at 1011.

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employment status.91 However, in the aftermath, an Uber-like company, BOLT, stepped in to fill the vacuum; its drivers, like traditional taxi drivers, still have limited rights. In another example, Airbnb providers use the advantage of a grey zone between two labour market statuses: a natural person offering short-term rentals with a local tax payment obligation and a licensed provider of accommodation services (including additional services such as cleaning). Therefore, both the Hungarian government and the Municipality of Budapest plan to restrict short-term house rentals (e.g. Airbnb) in the capital, which could completely transform the downtown real estate market. The government would act primarily to help the hotel industry, while the capital would intervene to normalise apartment lease prices in Budapest. That said, the Covid-19 already had a negative influence on the Airbnb market.

VI QUO VADIS?

This chapter identifies six factors that are crucial in understanding how digitalisation facilitates, or even reinforces, precarity nd has direct implications for labour market segmentation and broader labour market institutions in Hungary.92 These are: (1) complementarities between platform work and work in the traditional economy; (2) a regulatory response to precarity in platform work; (3) crisis of interest representation of platform workers via established structures; (4) the scope of the platform economy within the entire economy; (5) taxation and social security coverage; and (6) privacy and data protection issues. Owing to chapter space restrictions, only the first five factors will be discussed briefly. (1) Dichotomy of legal regimes (LC v. CC). Platform work is presently characterised by a rigid ‘binary model’ of employment regulation consisting of employment contracts and civil law contracts: ‘universal’ versus ‘zero’ legal protection.93 In Hungarian law, platform workers are mostly independent contractors, as Hungary does not have the third labour law category. Independent contractors are self-employed persons (e.g. freelancers) whose work relationships are covered by the CC. The CC does not provide any employment protection in the framework of such contracts for service, contrary to the LC provisions on employment relationships. The future aim of the Hungarian legislators – in the framework of the EU platform workers’ directive – is to find a balance between, on one hand, supporting innovation, encouraging new business models, and creating new opportunities in the labour market and, on the other hand, ensuring that those who work in the gig economy are properly protected. (2) Hungarian labour law is unprepared to cope with the regulation of platform work. ‘[T]he gig economy is . . . immature . . . in Hungary. . . . [P]latform work, as such, is neither defined nor regulated. Moreover, platform work (as a phenomenon) is immature, hardly visible and marginal; it is not perceived (yet) as a separate regulatory / employment field and it also lacks specific policy (etc.) attention.’94 Platform work is almost not discussed as an issue. There are no planned policies or legal measures or developments that would 91 92 93

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Mako´, Ille´ssy, and Nosratabadi, ‘Emerging platform work in Europe’. Ibid. From the perspective of the binary regulation, platform workers have either ‘employee status’, meaning that they are entitled to complete labour law protection guaranteed by the LC, or ‘self-employed’ status, meaning that they work without any legal protection under the scope of the CC. A. Kun, ‘Some tentative explanations for the protracted development of platform work (as a transnational phenomenon) in Hungary’ in A. Osztovits (ed.), Karoli Mundus I, 267–76 (Budapest: Ka´roli Ga´spa´r Reforma´tus Egyetem A´llam- e´s Jogtudoma´nyi Kar [Ka´roli Ga´spa´r Reformed University Faculty of Law and Political Science], 2021), https://bit.ly/3DTc4wB, at 267.

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specifically affect the working conditions and/or the social protection of platform workers in Hungary.95 (3) Owing to the weak position of the Hungarian trade unions on the offline labour market as well as the traditional weak affinity of trade unions towards the employment and working conditions of the ‘precariat’, for workers who are unable or unwilling to attain full-time employment, the regulatory role of the legal framework of platform work is of particular importance. Collective rights, especially the right to conclude collective agreements, are not ensured outside the scope of the LC. In the Hungarian labour market, collective agreements exist almost exclusively at workplace level. But workers who lack employee status cannot be covered by a collective agreement. Works Council agreements may provide an alternative or quasi-collective agreement, but this doesn’t help platform workers.96 As for possible solutions, sector-level collective agreements could cover legal relations beyond employment relationships, including platform work. Alternatively, unionisation could be extended to include not just workers with permanent jobs; the self-employed and platform workers could be given the right to organise, too (as in, e.g., France and Poland). However, neither of these ideas has taken shape in Hungary yet. (4) The crucial point about political organisation is that people’s minds are divided between their identities as workers and consumers. As consumers, they want to pay as low prices as possible, but they have to realise that this is connected to lower salaries. This contradiction is often hard to reconcile.97 From the companies’ point of view, the ‘gig economy’ promises business savings for the platform manager on employee benefits, office space, and training, as well as the ability to bring in experts only when a specific need arises. The negative sides of the gig economy are much more evident. To a large extent, what we call the gig economy these days is simply a more extreme form of the long-known phenomena of the flexibilisation and precarisation of work. The platforms that hire gig workers benefit from maximum levels of flexibility. The gig economy label serves to hide what is in practice a very traditional subordinate employment relation so that platform companies can avoid fulfilling the legal obligations and granting the social rights that traditional labour relations entail. The gig economy can lead to job creation in Hungary, but it has to be much better regulated.98 (5) These new forms of employment offer opportunities and challenges for social protection. Many of these jobs are found in non-standard forms of employment, a range of 95

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J. Hajdu´, ‘A digita´lis platform munka szaba´lyoza´sa´nak ne´ha´ny szocia´lis biztonsa´gi vonatkoza´sa az Euro´pai Unio´ban [Some social security aspects of digital platform work regulation in the European Union]’ in M. A´braha´m, G. Berke, and M. E. Ta´lne´ (eds.) Exemplis discimus: Emle´kko¨tet Radnay Jo´zsef szu¨lete´se´nek 95. E´vfordulo´ja´ra [Commemorative Volume for the 95th Anniversary of the Birth of Jo´zsef Radnay], 115–29 (Budapest: Pa´zma´ny Press, 2022), https://bit.ly /3Dyw6Mr. A. Kun, ‘A modern technolo´gia´k, digitaliza´cio´ hata´sa a munkava´llalo´i e´rdekke´pviseletek teve´kenyse´ge´re [The impact of modern technologies and digitisation on the activities of employee interest representatives]’ in A´. O. Homicsko´ (ed.), A digitaliza´cio´ hata´sa az egyes jogteru¨leteken [The Impact of Digitisation on Individual Legal Areas], Acta Caroliensia Conventorum Scientiarum Iuridico-Politicarum XXIX, 159–72 (Budapest: Ka´roli Ga´spa´r Reformed University Faculty of Law and Political Science, 2020). B. Kozek, K. Lenaerts, L. B. Poulsen, and L. Zamponi, ‘The gig workers on tap’, Green European Journal (17 May 2018), www.greeneuropeanjournal.eu/the-gig-workers-on-tap/. M. Kahancova´, T. T. Meszmann, and M. Sedla´kova´, ‘Precarization via digitalization? Work arrangements in the on-demand platform economy in Hungary and Slovakia’, Frontiers in Sociology, 5 (2020), 1–11, https://doi.org/10.3389 /fsoc.2020.00003.

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contractual arrangements that deviate from a ‘standard’ open-ended, full-time, dependent and regularly paid employment relationship, which constitutes the key reference point for most labour and social security legal and policy frameworks.99 In Hungary there is no adequate answer to this challenge. Basically, self-employed persons are covered by the social insurance system. Most platform work is an IT transaction; therefore, all the order and money flow is usually visible on the Internet (hence my personal idea of developing a new control, the IT-Controlled and Activity-Based Social Security and Taxation (ITCASS&T) system. It would be one step to use these data (flow of services and money) as a basis for taxation and social security coverage. Another possible solution would be the ILO’s Social Protection Floors Recommendation (2012). However, these are the author’s thoughts and not the official Hungarian standpoint.100

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ILO, Non-standard Employment around the World: Understanding Challenges, Shaping Prospects (Geneva: ILO, 2016); C. Degryse, Digitalisation of the Economy and Its Impact on Labour Markets, ETUI Working Paper 2 (Brussels: ETUI, 2016). Hajdu´, ‘A digita´lis platform munka szaba´lyoza´sa´nak ne´ha´ny szocia´lis biztonsa´gi vonatkoza´sa az Euro´pai Unio´ban [Some social security aspects of digital platform work regulation in the European Union].

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13 Digitalisation and Disruption of Labour Relations in Estonia Gaabriel Tavits

I INTRODUCTION

The use of different digital means of communication gives employers and employees in Estonia different opportunities to regulate work. Although the number of employees who are using digital means of communication is growing, the majority of employees still prefer to be employed under traditional employment contracts. The number of employees or workers with new employment forms (e.g. platform work) is not declining, but it is difficult to predict how quickly the number of such employees is growing. A survey carried out by the European Trade Union Institute (ETUI) showed that, for example, the share of platform employees in Latvia is only 1 per cent of the total number of employees.1 At the same time, it has been claimed that in Estonia, approximately 7 per cent of employees regularly use platform work to earn an income.2 In addition to platform work, other means have been used by employers to better regulate employment relationships, for example telework. This chapter begins with an analysis of the constitutional framework for the legal regulation of employment relationships in Estonia. In the digital world, the right of a person to freely choose a field of work is an important part of the basic rights determined in the constitution. After analysing the constitutional boundaries, the chapter will examine a few problems related to new forms of work and their legal regulation in Estonian labour law.

II DIGITALISATION IN ESTONIA: GENERAL BACKGROUND

Estonia has adopted an information society development strategy that will run until 2030.3 This strategy focusses on both individuals’ digital competences and increasing the digital capacity of businesses. According to this strategy, there are significant problems in the use and availability of information communication technology (ICT) in business-to-business communications. Although the state has contributed extensively to the development of public services and is planning to deploy various applications based on artificial intelligence (AI), the use of new information technology (IT) solutions in the private sector has not progressed fast enough.

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A. Piasna and J. Drahokoupil, Digital Labour in Central and Eastern Europe: Evidence from the ETUI Internet and Platform Work Survey, Working Paper 2019.12 (Brussels: European Trade Union Institute (ETUI), 2019). Foresight Centre, ‘The state has no overview of platform workers’ (2 June 2021), https://arenguseire.ee/en/news/thestate-has-no-overview-of-platform-workers/. Ministry of Economic Affairs and Communications, Estonia’s Digital Agenda 2030 (Tallinn: Ministry of Economic Affairs and Communications, 2021), www.mkm.ee/media/6970/download.

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According to the strategy, there is a development plan to implement the vision with more specific objectives and planned lines of action in three areas: • developing the digital state or the use of digital solutions in the public sector, with the primary goal to obtain public services while providing the best experience for the way of life; • developing electronic communication or connectivity, to make connectivity sufficiently available to enable use of digital solutions, be it in a person’s daily life or business, with the main goal to make fast communication affordable everywhere in Estonia; • developing national cyber security, because if the necessary trust is guaranteed, it can be formulated in a vision to move forward with digital development. This area includes ensuring cyber security in both the public and private sectors at large. Despite the availability of infrastructure and the widespread use of ICT in the country, the use of ICT by Estonian companies is insufficient. Although, according to Statistics Estonia, more than 96 per cent of Estonian companies consistently use computers, the implementation of ICT solutions remains unsophisticated. In particular, ICT solutions are used in financial accounting, but less in product development, production planning, or equipment management. Digitalisation and sharing economies are considered important topics in the European Union (EU). Thus, the EU has endorsed the overall plan for digitalisation.4 The principles of the sharing economy have also been endorsed by the EU.5 In Estonia, attention has so far been paid to digital solutions that focus on the state’s communication with its citizens. The main objective is to provide citizens with faster ways of communicating with state authorities and to ensure as much paperless administration as possible. The state also contributes to ensuring the so-called high-speed Internet in various regions of Estonia. All these developments provide an opportunity for an increasing number of different tasks to be solved in a way that no longer requires a traditional employment relationship. It is possible to work on different online platforms and in different places. At the same time, it must also be understood that not all jobs can be digitised. Jobs that have now been digitised bring with them various issues related to ensuring the legal regulation of labour relations In 2021, there was a survey on platform work in Estonia. Where possible, the results of the survey were compared with previous results that were collected in 2018.6 According to the survey, 7.0 per cent of the platform work is done on a weekly basis, which, when expanded to the working age population (aged 18–64), affects about 56,000 people. In 2018, the corresponding share was 8.1 per cent. The share of regular platform employees has not increased. However, the share of people working on platforms at least once a month has increased (11.9 per cent v. 10.3 per cent in 2018). Further, 11.9 per cent of the respondents (about 95,000 people) work on a platform at least once a month, about a fifth (about 161,000 people) at least once a year, and more than a quarter of the working-age population (about 208,000 people) have at least once done platform work. 4

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European Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, and the Committee of the Regions: A Digital Single Market Strategy for Europe, 6.5.2015 (Brussels: European Commission, 2015), https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=ce lex%3A52015DC0192. European Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, and the Committee of the Regions: A European Agenda for the Collaborative Economy, 2.6.2016 (Brussels: European Commission, 2016), https://eur-lex.europa.eu/legal-content /EN/ALL/?uri=CELEX:52016DC0356. J. Vallistu and M. Piirits, Platform Work in Estonia in 2021: Survey Results [Platvormito¨o¨ Eestis 2021: Ku¨sitlusuuringu tulemused] (Tallinn: Arenguseire Kestus [Centre for Development Monitoring], 2021), www.riigikogu.ee/wpcms/wpcontent/uploads/2021/06/2021_platvormitoo_uuring.pdf.

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This change still shows that there is a growing tendency towards a web-platform economy and that people are interested in using this possibility for economic activity. At the same time, there is no specific legislation for either the web-platform economy or industry 4.0. The only legislative act that can be mentioned here is the Information Society Services Act.7 This legal act creates a certain legal framework for a web-based economy and activity, but it does not regulate labour relations.

III THE NATURE OF EMPLOYMENT RELATIONSHIPS IN ESTONIA

A Legal Regulation of Employment Relationships Individual employment relations in Estonia are regulated by the Employment Contracts Act (hereinafter ECA).8 This law entered into force in 2009 and implements the flexicurity principle. According to the ECA, an employment contract does not necessarily have to be concluded in written form, and the requirements for terminating an employment contract have been simplified. Although the ECA leaves sufficient room for the parties to the employment contract to conclude individual agreements, the ECA has been criticised for not ensuring sufficient flexibility in a changed working environment.9 Topics related to working time are inadequately regulated and, as far as working time is concerned, neither party to the employment contract can set the number of working hours. Everyone has the right to freely choose their field of activity and job, according to section 28 of the Constitution of the Republic of Estonia (hereinafter Constitution).10 This provision also complies with section 19 of the Constitution, according to which everyone has the right to selfdetermination. The principle of freedom of contract is derived from this provision. This means that everyone has the right to decide with whom to conclude an employment contract, and it guarantees the possibility of deciding whether and with whom to terminate a contract. Although, according to the Constitution, both the employee and the employer can decide with whom and under what conditions an employment contract will be concluded, the conditions of employment are controlled by the state. This principle enables the state to establish the necessary and required working conditions and to exercise control over the fulfilment of these conditions. Thus, when the conditions of employment are under the control of the state, the state can impose the necessary requirements and conditions for the verification and fulfilment of those conditions. In addition to the possibility of regulating working conditions as provided for by law, it is possible to regulate working conditions by means of a collective agreement. The importance of collective agreements as a legal option for regulating working conditions is modest in the Estonian legal system. According to the Collective Agreements Act, collective agreements can be concluded at three levels: company, industry, and state. Although it is possible to conclude 7

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Information Society Services Act [Infou¨hiskonna teenuse seadus] – RT I 2004, 29, 191 (RT = Riigi Teataja [State Gazette]), www.riigiteataja.ee/en/eli/530062021010/consolide. Employment Contracts Act [To¨o¨lepingu seadus] – RT I 2009, 5, 35, www.riigiteataja.ee/en/eli/522122022002/ consolide. In particular, that argument implies that, while the ECA switched its focus from the industrial economy more to the service economy, such regulation is no longer sufficient in the changed working environment. In the context of the platform economy, it is necessary to provide more flexibility to the parties involved in labour relations in defining working conditions. The Constitution of the Republic of Estonia [Eesti Vabariigi po˜hiseadus] – RT 1992, 26, 349, www.riigiteataja.ee/en/ eli/530122020003/consolide.

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a collective agreement at different levels, no collective agreements have been concluded in Estonia in connection with the new forms of work (platform employment). Working conditions related to new forms of work are regulated either by an individual employment contract or by unilateral norms established by the employer. Owing to the development of the digital economy and the consequent changes in the forms of work, the possibility of working remotely is regulated in the ECA. The provisions of the ECA on the regulation of telework are general and leave the employee and the employer the opportunity to make agreements to the extent necessary for the employer and the employee. In addition to the regulation of telework provided for in the ECA, the Confederation of Estonian Trade Unions and the Estonian Employers’ Confederation have concluded an agreement on the principles of applying telework. Although these principles are not mandatory (it is not a collective agreement), they are indicative. According to this agreement, telework can take place only on a voluntary basis. The employer must explain to the employee all risks related to occupational health and safety before offering the opportunity for telework. The employee must follow the explanations given by the employer to the employee. In Estonia, employment relationships are mostly individual in nature. In Estonia, the employment relationship can be characterised as a normal, so-called classical employment relationship. Employees mostly want to work under an open-ended contract, full-time. The spread of new forms of employment has generally not changed the attitude of employees towards the usual employment relationship. The role of collective agreements in Estonia cannot be underestimated. Although it can be acknowledged that collective agreements do not regulate labour relations to a significant extent, there are still sectors of the economy in Estonia where collective agreements play an important role in regulating labour relations. Such sectors are the transportation sector and the medical sector. B Constitutional Limits of Employment Relationships When analysing the impact of the digital economy on employment relationships, the limits set by the Constitution for the legal regulation of employment relationships are important. As mentioned in the Constitution, a person has the right to freely choose his or her place of work and field of activity.11 At the same time, the Constitution stipulates that the conditions of employment are under the control of the state. The latter principle gives the state the possibility to monitor the working conditions laid down by law. According to the Constitution, the possibility of self-realisation is also provided for. In accordance with that principle, the freedom of contract is also guaranteed in employment relations, which means the possibility of deciding with whom and under what conditions a contract of employment is to be concluded. It also means the freedom to terminate an employment contract. In addition to individual employment rights, the Constitution also provides for collective rights. In this way, the Constitution provides for the right to assemble in associations in order to better protect the interests and rights of both workers and employers. According to the Constitution, the right to organise strikes is also guaranteed.12 From the point of view of the digital economy, the importance of guaranteeing the privacy of the individual in employment relationships is also important. The protection of information 11 12

Constitution of the Republic of Estonia, § 19. Constitution of the Republic of Estonia, § 29.

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secrets13 and the right of everyone to the inviolability of their living space are guaranteed by the Constitution.14 Both rights become essential when employees carry out their tasks through a platform or use other new ways of working.15 Ensuring safe and healthy working conditions remains an important aspect when an employee takes advantage of new working opportunities. Although health and safety requirements continue to be the subject of analysis of employers’ accountability and responsibilities, the responsibility of employees to monitor safe working conditions is also becoming increasingly important. According to the Constitution, working conditions are controlled by the state.16 In this context, the control exercised by the state must be viewed in a broader sense, which includes both the establishment of relevant norms and the monitoring of compliance with those norms. The performance of this monitoring is also related to the fulfilment of occupational health and safety requirements. Pursuant to the Occupational Health and Safety Act, the Labour Inspectorate has the right to supervise safe working conditions.

IV PLATFORM/GIG WORK: CHARACTERISTICS OF DISTINCTION

There are only a few definitions of ‘platform’ and ‘platform work’ in Estonia because this kind of employment is still not very popular in practice. The notion of a platform was used in the fact sheet for Estonia prepared by the University of Hertfordshire. The fact sheet described it as referring to paid tasks that are found via a website or app accessed via a laptop, smartphone, or other interconnected device. The renting of rooms via Airbnb or similar and buying and selling goods online were excluded. Sometimes the notion of ‘platform work’ is used without any further clarification.17 There is no legal definition of platform work. However, platform work is leading to changes in both the labour market and industrial relations. The platforms create a parallel and sometimes too flexible labour market where employment is not dependent on any kind of contract. There are no employment contracts, no labour standards like working time, health and safety at work, no minimum wage, and no vocational training. Platform workers frequently lack access to trade unions or other forms of collective representation or action. The phrase ‘digital platform’ has various meanings in practice. There are digital platforms that serve only as intermediaries between job seekers and employers who offer jobs – sometimes temporary, sometimes permanent. Such platforms charge fees for their services, but they do not interfere in the employer–employee relationship. They operate like recruitment agencies. Workers who seek jobs via such platforms are free to negotiate working conditions with the employer.18 Other platforms operate like temporary agencies, and take the role of an employer, although they do not offer ‘real’ employment like other companies. In such cases, there are ‘triangular’ 13 14 15

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Constitution of the Republic of Estonia, § 43. Constitution of the Republic of Estonia, § 33. In this way, the requirement of living space inviolability takes on new meaning. If the employee works remotely, the employer remains responsible for meeting the employee’s health and safety requirements. The employer must have the right to enter the worker’s accommodation in order to inspect the working conditions. If the employee does not grant this right or opportunity, this fact does not exempt the employer from fulfilling the statutory requirements. Constitution of the Republic of Estonia, § 29. See Future Work: New Trends and Developments (Tartu: University of Tartu, 2017), https://skytte.ut.ee/sites/default/ files/2022-08/tuleviku_too_lopparuanne.pdf; K. Holts, Understanding Virtual Work: Prospects for Estonia in the Digital Economy (Tallinn: Arenguseire Kestus [Centre for Development and Monitoring], 2018), www .riigikogu.ee/wpcms/wp-content/uploads/2017/09/Virtual-work-size-and-trends_final1.pdf. See, e.g., platform GoWorkaBit, https://goworkabit.com/?lang=en.

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relationships between the actual employer (user company), the platform company, and the employee. There are also platforms that are real employers, but their activity is also not regulated by the law. Usually they offer temporary jobs, on-call work, and other forms of atypical work. ¨ , which is equivalent to Usually the platforms are registered as limited companies (OU German GmbH; English Ltd). This means that there is always a legal body operating the platform. The platforms define themselves as offering services for the information society, and they do not take any responsibility as an employer.19 There are some debates concerning the particular meaning of crowd work and ‘on-call’ work implemented via software application. Crowd work is usually done online and connects many clients, organisations, and businesses that are located at long distances from each other. On-call work, implemented via software applications, is done at one place but via digital platforms (for e.g. in transport, home services, repair services). In 2019, a survey was done on platform employment in thirteen European countries. Data from Estonia were also collected.20 In an online survey of 2,000 Estonians between the ages of 18 and 65, 8.1 per cent claimed to be doing work via so-called gig economy platforms such as Upwork, Uber, or Handy at least once a week. Further, 10.2 per cent did such work at least once a month. In 2021, a survey about platform work in Estonia21 produced the following results: • Only 7.0 per cent of the work is done on a weekly basis, which, when expanded to the working-age population (aged 18–64), is about 56,000 people. In 2018, the corresponding share was 8.1 per cent. • Platform work is additional work to other activities. Almost half of the people who do platform work regularly do platform work for up to ten hours a week. A quarter of regular platform workers work eleven to twenty-five hours a week, slightly more than a fifth work twenty-five to forty hours a week, and a small proportion (7.2 per cent) work more than forty hours a week via a platform. • For 4.4 per cent of platform employees, platform work is the only source of income (approximately 2,500 people), and this figure has not increased compared to 2018. • Platform workers who have done platform work at least once in the last year (20.2 per cent of the working-age population, i.e., about 161,000 people) earn on average 18.4 per cent of their monthly net income by doing platform work. Thus, the share of revenue generated by platform work is significant. • During the Covid-19 period, the volume of platform work performed in the digital environment increased, especially among Estonian-speaking respondents. It follows that the platform’s business model is expanding in the professional services sectors. Platform work and the legal status of such workers have been analysed in the legal literature from several different aspects. The jurisprudence of different countries seems to support the view that people working through a platform are similar to employees and consequently entitled to the same level of protection as employees. However, the question has not been raised about whether 19 20

21

GoWorkaBit, General Terms and Conditions, https://goworkabit.com/temp-recruitment-terms. U. Huws, N. H. Spencer, and M. Coates, The Platformisation of Work in Europe: Highlights from Research in 13 European Countries (Brussels: Foundation for European Progressive Studies (FEPS), with UNI Europe and University of Hertfordshire Business School, 2019), www.feps-europe.eu/resources/publications/686-theplatformisation-of-work-in-europe.html. Vallistu and Piirits, Platform Work in Estonia in 2021.

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and to what extent people who work through a platform want protection. Although the employment protection offered, for example in terms of working time and termination of employment contracts, is one of the most effective, different approaches do not specify to what extent and what kind of protection workers must receive. A directive on transparent working conditions has been adopted by the EU.22 This directive is remarkable in different respects as it creates a new legal framework for employees in terms of clarity of working conditions. Two aspects of this directive are important for Estonia. The first aspect relates to the concept of an employee. According to the directive, the concept of an employee must be clarified in national law, taking into account the case law of the Court of Justice of the European Union (CJEU). As a result, the principle enshrined in the directive gives priority to the existence of a relationship of subordination between the prospective employee and the employer. The importance of the existence of a relationship of subordination has been emphasised in Estonia’s courts’ case-law. In particular, case-law has emphasised the employer’s ability to decide how far they want to control their employee’s behaviour during the agreed-upon working hours.23 Another important feature highlighted by the directive is the possibility for a Member State to exclude from the scope of the requirements of the directive employees whose working time is on average less than three hours per week over a four-week period. According to this principle, the obligation to notify working conditions covers essentially all kinds of activity where work is performed for someone else. Although the CJEU has pointed out in its case-law that small-scale activities are not considered to be employment,24 the directive now also defines the limits of ‘small-scale activities’. In the context of Estonian law, such a change means that the border between the employment contract and other agreements under civil law becomes non-existent. According to the ECA, it is always assumed that there is an employment contract if the work is done for someone else, and it is expected that the work will be done for a remuneration. At the same time, the ECA states that the provisions of the employment contract are applicable to the employment contract, unless otherwise specified in the ECA itself. The structure of the ECA indicates that the parties can agree on the terms and conditions of the employment contract while respecting the minimum terms and conditions provided for in the ECA. The possibility of not applying the above-mentioned directive to the provision of information on working conditions also points to another fact. It is precisely on the basis of the principle set out in the directive that not only does the fact of working become important in and of itself but it is also important to establish the number of hours worked by the worker. If the working time is less than three hours per week for a four-week period, the existence of an employment contract is excluded, and thus the worker cannot benefit from the guarantees provided by the ECA. Occupational health and safety is one of the most important topics that must be taken into account for new ways of working. In the EU, the Occupational Safety and Health Directive was adopted as early as 1989. This directive stipulates that the employer is responsible for a safe working environment and must do everything possible to ensure that the health of the employee is not adversely affected in the course of his duties. In the changed situation, the employer has a number of issues that make it more difficult for him to fulfil his obligation and to ensure that 22

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Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union, https://eur-lex.europa.eu/legal-content/EN/TXT/? uri=CELEX:32019L1152. Ibid. M. Risak and T. Dullinger, The Concept of ‘Worker’ in EU Law: Status Quo and Potential for Change, Report 140 (Brussels: ETUI, 2018), 31–5, www.etui.org/sites/default/files/18%20Concept%20of%20worker%20Risak% 20Dullinger%20R140%20web%20version.pdf.

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the safe working conditions prescribed by law are guaranteed. On the one hand, the problem is guaranteeing the privacy of the employee; on the other hand, the protection of personal data also plays an important role. If the employee no longer has to be tied to the place of work created by the employer but can choose the place of work, the employer no longer has an effective opportunity to ensure the necessary safe and healthy working conditions. Even in a situation where the employer ensures that safe working conditions can be created (e.g. by providing targeted support for the purchase of safe work equipment), it is the employer’s responsibility to monitor these safe working conditions. The fulfilment of this obligation requires that the employer has the right to access the premises organised or owned by the employee. If the said working premises are located in the employee’s home, this behaviour requires that the employee allows the employer into his private life. If the employee refuses to do so, the employer cannot check whether and to what extent safe working conditions are met. Although there is no right of inspection, the employer’s liability does not exclude the possibility that the employer could not guarantee safe working conditions because the employee did not give permission to do so. In the case of telework, the Estonian legislator has amended the Occupational Health and Safety Act to the extent that the responsibility for ensuring safe working conditions for employees working remotely has shifted. When working remotely, the employer must inform the employee of all possible risks related to health and safety at work. If the employer provides such information, the employer’s responsibility is transferred to the employee, and the employer is not liable for any potential violations of occupational health and safety requirements.25 Such a shift of responsibilities is justified by the fact that it is not possible, either in substance or in law, for the employer to enter the worker’s living quarters in order to check the health and safety requirements at work. Moreover, the worker is not obliged to set up a separate place in his or her accommodation where the worker can perform his or her duties in compliance with the requirements of health and safety at work. According to the Occupational Health and Safety Act, the employee is obliged to comply with a number of different requirements. For example, the EU has adopted a separate directive laying down requirements for the use of display screens. Although this directive was already adopted in 1990 and technology has since developed rapidly, it remains largely applicable in the member states of the EU.26 This directive covers all possible situations in which the employee has to work with a display screen. At the same time, the directive does not foresee how the costs should be shared, for example when working with a display screen. The more technology develops, the more investments will be required of the employee in order that they have access to modern, ergonomic systems. Largely, costs remain a matter for the parties to the employment relationship to agree on themselves. According to section 40 of the ECA, the employee has the right to claim compensation for expenses and damages that are connected to the employment relationship. At the same time, the principle remains that the employee can claim such expenses from the employer to a reasonable extent. Estonian jurisprudence so far has not indicated what ‘a reasonable amount of expenditure’ means. Nor has case-law so far clarified whether and to what extent compensation for costs can be claimed in the case of telework. Estonian labour laws do not yet mention platform work or the specificities associated with it. Although, as said before, almost 7 per cent of Estonian workers receive their income through 25

26

Occupational Health and Safety Act [To¨o¨tervishoiu- ja to¨o¨ohutuse seadus] – RT I 1999, 60, 616, www.riigiteataja.ee /en/eli/511112022002/consolide. Council Directive 90/270/EEC of 29 May 1990 on the minimum safety and health requirements for work with display screen equipment, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A31990L0270.

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platform work, regulation of the legal situation of these workers has not yet made its way into law. Largely, the legal position of a worker is settled by agreement between the parties and on the basis of standard terms drawn up by platform operators. Based on these standard terms, platform operators do not consider themselves employers but are information society service providers. When talking about the ride-sharing service and the concept of an employee, the question may be raised as to whether and to what extent the concept of an employee is applicable. Is the interpretation of the concept of ‘employee’ in Estonian legislation broad enough to include all kinds of worker who work at least three hours during a four-week period? The highest court of Estonia – the Supreme Court of Estonia – has had to deal with the topic of taxi drivers several times. This issue has been addressed in both tax law and labour law. However, the assessment has been based on the criteria normally used in the employment relationship: who pays for the means necessary to carry out the work; is the employee included in the list of employees working for the employer; and to what extent are the persons providing the driving service still employees of the taxi company or are they independent service providers? According to the Estonian Supreme Court, subordination to a potential employer is of decisive importance.27 If the degree of subordination is modest, the relationship will not be qualified as an employment relationship. If there is an intensive degree of subordination, it is possible to determine the characteristics of the employment relationship and to assume that it is an employment relationship with all the significant characteristics resulting from the employment relationship. One of the most important consequences of digitalisation is that we are not in a position to move on from the concepts of a worker and an employment contract that developed in the late nineteenth century. In both Western and Eastern Europe, in the first half of the twentieth century, the essential characteristics of an employment contract and an employment relationship were established. This approach was very well suited to employment relationships in factories. However, in a situation where the employee’s workplace is not fixed and the employee can choose the workplace, or in a situation where the working time is flexible and the employee can decide for themselves when and how to provide the service or perform the tasks assigned by the employer, it is not possible to qualify the employment relationship on the basis of the characteristics that were used in the nineteenth and twentieth centuries. To better protect the worker, new criteria or additional criteria should be supported to place the worker within the definition of an employee. Although the modern concept of an employee presupposes that there is a very high degree of subordination to the employer, these characteristics must be abandoned. The extent of dependency is not the only determining factor in changing economic conditions. It is necessary to agree on who and to what extent we want to qualify someone as an employee. It can therefore be argued that, in today’s legal context, the inclusion of every worker in the employment contract and in the area of labour law is the first priority. It can be concluded that all people who work for someone are generally regarded as employees. With new ways of working, an important issue is related to the permissibility of fixed-term employment contracts. Fixed-term contracts have been considered an atypical form of employment that deviates from the normal employment relationship. According to the current prevailing understanding, fixed-term employment relationships can be entered into only if the law so provides, and, as a rule, such employment contracts can be entered into only if temporary employment is involved, and only if the fixed-term employment relationship lasts for a very limited period. New ways of working have highlighted the need to review the regulation of fixed27

¨ , www.riigikohus.ee/et/lahendid?asjaNr=2-18Supreme Court, Case 2–18–6908, 20 May 2020, A.H. v. Trust OU 6908/47.

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term employment relationships. Here we can give the example of what are known as ‘gigs’. These are where workers are not interested in a long-term employment relationship but instead want to take short jobs that last from a few hours or days to a few months. In other words, they want to do different jobs with different employers. This situation entails the need to review the regulation aimed at excluding misuse of successive fixed-term employment relationships and restricting the conclusion of fixed-term employment contracts. Under the ECA, fixed-term employment contracts can be concluded for a maximum period of five years owing to the temporary nature of the work. In order to carry out similar work, a fixed-term employment contract cannot be concluded on more than two consecutive occasions (maximum ten years). Once the aforementioned possibilities have been exhausted, a fixed-term employment contract can no longer be concluded, and the employment contract becomes an indefinite employment contract. Such regulation does not favour short-term work. In Estonia, there is a platform that mediates shortterm employment (GoWorkaBit). Through said platform, anyone who wishes can do short-term work offered by various employers. Owing to the limited number of fixed-term employment contracts, it may be difficult to carry out these multiple ‘gigs’. For the state, the important question is whether to allow such gigs or to continue with the current understanding of fixedterm employment. Consequently, the admissibility of the conclusion and use of fixed-term employment contracts in Estonian employment relationships needs to be clarified to make employment relationships more flexible. Although the EU directive on fixed-term employment provides that Member States must take measures to avoid misuse of successive fixed-term employment, fixed-term employment is one way of responding to changing employment patterns as well as changing economic conditions. The challenge of avoiding excessive use of permanent contracts and the protection of workers in fixed-term employment relationships will certainly remain important here.

V WORKING TIME: DIGITALISATION AND FLEXIBILITY

The issue of working and rest time is one of the most important issues in employment relationships. The correct balance of working and rest time ensures the efficiency of the employee’s work, and ensures that the employee is meeting the necessary occupational health and safety requirements. The ECA complies with the requirements of the Working and Rest Time Directive, regarding the maximum working time limits and the fulfilment of the minimum rest time requirements. Pursuant to clause 4 of subsection 2 of section 28 of the ECA, it is the employer’s duty to ensure the control of working and rest time. The employer is also responsible for keeping the necessary record of working and rest time. In its judgment C 55/18, the CJEU emphasised the importance of the employer’s obligation to keep a record of working time.28 The European Working and Rest Time Directive does not directly prescribe how the keeping of records of working and rest time should be ensured; it leaves it to the Member States to decide how to do this. The ECA does not prescribe more precisely how the employer must keep the said record or whether or not the employee’s representative has access to this account. In Estonia, the mentioned principle of recording clarity is indirectly derived from the sanctioning provisions of the ECA, according to which if the employer does not comply with the maximum working time limits and minimum rest time requirements stipulated in the ECA, the Labour Inspectorate can impose a financial penalty on the employer. In order to impose a financial penalty, the Labour 28

CJEU, Case C 55/18, Judgment of the Court (Grand Chamber) of 14 May 2019 (request for a preliminary ruling from the Audiencia Nacional – Spain) – Federacio´n de Servicios de Comisiones Obreras (CCOO) v. Deutsche Bank SAE, https://bit.ly/3NcKH5S.

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Inspectorate must be able to see the record of working hours kept by the employer. With the help of the working time record, it is possible to determine whether and to what extent the employees have had to work overtime, as well as whether the necessary rest time requirements have been complied with. Therefore, although the ECA does not oblige the employer to implement a specific recording system, the fulfilment of this obligation remains to be shaped directly by the employer. Digitalisation leads to a situation where the employee does not have to be physically available to the employer all the time. First, it is important that the employee’s duties are fulfilled; if necessary, the employee must be available to the employer for professional communication. Therefore, the employee can be quite independent when it comes to scheduling working and rest time. According to section 51 of the ECA, the rest period between working days must be at least eleven hours. The rest period can be divided according to an agreement in the employment contract. Limits also apply when portioning rest time. The duration of one rest period is at least six consecutive hours, provided that the work does not harm the employee’s health and occupational safety. If such a division of rest time has been agreed upon in the employment contract, the employer must ensure that the said requirement is strictly observed. This provision becomes especially important in the case of telework, where ensuring uninterrupted rest time may not be feasible in all cases. It is critical that the employer fulfils its obligation to ensure that the employee complies with the requirements of the rest regulation. The employer is still responsible for regulating working and rest time, as well as occupational health and safety requirements. At the same time, many practical guidelines emphasise the employee’s own responsibility for creating a safe working environment.29 A Locational Flexibility and Digital Work In connection with the development of the digital economy and the resulting changes in work forms, the possibility of teleworking is regulated in the ECA. The provisions of the ECA on the regulation of telework are general and leave the employee and the employer the opportunity for agreements to the extent necessary for the employer and the employee. In addition to the regulation of telework prescribed by the ECA, the Estonian Trade Union Confederation and the Estonian Employers’ Confederation have concluded an agreement on the principles of the application of telework. Although the principles are not mandatory (it is not a collective agreement), the parties recommend that all employees and employers should follow them. According to the said agreement: (1) In order to perform telework, the parties to the employment contract should enter into a written agreement at the beginning of the employment relationship or during the employment relationship before performing telework. The conclusion of a telework agreement must remain voluntary, and neither party of the employment relationship has the right to demand the conclusion of an agreement from the other party. (2) The employer is generally responsible for the procurement, installation, and maintenance of work equipment. The employee keeps and uses work tools in accordance with the rules laid down by the employer.

29

See the Agreement on Teleworking [Kaugto¨o¨ kokkulepe] (Tallinn: Estonian Trade Union Confederation [Eesti Ametiu¨hingute Keskliit], 2017), https://eakl.ee/kokkulepped/kaugtoo-kokkulepe. See also Occupational Health and Safety of a Teleworker [Kaugto¨o¨taja to¨o¨tervishoid ja ohutus], https://bit.ly/47Amejf.

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(3) The employer informs the teleworker of occupational health and safety rules, including, for example, the correct working techniques for working with display screen equipment. The teleworker is responsible for complying with occupational health and safety requirements made known to the teleworker. (4) According to the nature of the tasks, the teleworker may have the opportunity to freely choose his or her own working hours. The employer should retain the right to issue orders to the teleworker, which would make accounting for the teleworker’s working time easier for the employer. For teleworkers it is important to follow and ensure occupational health and safety requirements. It is one of the important problems for which several countries are seeking concrete solutions. Although the introduction of telework in many countries is regulated by different legal acts, the requirements related to occupational health and safety mostly remained unchanged. The Occupational Health and Safety Act does not change the ratio of responsibility for occupational safety between the employee and the employer. In the case of telework, the employer is fully responsible for meeting occupational health and safety requirements. If other working conditions in the case of telework are a matter of agreement between the parties, ensuring occupational health and safety requirements is ultimately still the responsibility of the employer. When implementing telework, one of the important issues is the employee’s right of protection of his or her private life. The Constitution of the Republic of Estonia stipulates that everyone has the right of protection of their private life.30 A similar right is also stipulated in Article 8 of the European Convention on Human Rights (ECHR).31 This right can be limited only by law. On the basis of this article, there are also provisions for everyone’s right of protection of their private lives. According to Article 8, it is also possible to limit this right on the basis of the law if it is necessary in a democratic society. When implementing telework (working from home), the question arises of whether the employer can unilaterally compel the employee to work from home (e.g. in a Covid-19 situation). To answer this question, it is necessary to analyse when the employer is allowed to demand from the employee unilaterally to work from home. Such a unilateral employer’s claim can be imposed only if such a possibility is provided by law. The requirement of legality based on the ECHR does not only mean that the legislator must adopt a specific law; to fulfil the requirement of legality, it is sufficient if, for example, the national government is given the authority to enact such legislation. In this respect, it is worth noting another aspect that the ECHR authorises to use. According to Article 15 of the ECHR, a Member State may suspend the application of the provisions of the ECHR if there is an emergency and the Member State has informed the Council of Europe. This option means that if there is a violation of the requirements of the ECHR, the Member State has the opportunity to refer to the non-application of the ECHR. At the same time, such an opportunity does not mean that the employee’s rights can be restricted unreasonably. Although it is possible to limit implementation of the provisions of the ECHR, this does not mean that it is possible to suspend the fundamental rights and freedoms provided for in the Estonian Constitution. Therefore, in a situation where the Member State has reported suspension of the rights and freedoms provided for in the ECHR, this does not lead to suspension of the rights and freedoms provided for in the Estonian Constitution. As mentioned earlier, the Estonian legislation doesn’t regulate telework extensively. The ECA section 6(4) stipulates: if an employer and an employee agree that the employee works, which he usually does in the employer’s enterprise, outside the workplace, including at the employee’s 30 31

Constitution of the Republic of Estonia, § 26. European Convention on Human Rights, www.echr.coe.int/documents/convention_eng.pdf.

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place of residence (teleworking), the employer shall notify the employee that the duties are performed by way of teleworking. The conditions of telework have to be agreed upon between the employee and the employer.32 Platform work is not regulated by Estonian legislation. There are no special requirements for platforms or platform holders, and the conditions of platform work have not been regulated. The conditions of platform work will be decided either by the platform or by mutual consent between the platform worker and the platform. If an employment contract is signed, the entire labour legislation becomes applicable. B Covid-19 and Its Influence on Platform Employment Relations On 12 March 2020, the Government of the Republic of Estonia declared an emergency to prevent the spread of the Covid-19 disease in Estonia. Initially, the following measures were taken to avoid the spread of the coronavirus: • all public gatherings were prohibited; • all educational institutions (primary, basic, secondary, vocational, and hobby schools, as well as higher education establishments and universities) switched over to remote and home study; • all performances, concerts, conferences, and sports competitions were prohibited; museums and cinemas were closed. The implementation of the restrictions led to a high degree of teleworking and the creation of socalled home offices. The main problem when working from home is ensuring the health and safety of employees because their homes are not under the employer’s control. In this sense, there were also no changes in regulations. In many sectors and companies, telework has been implemented since March 2020, or the number of people involved in telework has increased. According to Estonian statistics for 2020, almost 30 per cent of all employees do telework.33 This trend also continued at the beginning of 2021. This applies to a variety of industries, including IT, telecommunications, commerce, water supply, finance, and, for the first time, education (schools and universities), research institutes, and government and local government. In addition, many companies that offer services at homes and offices continue to increase their remote work. In most cases, telework is implemented via shifts: some employees work from home for a week, for example, while others are in the offices, and then they switch for another week. In many cases, the new regimes are discussed or even negotiated with trade union or other worker representatives.

VI TECHNOLOGY AND COLLECTIVE REALITY

The regulation of collective labour relations in Estonia is still based on the legal framework established in the early 1990s. The two most important legal acts, the Collective Agreements Act34 and the Collective Labour Dispute Resolution Act,35 were adopted in 1993. To a greater 32 33

34

35

Occupational Health and Safety of a Teleworker (kaugto¨o¨taja to¨o¨tervishoid ja ohutus), https://bit.ly/47Amejf. Estonian Statistics, ‘More than 40,000 teleworkers were added during the year [Aastaga lisandus u¨le 40,000 kaugto¨o¨ tegija]’ (17 February 2021), www.stat.ee/et/uudised/aastaga-lisandus-ule-40-000-kaugtoo-tegija. Collective Agreements Act [Kollektiivlepingu seadus] – RT I 1993, 20, 353, www.riigiteataja.ee/en/eli/518112021002/ consolide. Collective Labour Dispute Resolution Act [Kollektiivse to¨o¨tu¨li lahendamise seadus] – RT I 1993, 26, 442, www .riigiteataja.ee/akt/126062018021.

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extent, this legislation has remained unchanged. Since the special position of platform workers is not regulated by law, it is necessary to ask here whether platform workers have the right to protect their rights collectively. According to the Competition Act,36 it is prohibited to enter into agreements that aim to limit the development of the market. This means that such agreements, which can limit both the provision of services and the necessary pricing policy, are prohibited. The Competition Act does not contain an exception for collective agreements, but so far the collective agreement has been considered in Estonian legal literature as an agreement that does not violate the conditions of free competition. If platform workers wanted to conclude a collective agreement, this could be contrary to the Competition Act. In Estonia, platform workers have so far not expressed a desire to regulate the terms of the service they provide collectively. However, there have been cases where, for example, ride-service drivers have collectively protested against the pricing policy set by the platform service provider. In the case of collective labour law, an important question is also who can form a collective of workers that would have the opportunity to conclude a collective agreement or who would have the opportunity to invite workers to collective actions. The collective labour law in Estonia is based on the principle that only employees who work under an employment contract can form a collective. If a worker does not have an employment contract, the workers are not allowed to form a collective or trade union. According to the Employees’ Trustee Act,37 the employer is obliged to inform and consult with employees about important changes at the employer’s organisation. According to the Employees’ Trustee Act, there is also a limit on the number of employees who, on average, have to work for the employer, so that the employer has a duty to inform and consult. This shall be done, on average, by reference to the number of employees employed under the employment contract. All other forms of work (e.g. other contracts under the civil law) are thus excluded from the mandatory obligation to provide information and consultation. Estonian collective labour law does not allow platform workers to regulate the terms and conditions of the services they provide, nor does it require that the provision of services be regulated collectively. A collective agreement could be reached, but this would be in violation of the Competition Act and would not allow platform workers to harmonise the terms and conditions of the services they provide. At the moment, the Estonian Parliament is not debating any bill that would allow either the extension of the scope of the collective agreement or a significant shift in the perception of the concept of an employee. The importance of collective labour relations in regulating labour relations cannot be underestimated. With new forms of employment, the involvement of teleworkers in collective actions plays an important role. The current collective labour law is based on the traditional concept of an employee and an employer. When it comes to using new forms of work (including using different platforms), a situation may arise in which there is no employment contract. This situation immediately raises questions about the applicability of the regulation of collective labour relations. In Estonia, neither employers nor trade unions have tried to involve platform workers in collective labour relationships. Estonian collective labour law is based on the traditional concepts of an employee and an employment relationship. Both the Collective Agreements Act and the Collective Labour Dispute Resolution Act give priority to labour relationships arising from the employment contract and the need to regulate them. 36

37

See § 4 of the Competition Act [Konkurentsiseadus] – RT I 2001, 56, 332, www.riigiteataja.ee/en/eli/526092022001/ consolide. See §§ 17 and 18 of the Employees’ Trustee Act [To¨o¨tajate usaldusisiku seadus] – RT I 2007, 2, 6, www.riigiteataja.ee /en/eli/518112021004/consolide.

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All other possible forms of employment and opportunity exist outside the areas covered by labour law, insofar as the existence of an employment contract in the relations between the employee and the employer is a prerequisite. The various collective measures that may be used to regulate labour relations are not available when, for example, platform work is used. Consequently, the regulation of labour laws needs to be amended to ensure that the employees of the platform are also involved in the formulation and regulation of working conditions. One important topic as a result of digitalisation is the possibility of concluding a collective agreement in a situation where workers do not act on the basis of an employment contract. If workers who are classified as neither employees nor self-employed wish to collectively agree on the terms and conditions of the service they provide, this will lead to a distortion of the market and undermine free enterprise. Collective agreements do not constitute agreements that have an adverse effect on the market under competition law, and, as a general rule, such agreements are excluded from the restrictive provisions of competition law. Insofar as it is not a collective agreement concluded between workers’ and employers’ representatives, such an agreement may be contrary to the Competition Act, with all the consequences that may result therefrom. The impact of digitalisation on collective labour relations is multifaceted. On the one hand, employee organisation is a critical issue. On the other hand, involving employees in solving various issues is important. Since 2001, the EU has had a general framework for informing and consulting employees.38 Estonia has also transposed these requirements into its national law. According to the Employees’ Trustee Act, the employer must inform and consult the employees, particularly in the event of changes in working conditions affecting a larger number of employees. Such compliance is necessary, in particular, to make employees aware of the introduction of new employment conditions and to enable them to have a say in the content and expediency of the changes. In spring 2020, owing to the Covid-19 pandemic, there was a significant change in the use of telework and its implementation. Telework was widely used in most countries, including Estonia. Although current Estonian law provides for obligations to inform and consult employees, employers did not have time to inform and consult employees. As restrictions on movement were introduced in a short period, there was not much time for employers to reorganise the work. Informing and consulting employees in a situation where employees spend a large part of their working time at home remains important. Different platforms are used for informing and consulting employees, and both employers and employees use them to hold work-related meetings virtually. Consequently, the importance of information and consultation has not lost its relevance, but the technical implementation of information and consultation has changed. Information and consultation retain their substantive and legal meanings in the changed context of employment relationships. Rather, it can be said that information and consultation for employees who work remotely have become even more important, as such activities help to maintain different social contacts. Trade unions are still at the beginning of their activities regarding platform work. There are no trade unions or branches of trade unions that are specifically concentrated on platform employment or platform workers. There are no statistical data about the representation of platform workers. There are no specific trade unions to protect the interests, rights, and obligations of platform workers. 38

Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community – Joint declaration of the European Parliament, the Council, and the Commission on Employee Representation, https://eur-lex.europa.eu/ legal-content/EN/TXT/?uri=celex%3A32002L0014.

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The interests of platform workers are not represented by any of the trade unions. Should platform workers want to protect their rights, they must organise demonstrations against the platform holders themselves. Such demonstrations are not viewed as strikes because strikes can be organised only by trade unions or by the employees’ trustee. At the moment, both possibilities presuppose that there is an employment contract. In Estonia the one and only demonstration was organised in 2018 in order to stop the changes in pricing policies for ride-sharing services.39 There are also many discussions concerning the digitalisation of work where the issue of platform work is brought up. Some of the main issues of concern to workers are related to working time, health and safety at work, the balance between work and private life, as well as representation of the workers. One of the major issues is the alternative labour market, as well as the growing amount of nonformal work and non-formal economy. Platform work typically is not performed on the basis of an employment contract, an agreed-upon wage or working hours, training, trade union organising, and so on. The worker is usually self-employed, and it is his or her responsibility to take care of social protection, social insurance, and so on. Usually, such work or employment is neither registered nor taxed or covered by social insurance. Another question is whether the platforms employ truly self-employed individuals or whether the majority of them are dependent on the platforms despite being officially self-employed. Do they have the right to refuse tasks? If they are considered independent contractors, the questions remain: what kinds of right do these workers have and what kinds of right can be guaranteed?40 Regarding the new EU policies, some steps have been taken by the government and the social partners, but at the moment they are still in the form of discussions. More attention is being paid to skills improvement and the adaptation of workers’ education and training, including their digital skills. Also, social protection is among the main subjects of the new programmes and discussions. However, platform work is still not among the priorities. Some of the most important policies are related to the legal amendments concerning platform work, including all the issues of labour and of worker and employer representation. The most important issues concern standards for minimum payment (payment per hour, day, week, and month), social insurance, rights for paid leave, working time regulations, standards for occupational health and safety, as well as the rights for organising and representation for workers and employers, dispute resolution, and collective bargaining. At the moment, it is obvious that platform workers need additional regulations, and there is a need to clarify the applicable labour conditions. The social partners must also reform themselves; for example, trade unions have to reform their structures and organisational methods. Trade union policies should be improved, with a greater emphasis on individuals. In the law, it is necessary to clarify to what extent trade unions can represent platform workers (i.e. workers who do not work under an employment contract). Generally speaking, it would also be useful to adopt new laws on collective labour relations, as the main legislation dates from 1993 and the labour market has changed a lot since then. In Estonia, there have been discussions about the right to be disconnected, but at the moment there is no concrete draft of a law to regulate this topic. In addition, there is no concrete plan to

39

40

¯ htuleht, ‘Taxify leaders gathered for demonstration [Taxify juhid kogunesid meeleavaldusele]’ See in Estonian: O (26 January 2018), www.ohtuleht.ee/854557/fotod-ja-video-taxify-juhid-kogunesid-meeleavaldusele. For example, § 97 of the Employment Contracts Act (ECA) allows for determining, via a collective agreement, the period of notice in case of termination of an employment contract. The period of notice agreed in a collective agreement could be longer than prescribed in the ECA or shorter.

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regulate in a more detailed manner the rights and obligations of employees and employers in order to regulate telework. No preparations have been made in Estonia for implementing the Digital Development Agreement concluded at the level of the EU or for implementing the principles referred to therein. It is probably not expected that the aspects of the agreement mentioned earlier will be specified in the near future in Estonia. At the same time, it is important that the principles referred to in this agreement are known to both employees and employers and that they have the opportunity to implement some of the principles, at least at the company level.

VII CONCLUSIONS

Estonia needs to solve several legal problems. The legal status of platform employees (whether it is an employment contract or another civil contract) needs to be clarified. Teleworking situations also require more specific regulation (e.g. whether and under what conditions an employer can or must allow teleworking). The issue of the digital skills of employees has been quite clearly understood by Estonian employers and employees, and the state has offered various measures to employers in this regard. Collective regulation of working conditions needs to be developed in Estonia. Although it is not possible to see obstacles from a legal point of view, this is largely a question of the activity of employers and trade unions themselves. If there is no need to regulate certain issues based on collective regulations, it is not possible to expect such action. In relations between the Estonian government and the citizens, Estonia has a very good reputation as a digital state. Although digitalisation is necessary and important in employment, the development here has been more modest. The role of trade unions and employers’ organisations in regulating new production and employment relations has been even more modest.

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14 Israel: New Trends in Israeli Labour and Employment Law Lilach Lurie*

I INTRODUCTION

The Covid-19 crisis has shaken Israel’s labor market. Many Israeli workers lost their jobs temporarily or permanently.1 Workers in several sectors, such as teachers and hi-tech workers, have moved to working at home using technology tools such as Zoom. Others, such as healthcare workers, workers at grocery stores, and other types of essential worker, continued to go to work facing health risks. Workers with children, who have been studying at home through virtual learning, needed to find a new balance between work and taking care of family members. Many questions regarding the future of employment and labor law, which formerly seemed theoretical, have become at once acute and relevant.2 Indeed, the crisis has not only changed the nature of work but also dramatically changed the nature of employment and social security law. Ideas that for a long time were mainly theoretical – such as basic income, flexible work, and providing rights that are not based on traditional employment – have become a reality. In Israel, for example, special regulations and collective agreements have encouraged employers to enable their employees to work from home when possible.3 Emergency regulations also granted independent workers, freelancers, and other categories of non-employees, who have been excluded from unemployment benefits, a special short term grant.4 In a controversial effort to assist Israeli residents, the Israeli government decided to distribute a lump sum to all Israeli residents, in several installments.5 While it is too early to determine whether the above changes are temporary or here to stay, it is possible to formulate some preliminary thoughts. *

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The study on which this chapter is based was supported by the Israeli Ministry of Science, Technology and Space, grant no. 3-14765. In August 2020, about half a million Israelis, constituting about 10 percent of the workforce, were unemployed. In April 2020, the numbers were larger, when 1.3 million Israelis were unemployed. See Central Bureau of Statistics (CBS), Labor Force Survey Data, June and 2nd Quarter of 2020 (July 30, 2020), www.cbs.gov.il/he/mediarelease/ DocLib/2020/233/20_20_233e.pdf; Merav Arlozorov, “How Many Years Will It Take to Return Half a Million Unemployed to the Labor Market?”, TheMarker (August 3, 2020), www.themarker.com/coronavirus/.premium-1 .9040705. Einat Albin and Guy Mundlak, “Covid-19 and labour law: Israel,” Italian Labour Law e-Journal, 13(1) (2000); Guy Mundlak and Judy Fudge, “The future of work and the Covid-19 crisis,” Futures of Work, 14 (2020); Leah Achdut, “The Covid-19 crisis and Israel’s labor market,” Social Security, 110 (2020), 1. Special Regulations for Dealing with the New Corona Virus (Temporary Order) (Restrictions of Activity in the Workplace) 2020. Emergency Regulation (New Corona Virus) (Grant for Self-Employed) 2020 (April 2, 2020). This grant was of less value compared to unemployment insurance. See also Emergency Regulations (New Corona Virus) (Grant for SelfEmployed and Employees of a Company Controlled by Only a Few People) (April 24, 2020); Law for Increasing the Rate of Participation in the Labor Force and Reducing Social Disparities (Labor Grant) 2007. Economic Aid Plan Statute (New Corona Virus – A One Time Grant) (A Temporary Order and Legislative Amendments) 2020.

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The chapter proceeds as follows. Section II sets the scene through a review of the traditional configuration of the employment relationship in Israel, with an emphasis on the borderlines between an employee and an independent contractor. Section III describes the changing nature of work, including the categories of independent contractors, employees of manpower contractors, and service contractors. It analyzes how Israeli employment and labor law has responded to these changes. Section IV explores the ways in which technological innovation is changing the legal fabric of the employment relationship. Section V surveys the state of the law in Israel regarding the platform economy. In conclusion, Section VI outlines the directions in which Israel’s employment and labor law is heading.

II THE ARCHETYPE

Israeli employment laws, including the Annual Leave Law 5711–1951, the Hours of Work and Rest Law 5711–1951, the Wage Protection Law 5718–1958, the Employment of Women Law 5714–1954, and the Youth Labor Law 5713–1953, were legislated in the early 1950s based on the presumption of a traditional employment model of work.6 According to this model of work, male workers worked all of their working lives in the same workplace, under the same employer in a full-time job. The salary they received was supposed to be sufficient to make ends meet. While not all Israeli workers worked according to this traditional model of work, Israeli legislators designed Israeli labor laws in light of this assumption.7 Indeed, the legislators appear to have imagined a worker working in the same workplace, under the same employer, six days a week, from nine in the morning until five in the afternoon, and taking a two-week vacation in the summer.8 Moreover, traditionally, and subject to several exemptions, there has been a strict distinction in Israel between an employee and an independent worker. In contrast to other countries,9 in Israel there has never been an intermediate status.10 A worker could be either an employee or self-employed.11 Employment legislation, collective agreements, and extension orders 6

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Lilach Lurie, Employment and Social Security Laws in the Twenty-First Century (Jerusalem: Sacher Institute at the Hebrew University, 2013). For a comparative perspective, see Katherine V. W. Stone, From Widgets to Digits: Employment Regulation for the Changing Workplace (New York: Cambridge University Press, 2004); Alain Supiot, Beyond Employment: Changes in Work and the Future of Labour Law in Europe (Oxford: Oxford University Press, 2001). Several occupational rights in Israel, for example the number of vacation days, are based on seniority in the workplace. See Annual Leave Law, 5711-1951, Art. 3. According to Annual Leave Law, 5711-1951, Art. 6(a), the default regarding the timing of the vacation is: “Leave shall be given in the last month of the working year in respect of which it is given, or in the working year immediately following.” According to Hours of Work and Rest Law, 5711-1951, Arts. 2(a) and 3, “a working day shall not exceed eight working hours”; “a working week shall not exceed forty-five working hours.” Nevertheless, several collective agreements and extension orders have through the years reduced the maximum weekly hours from forty-five to fortytwo. Extension orders have also enabled workers to work five instead of six days a week, up to nine hours a day. See Reduction of the Weekly Hours of Work Extension Order (August 26, 1990); Collective Agreement 7010/1995 and Extension Order (November 13, 1996); Reduction of the Weekly Hours of Work Extension Order (June 7, 2000); Collective Agreement 7019/2017 between the Federation of Israeli Economic Organizations (FIEO) and the Histadrut (March 29, 2017). Manfred Weiss, “Employment verses self-employment: The search for a demarcation line in Germany,” Industrial Law Journal (ILJ), 20 (1999), 741. Guy Davidov, Mark Freedland, and Nicola Kountouris, “The subjects of labor law: ‘Employees’ and other workers” in Matthew W. Finkin and Guy Mundlak (eds.), Comparative Labor Law, 115–31 (Cheltenham: Edward Elgar, 2015). However, in a National Labor Court decision, a former president of the National Labor Court, Steve Adler, wrote in a dissenting opinion that Israeli law includes three categories: employee, self-employed, and freelancer. The freelancer is entitled to several employment rights. See Labor Court 300274/96 Shaul Zadka v. Galei Zahal (2001) (Nevo Legal Database) (by subscription, in Hebrew) (Isr.). See also Guy Davidov, “Freelancers: An intermediate group in labour law?” in Judy Fudge, Shae McCrystal, and Kamala Sankaran (eds.), Challenging the Legal Boundaries of Work Regulation, 171–85 (Oxford: Hart, 2012).

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determine the rights that employees will receive from their employer. Generally, these occupational rights – including, for example, annual leave, paid sick leave, and occupational pension – have been provided only to employees and not to independent contractors.12 Although, as will be described in Section III, in recent years the Israeli labor courts have provided several statutory employment rights to non-workers through a purposive approach to labor law,13 these decisions should be seen as exceptions. In contrast to occupational benefits, which are generally provided only to employees, healthcare in Israel is mandatory and since 1995 has been provided to all Israeli residents no matter what their employment status is. Moreover, the Israeli National Insurance Institute provides many rights to employees and self-employed alike. These rights include maternity insurance and work injury insurance.14 Other rights, such as old age benefits, are provided to all Israeli residents, regardless of their employment status.15 However, unemployment benefits are provided in Israel only to employees.16 In Israel, the decision regarding who is an employee is a substantive decision. Although no legislation determines who is an employee, over the years the Israeli labor courts have established a combined test in order to determine who is an employee.17 The combined test has two aspects, positive and negative.18 The positive aspect asks whether the worker is integrated within the employer’s organization.19 The negative aspect asks whether the worker operates an independent business.20 Since the 1990s, in borderline cases the courts have given preference to the workers and awarded remedies that made the price of misclassification high.21 Like the decision regarding the question Who is an employee?, the decision regarding the question Who is the employer? is substantive in Israel. Several court decisions define the tests in order to determine who the employer is in cases of triangular employment relationships.22 However, as will be described in Section III, over the years Israel’s parliament (the Knesset) has enacted particular legislation regarding the rights of workers who work through manpower contractors and service contractors.23

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Annual Leave Law, 5711-1951; Sick Pay Law 5736-1976; Mandatory Pension Extension Order (September 27, 2011), https://bit.ly/3OohDJh. See Guy Davidov, A Purposive Approach to Labour Law (Oxford: Oxford University Press, 2016). National Insurance Law (Consolidated Version), 5755-1995, Arts. 40, 75. Ibid., Art. 240. Ibid., Art. 158. Issac v. Tahal 36 PDA 817 (1998); Sarugi v. The National Insurance Institute 39 PDA 686 (2001); Ruth Ben-Israel and Hadara Bar-Mor, “Israel” in Frank Hendrickx (ed.), IEL Labour Law (Alphen aan den Rijn: Kluwer Law International BV, 2009), 51–8. Ben-Israel and Bar-Mor, “Israel,” ibid. The combined test also includes other tests: the control test; the personal tie test; the way the employee is defined by the tax authorities and by the National Insurance Institute; the way the employer and the employee defined their connection in their contract; the payment method; the hours of work. The positive aspect includes the following tests: Is there an enterprise that the employee can integrate with? Is the employee part of the organization structure? Is the integration in the regular activity of the enterprise? See National Labor Court 95/2-5 Varda Dabul et al. v. The State of Israel and the Municipality of Jerusalem (1996). Guy Davidov, “The three axes of employment relationships: A characterization of workers in need of protection,” University of Toronto Law Journal, 52(4) (2002), 357, 369; Ben-Israel and Bar-Mor, supra note 17. The negative aspect of the test includes the following sub-tests: Does the employee have an independent business? Who bears the risks? Who benefits from the reduction of expenses? Who owns the equipment? See National Labor Court 95/2-5 Varda Dabul et al. v. The State of Israel and the Municipality of Jerusalem (1996). Davidov et al., supra note 10. National Labor Court 3-142/1992 Alharinat v. Kefar Ruth, 24 PDA (Labor Court Decisions) 535; National Labor Court 766/07 Limor Ben-Haim v. The Israeli National Insurance Institute (2011). Employment of Employees by Manpower Agencies Law 5756-1996; Enhanced Enforcement of Labor Law 5772-2011.

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Lilach Lurie III THE CHANGING NATURE OF WORK

The traditional configuration of employment is evolving in Israel as elsewhere. While it is questionable whether the traditional model of work ever existed in the past,24 it surely does not exist today. Workers in Israel, as elsewhere, no longer work in the same workplace under the same employer all their working lives.25 Rather, workers change jobs, combine work with care of family members, and move between several work statuses: self-employed, dependent employees, freelancers, and unemployed. In 2018, about 12 percent of the Israeli workforce worked as selfemployed.26 In the same year, 26 percent of the workers worked in part-time work.27 While there are no current data with regard to Israeli workers who take part in the gig economy or the platform economy, these forms of work seem to be evolving too.28 Moreover, while employment rates in Israel were relatively high before the coronavirus crisis,29 they have dropped during the crisis as the number of unemployed increased dramatically. Income inequality in Israel was high even before the crisis,30 but continued to expand throughout the crisis. Indeed, the COVID-19 crisis has surfaced and exacerbated the vulnerability of certain groups in society, including female workers, elderly workers, and self-employed.31 Through the last decades, Israeli legislators and courts have responded to the changes in the nature of work, and specifically to the shift toward several statuses of work, informal work, and self-employment, in several ways. First, over the years, Israeli courts have developed a purposive approach to labor law in general, and specifically with regard to the question: May individuals who are not classified as employees (e.g., freelancers, independent contractors) be entitled to several employment rights?32 According to this approach, a person can be considered an employee for the specific purposes of specific laws, and an independent contractor for other purposes.33 In such case, the person may be entitled to several employment rights, but not entitled to other rights. In order to decide which rights the person is entitled to, the court looks at the specific circumstances of the 24

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Compare with Gu¨nther Schmid, “Transitional labour markets and the European social model: Towards a new employment compact” in Gu¨nther Schmid and Bernard Gazier (eds.), The Dynamics of Full Employment: Social Integration through Transitional Labour Markets, 393–435 (Cheltenham: Edward Elgar, 2002). As of 2000, the average seniority of workers in their latest workplace was 9.8 years. Ronit Nadiv, Seniority in the Workplace in Israel (Jerusalem: Labor Ministry, 2004). CBS, “Employed Persons, Percentage of Employees and Percentage of Part-Time Persons, by Industry 2018,” www .cbs.gov.il/he/publications/doclib/2019/9.shnatonlabourmarket/st09_11.pdf. Ibid. Shelly Kreiczer-Levy, “Institutional aspects in the sharing economy: Mapping the phenomenon and guidelines for regulation,” Regulatory Studies, 1 (2019), 25 (Hebrew). The numbers of self-employed who do not employ workers increased slightly over the years, from 6.4 percent of the workers in 1995 to 7.9 percent of the workers in 2017. See Ministry of Labor, Social Affairs and Social Services, Israeli Labor Market (July 2019), www.gov.il/BlobFolder/news/ news310719/he/employment_report_0719.pdf. In 2018, Israel’s labor market participation rate (of the population in the fifteen to sixty-four age group) was similar to the OECD average (72 percent). In the same year, Israel’s unemployment rate was a bit lower than the OECD average (4 percent as compared to 5.3 percent). See OECD Data, ‘Labor Force Participation Rate’, https://data .oecd.org/emp/labour-force-participation-rate.htm; OECD Data, ‘Employment Rate by Age Group (55–64 Years Old)’, https://data.oecd.org/emp/employment-rate-by-age-group.htm#indicator-chart. OECD, OECD Economic Surveys: Israel 2018 (Paris: OECD Publishing, 2018), 39–40, http://dx.doi.org/10.1787/eco_ surveys-isr-2018-en; IMF, Israel: Selected Issues, IMF Country Report No. 18/112 (Washington, DC: IMF, May 2018), 23. See, for example, Daphna Hacker, “The challenges of the Coronavirus through the lens of gender” (2020) 1 Outbreak (Hebrew). HCJ (additional hearing) 4601/95 Sarussi Chai Yoseph v. The National Labour Court and others, PD 52(4) 817. As Guy Davidov explains: “It is generally accepted in many areas of laws and many countries that laws should be interpreted ‘purposively’, ie that terms in legislation should be given the meaning that best advances the purpose that the legislation is aimed to achieve.” See Davidov, supra note 11, at 171. Davidov, supra note 11, at 171, 175.

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case in light of the purpose of the specific legislation.34 For example, a 2007 court decision dealt with a woman who was a victim of sex trafficking and demanded several statutory employment rights from her trafficker. The Israeli National Labor Court ruled that the woman, who had been kept against her will, should not be classified as an employee, but would be entitled to receive several statutory employment rights – including minimum wage, vacation pay, and severance pay – due to the purposes of the specific legislations.35 Second, the case-law is changing with regard to the implications of a decision that a certain individual shall be classified as an employee and not as an independent contractor.36 While it is relatively easy for workers who are classified by their employer as independent contractors to be recognized as employees by courts,37 they might in several cases receive no economic benefits from such recognition.38 Until 2021, judges in the Israeli National Labor Court have differed in their answers to the following question: Is an employer entitled to deduct from the sum of occupational benefits – which the employer is supposed to pay to the employee due to court recognition of an extant employer–employee relationship – the extra sum the employer paid to the employee due to the fact that the employer employed the employee as an independent contractor and not as an employee?39 In the past, two main judicial approaches could be identified. While the first approach (dubbed the computational approach) enabled a deduction in most cases, the second judicial approach (dubbed the deterrent approach) was more reluctant to allow such deduction.40 While the above question may seem technical, it had a strong influence on the employer’s decision to hire a worker as an independent contractor and not as an employee. While the first approach (the computational approach) encouraged this type of employment, the second approach (the deterrent approach) deterred such employment. In 2021 Israel’s National Labor Court issued a ruling that decided the issue. According to the decision the compensation to a newly classified employee is based on two layers. First, the employee is entitled to receive monetary damages (based on a comparison between the sum the individual received as an independent contractor and that which would have been paid to the individual had the individual been classified as an employee to begin with). Second, the court ruled, in what is now the guiding precedent, in addition to monetary damages, the employee is entitled to

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Labor Court (Jerusalem) 3348/94 Bashan v. The State of Israel (2002); National Labor Court 1141/02 Bashan v. The State of Israel (2003). Compare with Brian A. Langille and Guy Davidov, “Employed or self-employed? The role and content of the legal distinction: Beyond employees and independent contractors – A view from Canada,” Comparative Labor Law & Policy Journal (CLLPJ), 21 (1999), 7. National Labor Court 247/07 Jane Do v. Sofia Kuchick (2009). Guy Davidov, “Waiving an employee status and its implications,” Mishpatim, 14 (2020), 87. In the Kutah case, the majority rejected the application to determine that extreme bad faith will prevail over an employee’s status. See National Labor Court 15868-04-18 Gavriel Kutah v. The State of Israel, the Ministry of Law (2021); Orly Gerbi, Maayan Hammer-Tzeelon, Nir Gal, Keren Assaf, and Ohad Elkeslassy, “Israel” in Erica C. Collins (ed.), The Employment Law Review, 13th ed., 265–79 (London: Law Business Research Ltd, 2022). Until the Kutah case, judges in the National Labor Court also differed in their answer to another question: How should occupational benefits (such as paid vacation, paid sick leave, or overtime payment) be calculated? Should they be calculated from the sum he received as an independent contractor, or should they be calculated from a reduced sum he would have received if he had been initially employed as an employee? In the Kutah case, the Court ruled that unless the employer had managed to prove the exact salary that the individual would have received had he been employed as an employee, the occupational benefits would be calculated from the sum he received as an independent contractor. National Labor Court 3575-10-11 Anat Amir v. The Israeli News Company (2015); National Labor Court 110/10 Rafi Rofe v. Mirkam (2011); National Labor Court 55425-09-11 Gutman v. Shikun Binuy (2017); National Labor Court 15868-04-18 Gavriel Kutah v. The State of Israel, the Ministry of Law (2021). Davidov, supra note 36.

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non-pecuniary damages. The amount of compensation will vary from case to case according to criteria that the labor courts will develop over time. A third important development in Israel’s employment and labor law is the organization of care providers in Israeli family daycares. Since 2008, care providers in family daycares in Israel, who are employed as independent contractors, have managed to improve their working conditions through organizing in an employee union.41 While traditionally it has been mostly employees who organize in an employee union, in Israel, as elsewhere, the organization of care providers in Israel is an interesting case study of vulnerable self-employed women who have managed to improve their working conditions through organization.42 These care providers take care of up to five children – between the ages of three months and three years – in their own house.43 While they are not recognized as employees, they are not free to define their working conditions, including the parents’ payment and their hours of work. Indeed, the Ministry of Labor, Social Affairs and Social Services (hereinafter the Ministry of Labor), which regulates their work, defines their terms of work, including their wages, their hours of work, and the specific days in which they are entitled to take a vacation from work.44 Due to the fact that they are not employed as employees, they are not entitled to statutory employment benefits such as payment for overtime work and contribution to occupational pension.45 Over the years, their efforts to be recognized as employees by the Ministry of Labor have failed.46 In 2008, they decided to organize in an employee union named Power to the Workers and improve their working conditions collectively.47 Since 2008, they have managed to improve their working conditions in several ways through their organization. For example, in May 2020, they went on strike for three days after facing economic hardship through the coronavirus economic crisis. Following the strike, the Minister of Labor agreed to provide them with special grants.48 The fourth important development in Israel’s employment and labor law concerns the rights of workers who work through manpower contractors and service contractors. In 1996, the Knesset enacted the Employment of Employees by Manpower Agencies Law 5756–1996. The law required manpower contractors to obtain licenses and it regulated the conditions for the grant of licenses.49 It also stated that there should be a written employment agreement between the contractor and the employee.50 In 2000, the Knesset enacted two important amendments to the act, which only came into force in 2008. According to the first amendment, after nine months of employment an employee of a manpower contractor becomes an employee of the actual 41

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Guy Mundlak, “The wages of care workers: From structure to agency” in Judy Fudge, Shae McCrystal, and Kamala Sankaran (eds.), Challenging the Legal Boundaries of Work Regulation, 189–212 (Oxford: Hart, 2012). For a comparative view of organization of self-employed in Austria, see Susanne Pernicka, “Organizing the self-employed: Theoretical considerations and empirical findings,” European Journal of Industrial Relations, 12(2) (2006), 125–42. Shely Mizrahi Simon and Eliezer Swarch, The Employment Conditions of Teachers in Family Daycares (Jerusalem: Knesset Research and Information Center, 2018) (Hebrew), https://bit.ly/3pXMh2K. Ibid. Ibid. National Labor Court 95/2-5 Varda Dabul et al. v. The State of Israel and the Municipality of Jerusalem (1996). Tani Goldstein and Yair Hason, “The Minister of Labor Is Destroying the Family Day Cares” (June 30, 2009) (Hebrew) www.ynet.co.il/articles/0,7340,L-3739252,00.html. Yuval Bagno, “The Care Providers in the Family Day Cares Will Receive Grants” (May 12, 2020), www.maariv.co.il /news/israel/Article-765073. Employment of Employees by Manpower Agencies Law 5756-1996, Arts. 2, 20. On the importance of a license as a way to promote enforcement of labor laws, see Davidov, supra note 13, 245–6. On the law in general, see Guy Davidov, “Enforcement problems in informal labor markets: A view from Israel,” CLLPJ, 27 (2005), 3. Employment of Employees by Manpower Agencies Law 5756-1996, Art. 11.

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employer instead of the contractor.51 According to the second amendment, an employee of a contractor is entitled to the same rights as other employees in the same workplace (respectively to the category of employment and to the period of service seniority).52 After these two important amendments came into force, Israeli employers, and more specifically the Israeli government, stopped employing workers through manpower contractors. Instead, employers began to employ cleaning workers and security workers through service contractors and categorized them as “service providers.”53 The Manpower Agencies Law initially did not apply to these contractors. In 2009, Israeli legislators amended the Employment of Employees by Manpower Agencies Law, adding a provision that declares that not only manpower contractors need to obtain a license; service contractors need to obtain one as well.54 However, the other provisions of the law applied only to manpower contractors and not to service contractors. In 2011, the Knesset enacted the Enhanced Enforcement of Labor Law 5772–2011. The law addresses the larger problem of enforcing labor laws, and specifically the problem of service contractors violating the rights of their employees.55 The law imposes – in certain cases of services contractors violating labor laws in relation to their employees – liability upon the indirect employers who ordered the services from the contractor.56 For example, if a university ordered cleaning services from a contractor and the contractor violated the labor rights of its employees, the university might be liable. The law enables the indirect employer to be released from such liability if the indirect employer hires a wage checker to monitor the conditions of employment of the contractor’s employees on an ongoing basis.57 The law applies only to service contractors (and not to manpower contractors) and only to contractors engaged in security, cleaning, and catering. Lastly, in a case from 2018 before the Israeli National Labor Court, a woman who was employed through a service contractor in the Israeli Electric Company claimed that she was discriminated against by the company due to her sex. In this specific case, neither the Enhanced Enforcement of Labor Law nor the Manpower Agencies Law applied to her.58 The court adopted an expanded interpretation of the term “employer” in the Israeli Employment (Equal Opportunities) Law through a purposive approach to the law. It ruled that due to the purpose of the Employment (Equal Opportunities) Law and due to the severity of sex discrimination in the specific case, although the woman was employed through a service contractor, the Israeli 51

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Ibid., Art. 12C (“[W]here an employee as aforesaid is employed with the same actual employer for a period in excess of nine continuous months . . . such employee shall be deemed to be an employee of the actual employer at the end of such nine months”). Ibid., Art. 13(a) (“[T]erms of employment . . . which apply to employees at a workplace in which manpower contractors’ employees are also employed shall . . . apply to those employees of a manpower contractor who are employed at the same workplace, respectively, inter alia, to the category of employment and to period of service seniority with the actual employer”). Amir Paz-Fuchs, “Privatization, outsourcing, and employment relations in Israel” in Amir Paz-Fuchs, Ronen Mandelkern, and Itzhak Galnoor (eds.), The Privatization of Israel: The Withdrawal of State Responsibility, 283–310 (New York: Palgrave Macmillan, 2018), 288 (“While 10,000 ‘outsourced personnel’ were employed by the government in the year 2000, by early 2009, there were only 150 such workers in all government ministries, and they were employed as a last resort, for up to 6 months”). Employment of Employees by Manpower Agencies Law 5756-1996, Art. 10. On the problem of enforcement of labor law in general, in particular the Enhanced Enforcement of Labor Law 57722011, see Davidov, supra note 13, at 224–50. Enhanced Enforcement of Labor Law 5772-2011, Art. 25. Ibid., Arts. 27, 44–5. The Employment of Employees by Manpower Agencies Law 5756-1996 did not apply to her because she was employed by a service contractor and not by a manpower contractor. The Enhanced Enforcement of Labor Law 5772-2011 did not apply to her because it does not impose liability on the indirect employer in cases of infringement of Article 2 of the Employment (Equal Opportunities) Law 5748-1988.

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Electric Company should be considered as her employer with regard to the provisions of the Israeli Employment (Equal Opportunities) Law.59

IV THE PROTOTYPES

One of the main causes of the changes in the nature of work in Israel as well as all over the world is technology. Indeed, technological innovation is changing the legal fabric of employment relations in Israel in several ways. First, in several cases technology has replaced workers in tasks that were formerly done by workers. In a survey conducted in 2019 by the Israel Democracy Institute, 28 percent of the respondents declared that they are concerned that, due to technological developments, their jobs will become irrelevant.60 About half of the respondents declared that they have considered going through vocational training in order to face that risk and that they believe it is the employer’s responsibility to fund that type of training.61 In the same year, research found that the share of occupations at high risk in Israel stands at about 15 percent, similar to the Organisation for Economic Co-operation and Development (OECD) average.62 However, several population groups – specifically Jewish women and Arab men – are at higher risk, compared to the rest of the population, of losing their job due to automation.63 Second, technology is used by human resources (HR) departments in the processes of hiring and promoting workers. Moreover, many organizations possess data on employees and candidates for new positions, including personal data, curricula vitae (CVs), bank accounts, health condition, pictures, and sometimes fingerprints. Israel’s Privacy Protection Regulations from 2017 declare that Israeli organizations and employers should protect such data and provide reports to the Israeli Register of Databases.64 Third, employers (and lately also the state) use technology in order to monitor workers. Indeed, technology enables employers to monitor workers in ways that were not possible before, raising new legal questions with regard to the right to privacy. In recent years, court rulings in Israel have strictly limited the use of technology by employers, highlighting the importance of the right to privacy.65 In one case, the court ruled that an employer is not allowed to obligate its workers to sign into a biometrical clock when they arrive to work without their consent and without explicit legislation.66 In another case, the Israeli National Labor Court strictly limited the employer’s right to monitor and read its employees’ emails. It ruled that employers should have a clear written policy regarding email and computer use. It also differentiated between four 59 60

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National Labor Court 37078-11-13 Israel Electric Company – Lia Naidorf (2018). Israeli Democracy Institute, “The Eli Hurvitz Conference on Economy and Society 2019: Two Economies – One Society, an Attitude Survey” (2019), https://en.idi.org.il/publications/29368. Ibid. Shavit Madhala, “The Risk of Automation in the Israeli Labor Market Policy Research” (Taub Center for Social Policy Studies in Israel, December 23, 2019), www.taubcenter.org.il/wp-content/uploads/2020/12/theriskofautomatio nintheisraelilabormarket2019eng75.pdf. Ibid. Israel’s Privacy Protection Regulations (Data Security) 5777-2017; Protection of Privacy Law 5741-1981. Cases that were brought to court include: the right of the employer to monitor his employees’ emails (Labor Court 312/ 08 Isakov v. the State of Israel (February 8, 2011) (Nevo Legal Database) (by subscription, in Hebrew) (Isr.)); the right of an employer to obligate workers to sign into a biometric time clock when they arrive to work (Labor Court 7541-14-14 The New Histadrut v. The City of Kalansua (March 15, 2017) (Nevo Legal Database) (by subscription, in Hebrew) (Isr.)); the right of an employer to operate cameras in the workplace (Labor Court (Nazareth) 30929-12-10 Salman v. Aleymi (June 20, 2012)); the right of an employer to track employee locations with cell-phone GPS (Labor Court (Herzelia) 28812-05-11 Beyder v. Optika Halperin (November 3, 2013); Labor Court 40711-04-17 Fisher v. Steter (March 4, 2018)). Labor Court 7541-14-14 The New Histadrut v. The City of Kalansua (March 15, 2017) (Nevo Legal Database) (by subscription, in Hebrew) (Isr.).

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different types of email mailbox: an employee’s private mailbox, a mixed mailbox, an employerprovided personal mailbox, and a professional mailbox. The court ruled that, except in unusual circumstances, the employer is not allowed to monitor the emails of employees that are in their private mailbox, mixed mailbox, and employer-provided personal mailbox.67 Several case-laws and regulations have restricted the employer’s ability to use cameras in the workplace.68 The Israeli Privacy Protection Authority defined in a regulation the main terms for the use of cameras in the workplace. First, it determined that employers, when using cameras in the workplace, must act in reasonability, proportionality, good faith, and fairness. Second, employers shall use the cameras for the purpose for which the cameras were installed in the first place, and not for any other purpose. Third, prior to the installation of cameras, the employer must formulate a clear policy regarding the use of cameras in the workplace. The Israeli Privacy Protection Authority emphasized that the employer must bring the policy to the employees’ knowledge. Employers are not allowed to photograph workers without their knowledge.69 The COVID-19 crisis has highlighted new questions regarding technology and privacy. For the first time it was the government (and not the employers) that obligated the employers to monitor their employees in several ways. Emergency regulations obligated employers to check the temperature of all of their employees and to ask questions regarding their health status.70 The Israeli Privacy Protection Authority issued guidelines that aim to reduce the violation of privacy due to the above regulation (including using the data only for the purpose for which they were collected). Nevertheless, these guidelines do not eliminate the violation of privacy.71 Moreover, in March 2020 the Israel government authorized its internal security agency (Shin Bet) to tap into previously undisclosed cell-phone data to retrace the movements of people who had contracted the coronavirus and to identify others who should be quarantined because their paths had crossed.72 In April 2020, the Israeli Court of Justice ruled that, starting from the end of April, the Israeli government would not be able to authorize Shin Bet to trace coronavirus patients anymore; in order to permit it, the Knesset would have to legislate a law.73 In July 2020 the Knesset legislated a special act authorizing Shin Bet to trace coronavirus patients. It was enacted as a temporary order.74 67

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Labor Court 312/08 Isakov v. the State of Israel (February 8, 2011) (Nevo Legal Database) (by subscription, in Hebrew) (Isr.). Israeli Privacy Protection Authority, “The Usage of Cameras in the Workplace” (October 17, 2017), www.gov.il/he/ departments/policies/workplace_camera; Labor Court (Nazareth) 30929-12-10 Salman v. Aleymi (June 20, 2012) (The employer installed cameras in the workplace without the employee’s knowledge; the court ruled that the employee was entitled to resign from his work and receive severance pay); Labor Court (Haifa) 39840-04-10 Lsziner v. Peer (January 25, 2011) (The employer installed cameras in the employee’s office without the employee’s consent; the court ruled that the employee was entitled to resign from his work and receive severance pay); Labor Court (Tel Aviv) 1018-10-17 Flumin v. Snayder (February 23, 2020) (The employer had installed cameras outside the bathroom and monitored the workers who went to the bathroom; the court ruled that the employee was eligible for compensation from her employer); District Court (Beer Sheva) 29624-01-12 Veiz v. Yiphrach (July 30, 2012) (An employer installed cameras inside the employee’s office without her knowledge; the court ruled that the employer infringed the employee’s right to privacy). Israeli Privacy Protection Authority, supra note 68. Emergency Regulation (New Corona Virus) (Limiting the Number of Workers in Order to Reduce the Expansion of the New Corona Virus) 2020; Emergency Regulation (New Corona Virus) (Limiting Activity) 2020. Privacy Protection Authority, “Privacy at the Entrance to Work – Dealing with the Corona Virus” (2020). David M. Halbfinger, Isabel Kershner, and Ronen Bergman, “To track Coronavirus, Israel moves to tap secret trove of cellphone data,” New York Times (March 28, 2020), www.nytimes.com/2020/03/16/world/middleeast/israelcoronavirus-cellphone-tracking.html HCJ 2109/20 Shachar Ben-Meir v. The Prime Minister (April 26, 2020). The Shin Beth Authorization Law to assist in the national effort to reduce the spread of the new corona virus and to promote the use of civilian technology to locate those who have been in close contact with patients (Temporary Order) 5720-2020.

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Lilach Lurie V ‘UBERISATION’

Technological innovation not only replaces jobs and enables new ways of monitoring workers; it also enables new forms of employment – in the sharing economy and in the platform economy. The sharing economy and the platform economy are not as developed in Israel as they are in other countries, specifically the United States. Most importantly, the Israeli government has not yet allowed Uber to operate its ride-share service in the country, and cases regarding the legal classification of workers in the platform economy have not come to a final court decision yet. However, the scope of the sharing economy in Israel is sharply increasing.75 An Israeli group named WeEconomize has identified 200 Israeli projects that belong to the sharing economy. The group divided these projects into nine sectors: transportation, tourism, real estate, education, commerce, communication, finance, services, and social business.76 Nevertheless, the group emphasized that Israel is a relatively small country, and some of these projects are very small. Shelly Kreiczer-Levy analyzed fifty-five projects of the sharing economy in Israel. She divided them into five categories: (1) peer-to-peer markets that include owners that share their property for profit (e.g. Airbnb, Uber, Fiverr); (2) peer-to-peer markets that include owners that share their property not for profit (e.g. Home Exchange, Moovit Carpool); (3) community projects (e.g. a community garden); (4) governmental projects; and (5) commercial companies (e.g. WeWork).77 With regard to the current chapter, the most relevant projects are those of the first category (“peer-to-peer markets that include owners that share their property for profit”). Even more specifically, the most relevant projects belong to the platform economy and include people that provide services to other people through a technological platform (e.g. Uber). Jurisdictions in several countries have dealt with the question of whether the service providers in these platforms should be classified as independent contractors or as employees of the specific platform.78 Moreover, several researchers have pointed to the phenomenon of discrimination in the platform economy and to the possible legal responsibility of the platform with regard to such discrimination.79 In Israel, the most relevant projects with regard to the current chapter are platforms such as Fiverr – an online marketplace for freelance services – as well as several delivery service companies such as Wolt.80 Wolt, a Finnish food delivery app, began operating in Israel in December 2018.81 Similarly to the way in which other food delivery apps such as the American 75

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For a mapping of the phenomenon of the gig economy in Israel, see Kreiczer-Levy, supra note 28; Yair Friedman, Zafrir Bloch-David, and Eyal Bloch, The Sharing Economy and Opportunities for Israel (Jerusalem: Jerusalem Institute for Policy Research, 2016), 19–25, https://bit.ly/3DnVLaz; Jacob Hecht, “The platform economy and the sharing economy,” Israel Internet Association (2016), https://bit.ly/3Oyyole. Friedman et al., supra note 75. Kreiczer-Levy, supra note 28. Guy Davidov, “The status of Uber drivers: A purposive approach,” Spanish Labour Law and Employment Relations Journal, 6 (2017), 6–15; Richard A. Bales and Christian Patrick Woo, “The Uber million dollar question: Are Uber drivers employees or independent contractors?,” Mercer Law Review, 68 (2016), 461; Shannon Bond, “Uber, Lyft will not suspend service in California after court gives them more time,” NPR (August 20, 2020), https://bit.ly/44QgccB. Arianne Renan Barzilay and Anat Ben-David, “Platform inequality: Gender in the gig-economy,” Seton Hall Law Review, 47 (2017), 393; Arianne Renan Barzilay, “Discrimination without discriminating: Learned gender inequality in the labor market and gig economy,” Cornell Journal of Law & Public Policy, 28 (2018), 545; Tamar Kricheli-Katz and Tali Regev, “How many cents on the dollar? Women and men in product markets,” Science Advances, 2(2) (2016), https://doi.org/10.1126/sciadv.1500599. Kreiczer-Levy, supra note 28. Hadar Kaneh, “If you are not at the application you don’t exist: Wolt and Ten-Bis shake the food industry,” TheMarker (August 27, 2019), www.themarker.com/consumer/.premium-1.7761067; Eitan Leshem, “Modern slavery in the gig economy, or: My week as a Wolt delivery guy,” Haaretz (November 4, 2019), https://bit.ly/3Oq6Luz.

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DoorDash, Grubhub, and Uber Eats work, customers can order food from Wolt’s restaurant partners, and Wolt couriers deliver the food to the customers. Wolt employs its couriers in Israel as independent contractors and not as employees. They use their own car or bike and pay their own insurance. Wolt pays the couriers a guaranteed minimum per order. The couriers do not enjoy work-related benefits such as paid sick leave or occupational pension. While currently there is no specific legislation that refers to workers in the platform economy in Israel, it seems to be only a matter of time until such legislation is enacted. Indeed, as in other countries, some Wolt couriers in Israel have begun to organize using the tools of social media, instead of an established employee union.82 In August 2020, a courier filed a request for a class action against Wolt asking for its couriers to be recognized as employees.83 In August 2022, a regional court accepted this request and now a class action proceeding is pending.84 The court mentioned that there is a reasonable possibility that it will be determined that there are employment relationships between Wolt and its couriers. It is the first such decision in Israel with regard to workers in the gig economy. In tandem with these court proceedings, in February 2022, the Minister of the Economy appointed a committee for the purpose of examining the legal status of platform workers in Israel. As of July 2023, the committee has yet to submit its recommendations.

VI QUO VADIS?

A Social Dialogue and the Social Partners The social partners in Israel, as in many other countries, have lost much of their power. Union density in Israel dropped from 80 percent of workers during the 1980s to 27 percent of workers in 2016.85 The number of collective agreements that are signed each year dropped as well,86 but have increased slightly during the pandemic.87 Due to the industrial relations system in Israel in general, and to the expansion order tool specifically, the social partners still have the power to influence social policy. As in countries such as Germany, Austria, and the Netherlands, the Minister of Labor in Israel has the power to extend a collective agreement signed by the social partners to all workers in the sector or in the state.88 During the last fifteen years, the Israeli social partners managed to sign several collective agreements, which were extended by the Minister of Labor to all the workers in the state. First, at the end of 2007 the social partners signed a collective agreement that provides mandatory occupational pension to Israeli workers. The Minister of Labor extended the collective 82 83

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Tiki Golan, “The protest of Wolt drivers,” Ynet (June 23, 2020), www.ynet.co.il/food/foodnews/article/S1yAv90p8. Sivan Klingbeil, “A request for a class action against Wolt,” TheMarker (August 30, 2020), www.themarker.com /career/1.9088598. Labor Court (Tel-Aviv) 35327-08-20 Golan Chazanovich v. Wolt (August 3, 2022). CBS, Social Survey 2016, Publication No. 1712 (Jerusalem: CBS, 2018), www.cbs.gov.il/publications18/seker_hev rati16_1712/pdf/h_print.pdf; Guy Mundlak, Fading Corporatism: Israel’s Labor Law and Industrial Relations in Transition (Ithaca, NY: Cornell University Press, 2007); Yinon Cohen, Yitchak Haberfeld, Tali Kristal, and Guy Mundlak, “The state of organized labor in Israel,” Journal of Labor Research, 28(2) (2007), 255; Guy Mundlak, Yishak Saporta, Yitchak Haberfeld, and Yinon Cohen, “Union density in Israel 1995–2010: The hybridization of industrial relations,” Industrial Relations, 52(1) (2013), 78. Lilach Lurie, “Occupational welfare in Israel: A study of collective agreements and benefits,” International Journal of Comparative Labour Law and Industrial Relations, 36(3) (2020), 281. Based on data from the Ministry of the Economy’s website, https://workagreements.labor.gov.il/. Collective Agreements Law 1957-5717, Art. 25. For a comparative view on extension orders, see Jelle Visser, “What happened to collective bargaining during the Great Recession?,” IZA Journal of Labor Policy, 5(1) (2016), 9.

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agreement to all Israeli workers.89 Second, the social partners managed to raise dramatically the amount of the minimum wage in Israel through collective negotiation.90 Third, the social partners managed to reduce the maximum hours of work from forty-three to forty-two a week.91 Fourth, the social partners signed a collective agreement with regard to fair representation of workers with disabilities in the workplace.92 Moreover, the social partners were also involved in a governmental committee named Israel 2030, which aimed to outline the long-term labor policy in Israel for the year 2030. The committee submitted its report to the government in August 2020.93 Its report included several policy recommendations: to examine and extend retraining programs to workers who are at risk of being replaced by technology; to establish a database regarding changes in market demand for workers in various professions and industries; and to examine the adaptation of employment law to changes in the labor market.94 Lastly, during the pandemic, several collective agreements were signed regarding digital work and new technology. These agreements referred to digital work and the use of new technology through the crisis and beyond it.95 B Work-Related Social Protection As noted, many rights in Israel – including paid sick leave and the right to a minimum wage – are work-related and therefore provided only to dependent workers and not to self-employed. Similarly, unemployment benefits are provided in Israel only to dependent workers and not to self-employed.96 However, several developments in Israel extend the protections provided by work-related benefits. First, as noted in Section VI, A, since 2008 all workers in Israel are entitled to an occupational pension. The collective agreement and the extension order, which established the right to occupational pension, did not cover the self-employed, a group that suffered from particularly low rates of pension insurance.97 However, following the collective agreement and its extension order, in 2016 the Knesset enacted a law requiring the self-employed to contribute to a special

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Collective Agreement 7019/2007 between the Federation of Israeli Economic Organizations (FIEO) and the Histadrut (November 19, 2007); Mandatory Pension Extension Order (December 30, 2007), https://bit.ly/470LCOB. In December 2014, the social partners concluded a collective agreement that aimed to raise the minimum wage dramatically. Shortly afterwards, the Knesset amended the Minimum Wage Act in light of this collective agreement. Collective Agreement 7047/2014 between the Federation of Israeli Economic Organizations (FIEO) and the Histadrut (December 13, 2014); Minimum Wage Law Amendment 2015. Overall, the social partners together with the Knesset managed to raise the full-time minimum wage from NIS 4,300 in 2012 to NIS 5,300 in December 2017. Collective Agreement 7019/2017 between the Federation of Israeli Economic Organizations (FIEO) and the Histadrut (March 29, 2017); Reduction of the Hours of Work Extension Order (March 15, 2018), https://bit.ly /3rAxKdL. Collective Agreement 7027/2014 between the Federation of Israeli Economic Organizations (FIEO) and the Histadrut (June 25, 2014); Fair Representation of Workers with Disabilities Extension Order (September 21, 2014), https://bit.ly/3Y1gIl4. According to the collective agreement and the extension order, in each large workplace with at least 100 workers, 3 percent of the workers are required to be workers with disabilities. Employment Committee 2030 website, https://bit.ly/3q1QZN6. Ibid. Collective Agreement 46/2021 between SAP and the Histadrut (December 14, 2020); Collective Agreement between the Government of Israel and the Histadrut (November 3, 2021). National Insurance Law (Consolidated Version) 5755-1995, Art. 158. In the 2012 survey, only 58 percent of the self-employed had pension insurance. In the same survey, 74 percent of all self-employed workers were of the view that the state should require them to have pension coverage. See CBS, Social Survey 2012 (Jerusalem: CBS, 2014), www.cbs.gov.il/he/publications/DocLib/2014/seker_hevrati12_1555/pdf/h_print .pdf.

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pension insurance that is intended to be adapted to their needs.98 The law also enables the state to impose a fine on self-employed workers who do not pay in to this insurance.99 Second, during the coronavirus crisis, emergency regulations also granted independent workers, freelancers, and other categories of non-employees, who have been excluded from unemployment benefits, a special short-term grant.100 Lastly, in a controversial effort to assist Israeli residents, the Israeli government decided to distribute a lump sum to all Israeli residents, including workers, self-employed, and unemployed, in several installments.101 C Key Reform Issues for the Next Five to Ten Years We can identify several key reform issues for the next five to ten years. First, questions regarding the supply of social protection in its broad sense will continue to be dominant in Israel as well as elsewhere.102 Among them are who should supply and who should pay for social protection (the state? the employer? the employees?), as well as the related question whether benefits should be related to work (occupational benefits) or to residency or citizenship (social benefits).103 Should only workers be entitled to them or also selfemployed and workers in the platform economy?104 These questions become more and more important as more and more people are working as freelancers, self-employed, and in the platform economy. One important issue in this sense is paid sick leave.105 According to the Paid Sick Leave Law from 1976, when an employee is sick the employer must pay the sick payment.106 Over the years, Israeli legislators expanded the right of employees to receive sick payments from their employer in several other circumstances. Currently, an employee is entitled to paid sick leave not only when they themselves are sick but also when their child, partner, or parents are sick.107 Due to the fact that the right to paid sick leave in Israel is an occupational right provided by the employer and not a social right provided by the state, self-employed are not entitled to it. Moreover, employers claim that the state should assume responsibility for sick payment and not place the costs on them. During the COVID-19 crisis, the Israeli Supreme Court ruled that the state is not entitled to mandate that employers pay sick leave to workers in quarantine without

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Economic Policy Law (Legislative Amendments to Implement Economic Policy to Change the Budget 2017 and 2018) 2016, Arts. 2–18. Ibid., Arts. 6–9. See supra note 4. Economic Aid Plan Statute (New Corona Virus – A One Time Grant) (A Temporary Order and Legislative Amendments) 2020. Compare with David Natali and Emmanuele Pavolini, “Occupational welfare in Europe: An analytical and methodological introduction” in David Natali, Emmanuele Pavolini with Bart Vanhercke (eds.), Occupational Welfare in Europe: Risks, Opportunities and Social Partner Involvement, 9–30 (Brussels: European Trade Union Institute (ETUI), 2018), https://bit.ly/3Y4iDpd. Cynthia Estlund, “What should we do after work: Automation and employment,” Yale Law Journal, 128 (2018), 254. Orly Lobel, “The gig economy & the future of employment and labor law,” University of San Francisco Law Review, 51 (2017), 51. Sick Pay Law 5736-1976. Sick Pay Law 5736-1976, Art. 2(a): “A worker absent from work in consequence of sickness shall, subject to the maximum period of entitlement . . . be entitled to receive from his employer . . . a payment under this law in respect of the period of sickness.” Sick Pay (Absence Because of Child’s Illness) Law 5753-1993; Sick Pay (Absence Because of Parent’s Illness) 57541993; Sick Pay (Absence Because of Spouse’s Illness) Law 5758-1998. Moreover, according to the Law on Sick Leave (Maternity and Paternity Leave) 2000, an employee is allowed to take up to seven days a year for treatment or tests related to pregnancy or giving birth of the partner.

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specific legislation.108 I expect that the issue of paid sick leave to self-employed will continue to be discussed in the coming years. A second important issue where I expect reform concerns unemployment benefits to selfemployed. In Israel, only dependent employees are entitled to unemployment benefits.109 Over the years, members of the Knesset have submitted many bills proposing to extend the right to unemployment benefits to self-employed.110 None of these bills has so far turned into legislation. During the coronavirus crisis, the Minister of Welfare issued a special order that entitles freelancers working in showbusiness (including photographers, digital technicians, recorders, sound people, costume designers, dressers, makeup artists, and production assistants) to unemployment benefits.111 This order might be the first sign of an extension of the right to unemployment benefits to self-employed. Moreover, in the next few years, questions regarding the status of workers in the platform economy will probably continue to come before the labor courts. So will questions of privacy. Lastly, questions of equality will continue to be important.112

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HCJ 1633/2020 Sal v. The State of Israel (2020). National Insurance Law (Consolidated Version) 5755-1995, Art. 158. For example, Bill 26/21 Proposed National Insurance Law (amendment – unemployment benefits to the selfemployed) 2019; Bill 670/20 Proposed National Insurance Law (amendment – unemployment benefits to the self-employed) 2015; Bill 1547/18 Proposed National Insurance Law (amendment – unemployment benefits to the self-employed) 2009. National Insurance Institute of Israel Website, unemployment benefits for people in showbusiness, https://bit.ly /43Aiif1. Indeed, in 2020 Israel’s legislators amended Male and Female Workers (Equal Pay) Law 5724-1964 and mandated that employers (that employ more than 518 employees) publish a yearly report outlining wage gaps between women and men.

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15 United Kingdom: Labour Law and Technological Authoritarianism at Work: Past, Present, and Future Ioannis Katsaroumpas*

I INTRODUCTION

In recent years, the ‘technological question’ (typically posed in terms of the impact of new technologies on the future of work) enjoys a dominant presence in framing current policy and academic debates in labour law.1 Labour law scholarship has generally rejected a narrow econometric quantitative focus on the (anticipated and actual) net effect of new technologies on jobs.2 Instead, there is an emergent critical-contextual strand seeking to embed (and partially decentre) the technological discourse on established themes around precariousness, control, and human agency.3 This chapter aims to contribute to this literature by examining the dynamic relationship between UK labour law and what is herein termed ‘technological authoritarianism at work’. This term is used to refer to a technological governance model where the employer enjoys an unrestrained power to control the design, use, and organisational integration of technology in the workplace. This concept is obviously of an ideal type. In practice it is rare (if not impossible) for this power to be fully unrestrained. But technological authoritarianism can be seen as referring to a workplace where workers experience wide and pervasive democratic deficits4 in technological governance. Labour law typically performs a contradictory constituting and limiting function towards this authoritarianism and the associated democratic deficits. On the one hand, it constitutes the employer’s right to control the means of production, including technology. The assumption that the power over technological decisions should be vested in the employer resides at the core of the *

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I am grateful to Professor Gordon Anderson, Professor Amir Paz-Fuchs and Dr Kenneth Veitch for comments on earlier drafts. Please note that most of this Chapter was completed before 2021. See Global Commission on the Future of Work, Work for a Brighter Future (Geneva: ILO, 2019); World Bank, Work Development Report 2019 (Washington, DC: World Bank, 2019); OECD, The Future of Work: OECD Employment Outlook 2019 (Paris: OECD, 2019); M. De Vos, ‘How the future of work can work for the workers’ in T. Toracca and A. Condello (eds.), Law, Labour and the Humanities, 46–61 (Abingdon: Routledge, 2019). C. Frey and M. Osborne, The Future of Employment (Oxford: Oxford Martin School, 2013); Office for National Statistics, Probability of Automation in England 2011 and 2017 (March 2019), www.ons.gov.uk/employmentandla bourmarket/peopleinwork/employmentandemployeetypes/articles/theprobabilityofautomationinengland/ 2011and2017; L. Nedelkoska and G. Quintini, Automation, Skills Use and Training (Paris: OECD, 2018). See S. Deakin and C. Markou, ‘The law–technology cycle and the future of work’, Giornale di Diritto del Lavoro e di Relazioni Industriali [Journal of Labour Law and Industrial Relations], 40 158(2) (2018), 445; J. Prassl, Humans as a Service (Oxford: Oxford University Press, 2018); V. De Stefano, The Rise of the ‘Just-in-Time Workforce’: On-Demand Work, Crowdwork and Labour Protection in the ‘Gig-Economy’, Conditions of Work and Employment Series Working Paper 71 (Geneva: ILO, 2016); L. Medland, B. Anderson, K. Bales et al., The ‘Future’ of Work? A Call for the Recognition of Continuities in Challenges for Conceptualising Work and Its Regulation, Bristol Law Research Paper Series 2019/001 (Bristol: University of Bristol School of Law, 2019). G. Davidov, ‘Collective bargaining laws: Purpose and scope’, International Journal of Comparative Labour Law and Industrial Relations, 20(1) (2004), 81.

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legal regulation of employment and is legally rationalised through the broad construction of managerial prerogative and the implied employee duties of loyalty and obedience. This power is also often considered a distinguishing feature of the employment relationship. Such technological authoritarianism is an integral element and manifestation of the authoritarian construction of the employment relationship as subordination between ‘a bearer of power and one who is not a bearer of power’5 and as one that suffers from democratic deficits against the employees.6 On the other hand, labour law through its ‘constitutional function’7 may enact various types of limits constraining this authoritarianism. These limits can be either collective (e.g. worker participation rights through an effective right to collective bargaining) or individual (e.g. data protection or privacy rights). In this context, the chapter offers an overview of the past, present, and future of the relationship between labour law and technological authoritarianism in the United Kingdom. It seeks to advance a power-sensitive, political account of the technological developments at work through the conceptual prism of technological authoritarianism at work and the associated democratic deficits. This account contributes to and advances the literature on the authoritarian nature of the employment relationship recently reinvigorated by Hugh Collins and Elizabeth Anderson8 through adding the technological perspective to their accounts. Collins does not systematically refer to technology and mentions social media monitoring only as an example of employers’ control of workers’ conduct outside the workplace.9 The same applies to Anderson’s account. While she refers to employers as private dictators,10 she does not discuss in depth the authoritarian role of technology. Conversely, Jeremias Prassl’s seminal work on the gig economy and technology does not provide a systematic account of technological authoritarianism.11 Consequently, this chapter aims to address this gap by adding a new perspective to the broader discourse on the relation between labour law and authoritarianism.12 Moreover, at a more practical level, this perspective enables the integration of different areas such as the law on collective bargaining, industrial action, employment status, and data protection. As will become apparent in this chapter, the relationship between labour law and technological authoritarianism proceeds through a very diverse set of norms scattered across various legal areas. The chapter is structured as follows. Section II discusses the post-war period during which, despite the existence of strong collectivist institutions, there was no fundamental alteration of the pervasive technological authoritarianism at work. Section III argues that technological authoritarianism at work and the associated deficits in technological governance have been intensified during the recent neo-liberal period owing to de-collectivisation notwithstanding the rise of statutory individual rights. Sections IV and V explore the legal framework in the context of

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P. Davies and M. Freedland, Kahn-Freund’s Labour and the Law (London: Stevens & Sons, 1983), 18. Davidov, ‘Collective bargaining laws’. R. Dukes, ‘Hugo Sinzheimer and the constitutional function of labour law’ in G. Davidov and B. Langille (eds.), The Idea of Labour Law, 57–68 (Oxford: Oxford University Press, 2011). See H. Collins, ‘Is the contract of employment illiberal?’ in H. Collins, G. Lester, and V. Mantouvalou (eds.), Philosophical Foundations of Labour Law, 48–67 (Oxford: Oxford University Press, 2018); E. Anderson, Private Government: How Employers Rule Our Lives (and Why We Don’t Talk About It) (Princeton, NJ: Princeton University Press, 2017). Collins, ‘Is the contract of employment illiberal?’, 49. Anderson, Private Government. Prassl, Humans as a Service. A. Bogg, ‘Beyond neo-liberalism: The Trade Union Act 2016 and the Authoritarian State’, Industrial Law Journal (ILJ), 45(3) (2016), 299–336.

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surveillance and the gig economy, respectively. Section VI identifies certain trends and potential reforms for the future, and Section VII concludes.

II THE ARCHETYPE: LABOUR LAW AND TECHNOLOGICAL AUTHORITARIANISM AT WORK DURING THE POST-WAR PERIOD

The post-war period (1945–79) is a convenient point of departure for identifying the archetypical configuration of the employment relationship in relation to technological authoritarianism at work. Against the backdrop of a more systematic adoption of Fordist management practices, albeit tailored to a large extent to the collectivist structure of British industrial relations,13 this period is commonly seen as shaped by the presence of an overall social-democratic ‘post-war consensus’.14 This term captures the broad political and social acceptance of a range of socialdemocratic policies. These include Keynesian state interventionism, the target of full employment, a strong welfare state, and a key role for trade unions as major economic and political actors. In fact, this consensus, though, was more a pragmatic compromise, a temporary post-war arrangement under which the aims of order and economic efficiency were aligned with a participative democratic culture hospitable to the role of strong trade unions and extensive collective bargaining coverage. This social-democratic spirit is clearly expressed in relation to technology in the 1964 Labour Party Manifesto. ‘Automation’ and ‘technological change’ were invoked as forces that need to be harnessed by inclusive ‘purposive planning’ based on participation and not through a return to a ‘19th century free enterprise economy and a 19th century unplanned society’.15 As this period progresses, though, discourses around ‘productivity’, ‘technology’, and ‘efficiency’ are increasingly linked to a national narrative of relative economic decline compared to the UK’s competitors interpreted as urging for adjustment and change.16 In the 1970s, the breakdown of the consensus becomes visible as trade unions and strikes are more and more portrayed as pathological sources of disorder, authoritarianism, and inefficiency.17 So, how did labour law relate to technological authoritarianism at work during this period? Despite the overall social consensus, the law constituted and maintained the democratic deficits in the technological governance. On the one hand, the North Riding Garages v. Butterwick judgment reiterated the technologically authoritarian position of the common law. It stated that ‘an employee who remains in the same kind of work is expected to adapt himself to new methods and techniques and cannot complain if his employer insists on higher standards of efficiency than those previously required’.18 This position confirms the operation of the employment

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See I. Clark, ‘Employer resistance to the Fordist production process: “Flawed Fordism” in post-war Britain’, Contemporary British History, 15(2) (2001), 28; see also S. Taylor, ‘Fordism to post Fordism in the UK’, International Journal of Housing and Human Settlement Planning, 5(1) (2019), 23. P. Addison, The Road to 1945: British Politics and the Second World War (London: Pimlico, 1994); for industrial democracy and the post-war consensus, see A. Williamson, ‘The Bullock report on industrial democracy and the post-war consensus’, Contemporary British History, 30(1) (2016), 119–49; for a critique of the accuracy of the term, see J. Marlow, Questioning the Post-War Consensus Thesis (Aldershot: Dartmouth, 1996). Labour Party, 1964 Labour Party Election Manifesto: ‘The New Britain’. C. Howell, Trade Unions and the State: The Construction of Industrial Relations in Britain, 1890–2000 (Princeton, NJ: Princeton University Press, 2005), ch 4; for a critique of the ‘decline thesis’, see J. Tomlinson, ‘Deindustrialization not decline: A new meta-narrative for post-war British history’, Twentieth-Century British History, 27(1) (2016), 76–99. See C. Hay, ‘“Narrating crisis”: The discursive construction of the “winter of discontent”’, Sociology, 30(2) (1996), 253–77. North Riding Garages v. Butterwick [1967] 2 QB 56 at 63.

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relation as a structure of alienation as it affords workers almost no legal rights to control or at least to exercise any voice over the means of work. In contrast, the collective route for worker empowerment through collective agreements in theory offered a democratic means of countering the technological authoritarianism engendered by the contract of employment and addressing the democratic deficits. Collective bargaining coverage in the United Kingdom rose from 62 per cent in 1940 to around 70 per cent in the 1960s and 80 per cent in the 1970s.19 Otto Kahn-Freund famously rationalised in the 1950s as ‘collective laissez-faire’20 the inverse correlation between the profound maturity of the UK’s industrial relations and the limited role of law under a ‘voluntarist’ system privileging autonomous collective regulation over direct legal compulsion and individual rights.21 Even though his account has attracted multiple critiques,22 for our purposes what is significant is that the UK industrial relations model was mainly constructed around industry-wide bargaining.23 This entailed, as Howell rightly points out, ‘managerial authority inside the firm [being] largely unaffected’.24 Issues of technology and work organisation were left largely outside the purview of industry-wide collective agreements, thereby failing to fundamentally alter the underlying legal structures enabling technological authoritarianism. Hence, the question of technological authoritarianism was not directly addressed by industry-wide collective bargaining during this period. The collective bargaining model also experienced in this post-war period a considerable decentralisation to the workplace level through bargaining conducted by democratically elected shop stewards and individual employers. This decentralisation meant ‘a shift in the scope of bargaining to include work practices, work organization, technology . . . and the construction of a raft of new individual rights at work’.25 For the Donovan Commission set up to address the perceived problem of unofficial strikes, the coexistence of a ‘formal’ system with a narrow scope and an ‘informal’ system conducted by democratically elected shop stewards over a wide range of issues (including discipline, recruitment, redundancy, and work practices)26 was presented as a source of ‘anarchy’, ‘inefficiency’, and ‘indecision’ caused by ‘extreme decentralisation’ and ‘self-government’.27 But an alternative narrative would perceive the rise of this informal system as a sign of increased democratic contestation over authoritarianism at work emerging spontaneously in a bottom-up way.28 The finding that collective bargaining overall failed to address these democratic deficits in technological governance is not altered by the rise of ‘productivity agreements’29 in the 1960s and 19

20

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23 24 25 26 27 28

29

Data from the table included in K. Ewing, J. Hendy, and C. Jones (eds.), A Manifesto for Labour Law: Towards a Comprehensive Revision of Workers’ Rights (Liverpool: Institute of Employment Rights, 2016), 4, based on a metastatistical analysis of data from various academic sources. See O. Kahn-Freund, ‘Legal framework’ in A. Flanders and H. Clegg (eds.), The System of Industrial Relations in Great Britain (Oxford: Blackwell, 1954), 43. O. Kahn-Freund, ‘Labour law’ in M. Ginsberg (ed.), Law and Opinion in England in the 20th Century (London: Stevens & Sons, 1959), 224. K. D. Ewing, ‘The state and industrial relations: The “collective laissez-faire” revisited’, Historical Studies in Industrial Relations, 5 (1998), 1–31; Howell, Trade Unions and the State, 79–82. For an excellent review of critiques of collective laissez-faire, see A. Bogg, The Democratic Aspects of Trade Union Recognition (Oxford: Hart, 2010), ch. 1. See Howell, Trade Unions and the State, chs. 2 and 3. Ibid., 47. Ibid., 88. Report of the Royal Commission on Trade Unions and Employers’ Association (1968) Cmnd 3623 paras. 147–8. Ibid., para. 130. See R. Hyman, ‘Pluralism, procedural consensus and collective bargaining’, British Journal of Industrial Relations, 16 (1) (1978), 16–40, at 25. Davies and Freedland, Kahn-Freund’s Labour and the Law, 76–7.

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1970s. These refer to agreements in which ‘advantages of one kind or another, such as higher wages or increased leisure, are given to workers in return for agreement on their part to accept changes in working practices or in methods or in organisation of work which will lead to more efficient workings’.30 Despite their potential for establishing a more participative model of technological governance, their conclusion seemed to reproduce the core assumptions of technological authoritarianism at work and failed to remedy the democratic deficits. This is because they were premised upon a trade-off of monetary benefits for workers for long-term changes in the organisation of work and technological use strengthening employers’ powers. It should also be noted that in 1977 the Bullock Report considered a more extensive involvement of workers inside the firm through economic democracy (workers on boards) but eventually fell short of recommending it based on its supposed inconsistency with the reality of conflict of interest between capital and labour.31 An alternative route by which labour law sought to address democratic deficits in technological governance was by the enactment of new individual statutory rights mostly under a narrative of modernisation and adaptation to technological change. The Redundancy Payments Act 1965 and the Industrial Relations Act 1971 essentially set a framework for ‘rationalising’ technology-related disputes by monetary awards for redundancies and the provision of a remedy for unfair dismissal, respectively. Various statutes also provided for consultative processes of trade union involvement on issues around health and safety,32 redundancy,33 and transfer of undertakings (which came into force in 1981).34 These statutes established some collective space for deliberation over technological change. However, the requirement that workers only needed to be consulted over decisions in these areas assumed employers’ technological authoritarianism as the privileged position. Lastly, this period witnesses the rise of the employment status question in its modern form as a marginal yet noticeable issue. As Deakin and Wilkinson have documented, in this period there is a consolidation of a unitary contract of employment, bringing together two formerly distinct statuses.35 These were the manual ‘servants’ previously subject to the master–servant relationship and higher-status professional/managerial employees previously enjoying a contractual relationship based on reciprocity.36 Most major statutes in this period adopted a binary model of classification between ‘employees’ (defined as those with contracts of services) and ‘selfemployed’ (defined as those with contracts for services).37 In determining employment status, the courts moved away from mere reliance on the control test to a multi-factorial and factspecific approach. Among the new tests are (i) the integration test focusing on whether a ‘man is employed as part of that business and his work is done as an integral part of the business’;38 (ii) 30

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‘Productivity bargaining and restrictive labour practices’ (Royal Commission on Trade Unions and Employers’ Association, 1967), Research Paper 4 Pt 1 (written by the secretariat); see in general B. Towers and T. G Whittingham, ‘Productivity bargaining in the United Kingdom: An overview’, Journal of Industrial Relations, 13(3) (1971), 251-273. See also A. Flanders, The Fawley Productivity Agreement (London: Faber & Faber, 1964). Report of the Committee of Inquiry on Industrial Democracy (1977) Cmnd 6706; on this topic, see E. McGaughey, ‘Votes at work in Britain: Shareholder monopolisation and the “single channel”’, ILJ, 47(1) (2018), 76–106. Health and Safety at Work Act 1974, s. 2(6); see further R. W. Howells, ‘Worker participation in safety I: The development of legal rights’, ILJ, 3 (1974), 87–95. Employment Protection Act 1975, s. 99ff. The Transfer of Undertakings (Protection of Employment) Regulations (SI 1981 No. 1794). S. Deakin and F. Wilkinson, The Law of the Labour Market (Oxford: Oxford University Press, 2005), ch. 2. Ibid. The concept of an ‘employee’ is adopted by the Contract of Employment Act 1963, the Redundancy Payments Act 1965, the unfair dismissal provisions of the Industrial Relations Act 1971, and the Employment Protection Act 1975. Stevenson, Jordan & Harrison v. MacDonald & Evans [1952] 1 TLR 101, 111 (Denning LJ).

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the economic reality test asking ‘whether the worker is in business on his or her own account, as an entrepreneur, or works for another who takes the ultimate risk of loss or chance of profit’;39 and (iii) from the late 1970s the mutuality of obligations test interrogating the presence of a reciprocal employer commitment to offer work and the employee to accept it.40 Kahn-Freund, who in 1951 observed that the various criteria collapsed in ‘a maze of casuistry without much principle’,41 attributed this judicial shift to a large extent to technological change. As he put it, the ‘control test postulates a combination of managerial and technical functions in the person of the employer’ that functions when the master is personally involved in the work, but ‘the technical and economic developments of all industrial societies have nullified these assumptions’.42 Hence, the multi-factorial test of employment status evolved at least in part as a response to a changing technological organisation of the workplace.

III THE CHANGING NATURE OF WORK: LABOUR LAW AND THE ENHANCED TECHNOLOGICAL AUTHORITARIANISM AT WORK DURING THE NEO-LIBERAL PERIOD

From 1979 onwards, successive UK governments have either pursued a radical market-based neo-liberal agenda based on the strategic use of law towards weakening the power of trade unions (Conservative governments 1979–97 and Conservative or Conservative-led governments 2010– 20) or failed to radically reverse its trajectory (New Labour governments 1997–2010).43 The contrast between collective and individual rights emerges as a key feature of this period. The ‘wholesale decollectivisation’44 of the employment relationship as manifested in the dramatic collapse of bargaining coverage and trade union membership (especially in the private sector)45 has been accompanied by the rise of individual statutory rights.46 However, the overall direction of the restructured labour law has been towards a more intensified technological authoritarianism at work and a widening of democratic deficits. This process occurred in the context of a broader shift towards the third industrial revolution associated with digitalisation, the growth of the service economy, and ‘vertical disintegration of firms’, that is, ‘the arranging aspects of production through subcontracting, franchise, concessions and outsourcing’.47 Narratives of ‘flexibility’, ‘adaptability’,48 and ‘competitiveness’49 39

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S. Deakin and F. Wilkinson, Labour Law (Oxford: Hart, 2012), 162. See Market Investigations Ltd v. Minister of Social Security [1969] 2 QB, at [173]. Airfix Footwear Ltd v. Cope [1978] ICR 1210. O. Kahn-Freund, ‘Servants and independent contractors’, Modern Law Review [MLR], 14(4) (1951), 504–9, at 507. Ibid., 505–6. H. P. Brown, ‘The counter-revolution of our times’, Industrial Relations: A Journal of Economy and Society, 29(1) (1990), 1–14; see also Deakin and Wilkinson, The Law of the Labour Market, 264–71; C. Crouch, ‘The terms of the neo-liberal consensus’, Political Quarterly, 68(4) (2002) 352. Howell, Trade Unions and the State, 132; see also J. Purcell, ‘The end of institutional industrial relations’, Political Quarterly, 64(1) (1993), 6–23 and Lord Wedderburn, ‘Freedom of association and philosophies of labour law’, ILJ, 18 (1) (1989), 1–38. Collective bargaining coverage dropped from around 80 per cent in 1980 to around 50 per cent in 1993 and was around 20 per cent in 2013. Data from Ewing, Hendy, and Jones, A Manifesto for Labour Law, 4. W. Brown, S. Deakin, D. Nash, and S. Oxenbridge, ‘The employment contract: From collective procedures to individual rights’, British Journal of Industrial Relations, 38(4) (2002), 611–29. H. Collins, ‘Independent contractors and the challenge of vertical disintegration to employment protection laws’, Oxford Journal of Legal Studies, 10(3) (1990), 353–80. See P. Davies and M. Freedland, Towards a Flexible Labour Market (Oxford: Oxford University Press, 2007). H. Collins, ‘Regulating the employment relation for competitiveness’, ILJ, 30(1) (2001), 17–48; see also HM Government, Competitiveness: Creating the Enterprise Centre of Europe, Cm 3300 HMSO (June 1996).

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accompany the growth of non-standard work,50 most notably part-time work,51 temporary agency work,52 self-employment,53 and zero-hours contracts.54 The Conservative government statement in 1988 that ‘management has regained the freedom to manage, and the incentive’55 perfectly encapsulates the spirit of employment law in this period. For the interaction between labour law and technological authoritarianism, the 1985 Wapping Dispute offers an ideal condensation and preview of the overall trajectory. This dispute brought about the clash between Rupert Murdoch, who pushed for a de-collectivised model of newspaper production, and the hitherto strong print trade unions. Murdoch asked the unions to concede to a range of demands, including a no-strike clause, flexible work, the end of closed shop arrangements, and a shift towards computer-based production without adequate job security guarantees. The unions unsurprisingly resorted to industrial action.56 In response, Murdoch dismissed all strikers while benefiting from an enormous mobilisation of state (police) resources that secured the almost undisrupted operation of the newspaper in a different location under a computerised format through the replacement of striking workers.57 The eventual defeat of the strike ‘clearly demonstrated the powerlessness of workers faced with an aggressive management determined to introduce changes into the workplace’.58 In terms of discourse, the dominant rationalisation of this event advanced a de-contextualised techno-determinist narrative of a struggle over technological progress where Murdoch is presented as the face of inevitable modernisation and workers are cast as irrational enemies of progress.59 As Murdoch himself put it: What happened at ‘Wapping’ is a microcosm of the changes taking place in many other industries, as outmoded social institutions attempt to suppress new technology. On the one hand, new technology opens up new possibilities, not only for business but for labor. Technological progress raises wages, and makes the workplace safer, cleaner, and more humane. On the other hand, the framework of social institutions (in this case labor unions and labor law) resists the change. Technological change and social institutions interact continually, and the technology does not necessarily win. Society can soar, or it can stall.60 50

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See T. Whitton, ‘The growth of precarious employment in Great Britain’, French Journal of British Studies, XII(2) (2003). Part-time work reached a high of 27.6 per cent of workers in 2012; data from M. Taylor, G. Marsh, D. Nicol, and P. Broadbent, Good Work: The Taylor Review of Modern Working Practices (London: Department for Business, Energy & Industrial Strategy, 2017), 24. Taylor et al., Good Work: The Taylor Review (at 24) referred to estimates of agency work ranging from 800,000 to 1.2 million workers. Self-employment has increased ‘from 3.3 million people (12.0% of the labour force) in 2001 to 4.8 million (15.1% of the labour force) in 2017’. Office of National Statistics, ‘Trends in self-employment in the United Kingdom’ (7 February 2018), www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/tren dsinselfemploymentintheuk/2018-02-07. The ILO estimated that 2.5 per cent of employees in the UK were on zero-hours contracts at the end of 2015; ILO, Non-standard Employment around the World (Geneva: ILO, 2016), xxiii. United Kingdom Government Department of Employment, Employment for the 1990s (1988), Cm 540 16. See K. Ewing, The Right to Strike (Oxford: Oxford University Press, 1991), 1; see also K. Ewing, ‘The Wapping dispute and labour law’, Cambridge Law Journal, 45(2) (1986), 285–304. Ewing, The Right to Strike, 2. For the influence of Wapping on the Financial Times, see T. Marjoribanks, ‘The “antiwapping”? Technological innovation and workplace reorganization at the Financial Times’, Media, Culture and Society, 22(5) (2000), 575–93. Ewing, The Right to Strike, 2. See J. Lloyd, ‘The Battle of Wapping, 1986’, Financial Times (25 April 2008), www.ft.com/content/c4a051fc-100811dd-8871-0000779fd2ac. R. Murdoch, ‘The war on technology’, Manhattan Institute’s Third Annual Walter B. Wriston Lecture in Public Policy, City Journal (Autumn 1990), www.city-journal.org/html/war-technology-12787.html.

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This image of employers as actors whose profit motive as by an invisible hand puts them on the right side of technological progress while striking workers appear as selfish disruptors, was used as a cloak for justifying the erosion of worker voice. The latter was pitched not only as inevitable but as necessary for technological progress. Workers’ claim to have some degree of control over the use, design, and steering of the technological process was dismissed as detrimental to the universal good served by the employers. The presence of democratic deficits in technological governance was presented as the sole route to change. Instead, an alternative contextualised alternative would have seen these events ‘not [as] a result of technological innovation alone [but r]ather . . . [as] the outcome of a complex set of influences involving relations between management, union and workers; government policy and legislative enactments; and the actions of other institutions of the state, including the courts’.61 This dispute exposed the centrality of law in disabling contestation opportunities against technological authoritarianism. Use of replacement labour for striking workers, dismissal of strikers, and the inability of print unions to gather the assistance of other unions owing to the recently imposed prohibition on solidarity strikes were all lawful at that time. Moving to judicial decisions, the Creswell judgment provides a perfect illustration of the dominant trends of de-collectivisation and individualisation. At first sight the case appears to pertain to an individual contractual claim involving tax officers refusing to accept a digitalised system of work and instead bringing a claim for breach of contract based on contractual variation. In siding with the employer, the Court confirmed the technologically authoritarian construction of the common law by determining a broad scope for the managerial prerogative on the introduction of new technologies at work. It stated that ‘an employee is expected to adapt himself to new methods and techniques introduced in the course of his employment’62 as soon as the employer arranges for necessary training and provided the new methods are not so radical as to be outside the employee’s contractual obligations.63 However, a more careful analysis of the facts reveals that this case was the result of a failed technological contestation of the employer’s technological authoritarianism through collective routes. Only when the trade union failed to secure a firm commitment by the employer to avoid compulsory redundancies as a prerequisite for securing its consent to the adoption of a digitalised system did it choose, as a last resort, to instruct workers not to accept the new conditions of work, thus triggering an individual contractual claim of breach of contract. The workers’ claim in front of the court that they would become ‘slave[s] to the machine’64 must be better interpreted as expressing anxiety over the loss of control of voice over the design and implementation of technology in the workplace. These concerns rather unsurprisingly failed to be adequately registered in the judicial application of the common law. At the collective level, the neo-liberal period witnessed the collapse of collective bargaining (especially in the private sector), which was so dramatic as to prompt Ewing to talk about the ‘death of labour law’.65 As Wedderburn put it (in 1986), for the first time labour law ‘does not accept the legitimacy of “collective labour power” in the labour market’.66 New Labour governments (1997–2010) made no major changes to the collective labour law except for

61 62 63 64 65 66

Marjoribanks, ‘The “anti-wapping”?’, 579. Creswell and Others v. Board of Inland Review [1984] ICR 508, [at] 518. Ibid., 509. Ibid., 520. K. Ewing, ‘The death of labour law’, Oxford Journal of Legal Studies, 8(2) (1988), 293–300. L. Wedderburn, The Worker and the Law, 3rd ed. (Harmondsworth: Penguin Books, 1986), 85.

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establishing a weak statutory union process67 and the Low Pay Commission as a body to annually recommend to the government the national minimum wage rates, which operates as an effective but rather isolated sui generis tripartite social partnership institution.68 As far as industrial action is concerned, the UK’s legal framework is highly restrictive. This is important for the power dynamics of technological contestation because industrial action offers an empowerment tool, enabling workers to collectively express their voices and contest technological decisions by their employer(s). Besides the significant prohibition of secondary strikes and the aggressive and successful use of injunctions by employers, the law establishes various procedural hurdles for trade unions, tending to increase ‘substantially the cost and complexity both of union organization and of strike action’.69 The Trade Union Act 2016 tightened even further the conditions for industrial action including by providing for turnout thresholds in industrial action ballots.70 Amid apparent tension with the declared aim of making decisions on industrial action more democratic, the government was reluctant to introduce electronic strike ballots that could have enhanced turnouts in the legislation, citing security and fraud concerns.71 This was despite the use of such ballots in leadership elections for both main parties. As a result, the law still requires postal ballots and does not permit unions to make use of the opportunities of the digital age to facilitate workers’ participation. It thus forces unions to operate in an outdated analogue era. The judgment Royal Mail Group Limited and Communication Workers Union,72 arising from industrial action by postal workers, gives an example of how law can be used to suppress acts of digital resistance to this system. Postal workers attempted to subvert the mandated process of postal ballot in the following way. They intercepted (and opened) the ballots addressed to them at the Delivery Office of the Royal Mail (rather than waiting for them to be delivered to their individual home addresses), and used social media to circulate videos putting them en masse into the ballot boxes and advising members to vote yes. However, following a challenge by the employer, the Court considered this action to be intimidating and unlawful under the statutory framework and held the ballot invalid (even though it returned a 97.1 per cent majority in favour of the strike).73 It should also be stressed that the statutory union recognition procedure, which offers a route for unions to secure mandatory recognition after securing a majority in a ballot of all workers in a bargaining unit (or demonstrating membership of the majority of workers), does not include technology as a mandatory issue of negotiation after a successful legal recognition by the Central Arbitration Committee. These mandatory topics are limited to pay, hours, and holidays.74 In addition, EU-derived statutes have led to the creation of certain structures for trade union consultation. In this period, there is a shift from a specific-issue consultation 67

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P. Smith and G. Morton, ‘New Labour’s reform of Britain’s employment law: The devil is not only in the detail but in the values and policy too’, British Journal of Industrial Relations, 39(1) (2001), 119–38; see also A. Bogg, ‘The mouse that never roared: Unfair practices and union recognition’, ILJ, 38(4) (2009), 390–402. On the operation of the Low Pay Commission as a social dialogue institution, see I. Katsaroumpas, Social Dialogue in the Wage-Setting Report (Utrecht: Ethos, 2019). W. Brown, ‘Industrial relations in Britain under New Labour, 1997–2010: A post mortem’, Journal of Industrial Relations, 53(3) (2011), 402–13, 404. On the 2016 Trade Union Act, see Bogg, ‘Beyond neo-liberalism’. The government eventually decided to set up a review over a statutory amendment to allow electronic ballots. The Knight Report decided not to recommend the use of e-ballots but instead recommended testing them on nonstatutory ballots, thus making uncertain their introduction. See Sir K. Knight, Electronic Balloting Review: The Report of the Independent Review of Electronic Balloting for Industrial Action (London: Department for Business, Energy and Industrial Strategy, 2017). Royal Mail Group Limited and Communication Workers Union [2019] EWCA Civ 2150. Ibid. Employment Relations Act 1999, Schedule A1, Part I, s. 3(3).

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(redundancies and transfers of undertakings) to more general schemes of information and consultation on a range of issues that include ‘decisions likely to lead to substantial changes in work organization or in contractual relations’75 and, for the European Works Councils more explicitly, ‘substantial changes concerning organization, introduction of new working methods of production’.76 But these new consultation fora had not been very successful in the United Kingdom owing to the dominance of the single-channel union system of representation. In contrast to the declining significance of collective structures, the question of employment status has gained prominence in UK labour law.77 This is not unrelated to the enactment of a raft of new individual rights (notably minimum wage and working time) attached to ‘employees’ or ‘workers’ and the employer’s adoption of more flexible strategies of casual labour facilitated by the de-collectivised environment that is testing the employment status boundaries. The general legal response of the UK’s legal system to the rise of precarious employment has been, as Freedland and Prassl aptly observe, to ‘superimpos[e] a firmly tripartite system of classification of personal work contracts upon the previously bipartite one’.78 Key drivers for this tripartite classification were the enactment of the National Minimum Wage Act 1998 and the 1998 Working Time Regulations that granted these rights to ‘workers’. The law generally distinguishes among three categories: (i) employees, (ii) workers, and (iii) self-employed. ‘Employees’, statutorily defined as those with contracts of services (contracts of employment), are eligible for almost all employment rights (though often with qualifying conditions in terms of duration of employment). A more limited but important set of rights (minimum wage, working time, protection from unlawful deduction, protection against discrimination and whistleblowing, the right not to suffer detriment from taking part in union activities, and the right to trade union organisation) is attached to the more inclusive category of ‘workers’. ‘Workers’ are not only employees but also those under contracts for services who ‘undertak[e] to do or perform personally any work for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual’.79 Self-employed individuals who are not workers under the statutory definition are outside of the scope of employment law. ‘Workers’ cannot bring an unfair dismissal claim to the courts even for participation in industrial action. Employment status determination has relied mostly on tests developed by the courts, focusing on a factspecific characterisation of the contractual arrangements and subsequent practices of the parties. The question operates in a variety of statutory contexts with their own scope of application and definitions. With regard to judicial tests, the most striking development in this period is the judicial construction of the mutuality obligation test as a major barrier to casual workers ability to access collective rights. In O’Kelly,80 the Tribunal denied that three waiters (known as ‘casual regulars’) performing regular dinner functions for a hotel (for more than thirty hours on average for most weeks) were workers by concluding that their contract ‘was a purely commercial 75 76

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Information and Consultation of Employees Regulations 2004, No. 3426, s. 20. Transnational Information and Consultation of Employees Regulations 1999, No. 3323, Schedule Regulation 18, Art. 7(3). See the excellent discussion in A. Bogg, ‘Employment status in the social democratic constitution: Law and politics’ in A. Bogg, J. Rowbottom, and A. Young (eds.), The Constitution of Social Democracy, ch. 8 (Oxford: Hart, 2020). M. Freedland and J. Prassl, ‘Employees, workers and the “sharing economy”’, Spanish Labour Law and Employment Relations Journal, 6(1–2) (2017), 16–29, at 23. Employment Rights Act 1996, s. 230. Emphasis added. O’Kelly v. Trusthouse Forte plc [1983] 4 WLUK 16; affirmed by the Court of Appeal in O’Kelly v. Trusthouse Forte plc [1983] ICR 728.

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transaction for the supply and purchase of services for specific events, because there was no obligation for the company to provide further work and no obligation for the applicants to offer their further services’.81 Hence, they were unable to bring an unfair dismissal claim for discrimination based on trade union organisation. Their de facto employer was thus able to capitalise on their casual arrangements to escape judicial scrutiny of its action targeted at suppressing their efforts to contest their working conditions through unionisation. While in later cases the courts have struggled with how to infer the existence of mutuality of obligations,82 this test imposes a significant hurdle for those employed in zero-hours contracts and in general has been used rather restrictively for workers.83 Another problem vis-a`-vis employment status concerns the so-called substitution clauses. These are often inserted by employers for the sole purpose of denying the personal nature of the contract and for defeating claims that the engaged individuals are ‘employees’ or ‘workers’. Here the Supreme Court Autoclenz judgment enabled a rupture in the primacy of the express contractual terms. Faced with a contract of car valeters containing express selfemployment clauses and no mutuality of obligation clauses along with their right to provide a substitute, Lord Clarke stated that ‘the relative bargaining power of the parties must be taken into account in deciding whether the terms of any written agreement in truth represent what was agreed and the true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only a part’.84 This judgment embraces a ‘contractual reality’ approach in that it maintains the focus on contractual obligations but looks at all the circumstances and crucially ‘disregards’ any clauses if they do not reflect the contractual reality (see also Section V below for the Uber judgment that further develops this case-law).85 Finally, for agency workers the courts have adopted a necessity test according to which a relationship between the end-user and the contract can be implied only if it is ‘necessary’ to explain the arrangement. This renders such an implication virtually impossible as it is sufficient for the agency to provide wages to agency workers to prevent it.86 In Smith v. Carillion,87 this necessity test did not allow an agency worker blacklisted by the user company for his health and safety activities to bring a claim because there was no contractual relationship with the user company.88 This was despite the fact that for all practical purposes he was fully integrated into the business of the user company. The user company conducted the interview, provided training, and fully integrated him into the management team. As a result, the law failed to grant protection to the worker in a matter related to blacklisting for health and safety activities. To the extent that health and safety activities are related to the technological organisation of the workplace, this case confirmed and exacerbated the technological authoritarianism of the user company. The user company was able to shield its punitive attitude (blacklisting) towards agency workers’ contestation of workplace organisation (as exercised through health/safety activities) behind the legal fac¸ade of agency/user separation. 81 82 83

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O’Kelly v. Trusthouse Forte plc [1983] 4 WLUK 16, para. 25. See Nethermere (St Neots) Ltd v. Gardiner and Another [1984] ICR 612. See further A. Adams-Prassl, M. Freedland, and J. Adams-Prassl, ‘The Zero-Hours Contract’: Regulating Casual Work, or Legitimating Precarity?, Oxford Legal Studies Research Paper 11/2015 (February 2015), https://ssrn.com /abstract=2507693; for a critique of the judicial construction of the test, see N. Countouris, ‘Uses and misuses of “mutuality of obligations” and the autonomy of labour law’ in A. Bogg, C. Costello, A. C. L. Davies, and J. Prassl (eds.), The Autonomy of Labour Law, 169–88 (Oxford: Hart, 2015). Autoclenz Ltd v. Belcher [2011] UKSC 41, para. 35. See further A. Bogg, ‘Sham self-employment in the Court of Appeal’, Law Quarterly Review, 126 (2010), 166. For an excellent critique of the ‘necessity test’, see A. Paz-Fuchs, ‘It ain’t necessarily so: A legal realist perspective on the law of agency work’, MLR, 83(3) (2020), 558. Smith v. Carillion (JM) Ltd & Anor [2015] EWCA Civ 209. K. Ewing, Ruined Lives: Blacklisting in the Construction Industry (Liverpool: Institute of Employment Rights, 2009).

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IV PROTOTYPE: LABOUR LAW AND TECHNOLOGICAL AUTHORITARIANISM IN THE AGE OF SURVEILLANCE AND ALGORITHMIC MANAGEMENT

In 1998, Michael Ford observed in a statement that is as valid today that ‘surveillance is almost as old as work, but new techniques represent a growing threat of a different kind for workers and unions’.89 Indeed, employers benefit from the new opportunities of ‘technologically enhanced’ monitoring through artificial intelligence (AI), big data, and ‘algorithmic management’.90 Algorithms are increasingly used to inform major employment decisions such as recruitment, the day-to-day management functions of task/shift allocation, and performance review.91 This heightens workers’ vulnerability to technological authoritarianism. The UK economy generally lags behind other countries in terms of business take-up of automation.92 In their brilliant analysis, David Spencer and Garry Slater draw direct links between the low pay/low productivity nature of the British economy and this failure, while noting that automation, where it exists, mostly focuses on the control of workers. They argue that [t]he relative cheapness of labour has not provided a spur to investment, including in new digital technologies. Faced with relatively expensive and risky new technologies, too often firms in the UK have opted for the cheaper and more reliable option of labour. Where new automated technologies have been adopted, there is evidence that these have often been focussed on control or have further routinised activity rather than be taken as an opportunity to reconfigure job tasks and to adopt new automated technology in a way that could enhance longer term productivity prospects.93

They also identify the weakness of workers’ bargaining power as one factor driving the relative lack of investment in automation.94 In terms of technology as a means of controlling workers, scholarship has offered insights on how monitoring is used in the care-home context to drive down wages95 and on the deployment of flexible scheduling systems that use various data inputs (demand, weather, etc.) as a means of fine-tuning the shift allocation to casual workers often with little or no notice.96 As in other countries, the Amazon warehouse monitoring system has been emblematic of authoritarian practices, featuring the constant monitoring of workers with vibrators indicating their location and movement, and generally associated with de-skilling and full supervision.97 In an alarming study, the Trade Union Congress (TUC) found that 56 per cent of workers think that it is likely that they are monitored. Common means or forms of workplace surveillance that workers 89

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M. Ford, Surveillance and Privacy at Work (Liverpool: Institute of Employment Rights, 1998) quoted in Trade Union Congress (TUC), I’ll Be Watching You: A Report on Workplace Monitoring (London: TUC, 2018), www.tuc.org.uk /sites/default/files/surveillancereport.pdf, 5. See A. Mateescu and A. Nguyen, Algorithmic Management in the Workplace (New York: Data & Society Research Institute, 2019), https://datasociety.net/wp-content/uploads/2019/02/DS_Algorithmic_Management_Explainer.pdf. V. De Stefano, ‘“Negotiating the algorithm”: Automation, artificial intelligence and labour protection’, Comparative Labor Law & Policy Journal, 41(1) (2019), 15. House of Commons Business, Energy and Industrial Strategy Committee, Automation and the Future of Work, Twenty-Third Report of Session 2017-19 (London: House of Commons, 2019), https://publications.parliament.uk/pa/ cm201719/cmselect/cmbeis/1093/1093.pdf. See D. Spencer and G. Slater, ‘No automation please, we’re British: Technology and the prospects for work’, Cambridge Journal of Regions, Economy and Society, 13(1) (2020), 117, 130. Emphasis added. Ibid., 127–31. L. J. B. Hayes, ‘Care in a time of austerity: The electronic monitoring of homecare workers’ time’, Gender, Work and Organization, 24(4) (2017), 329. See A. Wood, ‘Flexible scheduling, degradation of job quality and barriers to collective voice’, Human Relations, 69 (10) (2016), 1989. See J. Bloodworth, Hired: Six Months Undercover in Low-Wage (London: Atlantic, 2019), ch. 3.

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thought they are likely subject to include monitoring emails and browsing (49 per cent), closed circuit television (45 per cent), logging or recording phone calls (42 per cent), handheld or wearable location-tracking devices (23 per cent), and facial recognition software (15 per cent).98 These technological opportunities, which are afforded to employers within an environment largely free of the collective constraints of democratic control, set a novel terrain for technological authoritarianism and its contestation. Against this background, the following points can be made. First, the design and use of these technological systems fits well with the employer’s effort to create a completely quantifiable and predictable management in a way that supersedes inherent human limitations in terms of data-making and decision-making processes. This in turn exacerbates power imbalances between employers and workers. With collective safeguards often absent, workers have no knowledge of the working of the algorithm and the data collected by their employers. Second, a distinct set of concerns relates to the ethics of automated decisionmaking through algorithms.99 On this issue, the Data Protection Act 2018 implementing the EU General Data Protection Regulation 2016/679 provides a framework for ‘significant decisions based solely on automated processing that are authorised by law and subject to safeguards for the data subject’s rights, freedoms and legitimate interests’.100 In these cases there is a requirement for the person to be aware that ‘a decision has been taken based solely on automated processing’ and there is a right to request to ‘(i) reconsider the decision, or (ii) take a new decision that is not based solely on automated processing’.101 A third set of concerns relates to the dignity of workers, which can be undermined by their lack of control over new technologies and the perception of constant monitoring. This increases the feeling of alienation in the workplace, thus enhancing the perception of technology as overpowering and oppressive.102 Fourth, there have been other legal limitations on managerial control over technology, mostly of an individual nature. The European Court of Human Rights (ECtHR) has interpreted Article 8 of the European Convention on Human Rights (ECHR) on the right to private life103 as encompassing a ‘reasonable expectation of privacy’ in the workplace,104 which crucially includes the monitoring of communications. Initially, however, the Halford v. United Kingdom judgment appeared to mandate only that the worker is informed about the monitoring. Even though in the United Kingdom a legal framework was established in 2000,105 employers benefited from a broad ‘lawful authority’ exception. Businesses merely need to show that their monitoring is relevant to ‘establishing the existence of facts relevant to the business’ and ‘ascertaining or demonstrating the standards achieved or which ought to be achieved by persons using the system in the course of their duties’.106 However, in the more recent Barbulescu v. Romania judgment involving the dismissal of a worker for using a messenger account set up for professional use for private purposes, the ECtHR (Grand 98 99

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TUC, I’ll Be Watching You. For a review, see B. Mittelstadt, P. Allo, M. Taddeo et al., ‘The ethics of algorithms: Mapping the debate’, Big Data & Society, 3(2) (2016), 1–21. s. 14(2). s. 14(4). See P. Moore, P. Akhtar, and M. Upchurch, ‘Digitalisation of work and resistance’ in P. Moore, M. Upchurch, and X. Whittaker (eds.), Humans and Machine at Work (Basingstoke: Palgrave Macmillan, 2018). The Human Rights Act 1998 established a duty for UK courts to interpret domestic law in accordance with ECHR rights. Courts are also empowered to issue a declaration of incompatibility. Halford v. United Kingdom (1997) 24 EHRR 523 (ECtHR) para. 44. Regulations of Investigatory Powers Act and Telecommunications Regulations 2000. Now the Investigatory Powers (Interception by Businesses etc. for Monitoring and Record-Keeping Purposes) Regulations 2018, s. 3.

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Chamber) categorically stated that ‘an employer’s instructions cannot reduce private social life in the workplace to zero’.107 It crafted a comprehensive proportionality test that, beyond warning of monitoring/surveillance, required consideration of the extent of the monitoring and the degree of intrusion, the provision by the employer of legitimate reasons, the possibility of monitoring based on less intrusive methods, the consequences of the monitoring for the employee, whether there have been adequate safeguards, and the existence of an access to remedy.108 The Data Protection Act 2018 limited the purpose of data collection by stating that data should be ‘collected for specified, explicit and legitimate purposes and not further processed in a manner that is incompatible with those purposes’.109 They must be ‘adequate, relevant and limited to what is necessary in relation to the purposes for which they are processed’.110 However, these safeguards are insufficient to effect a substantial redistribution of the power dynamics to workers’ benefit. This is because they are still individual-based111 and they still permit some leeway to the employer to use the data if a link with a legitimate business interest or purpose can be established. Besides these individual safeguards, another way of democratising authoritarian technological governance and addressing its democratic deficits is through ‘new technology agreements’.112 According to Unite’s union draft agreement template, any form of surveillance must be ‘clearly stated and not be used for any other purpose’, and ‘communication with union representatives must be kept free from any monitoring or surveillance by the employer’.113 The agreement provides job security guarantees and there are mechanisms for negotiation and resolution of any disputes and calls for redistribution of any cost savings for the creation of new jobs elsewhere.114 Here it should also be noted that involving workers in the introduction of new technologies has been found in a study focused on Britain to ameliorate job-related worker anxiety and thus increase worker well-being.115 Interestingly, the rise in home working that came about because of Covid-19 social distancing guidelines raised the issue of the impact of technology on privacy not at the workplace but at home. The use by companies of various invasive devices (such as Hubstaff, ActivTrack) monitoring minute-to-minute activity and visited websites via regular screen shots or even webcam surveillance posed serious questions over the scope of employer’s reach at workers’ home through technology.116 It remains to be seen whether this will lead to future litigation or even legislative reforms.

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Barbulescu v. Romania [2017] ECHR 754 para. 80. Ibid., paras. 120–3. General Data Protection Regulations, Art. 5(1)(b). Ibid., Art. 5(1)(c). See A. Todoli-Signes, ‘Algorithms, artificial intelligence and automated decisions concerning workers and the risks of discrimination: The necessary collective governance of data protection’, Transfer, 25(4) (2019), 465. See Unite, Work Voice Pay: Draft New Technology Agreement (template) (London: Unite, National Organising and Leverage Department, 2017), www.unitetheunion.org/media/1236/draft-new-technology-agreement-october-2016 .pdf, 10. Ibid. Ibid., 6. A. Bryson, E. Barth, and H. Dale-Olsen, ‘The effects of organizational change on worker wellbeing and the moderating role of trade unions’, Industrial and Labor Relations Review, 66(4) (2013), 989. P. Collins, ‘The right to privacy, surveillance-by-software and the “home-workplace”’, UK Labour Law Blog (3 September 2020), https://uklabourlawblog.com/2020/09/03/the-right-to-privacy-surveillance-by-software-and-thehome-workplace-by-dr-philippa-collins/.

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V ‘UBERISATION’: LABOUR LAW, TECHNOLOGICAL AUTHORITARIANISM, AND THE GIG ECONOMY

In the United Kingdom, as in other countries, the gig economy has attracted intense political and legal contestation over the working conditions and employment status of those involved. Owing to space considerations, the focus here is on on-demand work via apps, that is, the ‘form of work in which the execution of traditional working activities . . . is channelled through apps managed by firms that also intervene in setting minimum quality standards of service and in the selection and management of the workforce’.117 Uber commenced operations in the United Kingdom on 2 July 2012. Deliveroo, a British company, was founded in 2013. There generally exist two competing conceptions and imaginaries of the gig economy. One views it through the lens of technological progress and freedom by drawing attention to the use of advanced technology and the provision of flexibility for individuals and companies reflected in their insistence that their staff should be classified as self-employed. The other narrative treats the gig economy not as a ‘separate silo’118 but as a continuation of previous trends on precarious short-term employment concealed under the manipulation of the symbols of ‘sharing economy’ or ‘collaborative economy’.119 Prassl eloquently puts this as the ‘innovation paradox’: despite the technologically novel features associated with the use of the app, there is nothing novel in the organisation of work in the gig economy.120 The latter combines established features of precarious work, notably contingent on-demand labour, false self-employment and piece-based compensation along with the assumption of most economic risks by the worker. Data on the gig economy are generally scarce, but one study estimated in 2016 that around 11 per cent of the workforce had worked for a gig platform.121 Before entering the specifics of litigation, it should be stressed that most judicial claims are not isolated occurrences. Instead, they are integral elements of a broader coordinated strategy of contestation by trade unions and gig workers over their working conditions and employment status. Litigation is one means for workers to regain some democratic control over working conditions and reduce the democratic deficits. The authoritarian practices associated with precariousness, low pay and non-recognition of labour rights have led to collective mobilisation mainly through the formation of the active trade union United Private Hire Drivers, which operates as a branch of the Independent Workers’ Union of Great Britain (IWGB).122 Unions have deliberately adopted a dual strategy of litigation and mobilisation for raising visibility of their conditions and for challenging what is perceived as exploitation by these companies. As Yaseen Ashlam (General Secretary of United Private Hire Drivers and one of the claimants in the Uber case) puts it, ‘we need to fight Uber – on the streets and in the courts – as well as taking the fight to the regulator’.123 This strategy represents an instance of convergence between technological politics and legal action aimed at challenging the practices of technological authoritarianism as manifested in the gig economy. Ashlam continues that companies like Uber are ‘laboratories of class struggle used by management to test new strategies. If these work, they will be used against more 117 118 119 120 121

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V. De Stefano, The Rise of the ‘Just-in-Time Workforce’, 1. Ibid., 7. See Prassl, Humans as a Service; see also Freedland and Prassl, ‘Employees, workers and the “sharing economy”’, 16. Prassl, Humans as a Service, ch. 4. U. Huws and S. Joyce, Crowdworking Survey (February 2016), englishbulletin.adapt.it/wp-content/uploads/2016/02/ crowd-working-surveypdf1.pdf. See Y. Aslam and J. Woodcock, ‘A history of Uber organizing in the UK’, South Atlantic Quarterly, 119(2) (2020), 412–21. Ibid., 413.

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workers. Our fight at Uber is therefore part of a much larger fight.’124 Turning to litigation, there have been numerous cases involving Uber drivers and private hire drivers claiming minimum wage rights and holiday pay (Uber v. Ashlam; Addison Lee Ltd v. Lange & Ors),125 cycle couriers claiming holiday pay (Dewhurst v. City Sprint),126 delivery couriers engaged by Hermes claiming minimum wage rights, annual leave, and unauthorised deduction from wages (Leyland and others v. Hermes),127 and finally Deliveroo riders making a request for statutory union recognition for the purpose of collective bargaining (Deliveroo).128 But the most significant judgment is the one issued in February 2021 by the Supreme Court where it dismissed the appeal against the lower courts’ finding that Uber drivers are workers within the relevant statutory definitions (minimum wage, working time, and whistleblowing).129 The question of employment status is key as it is directly related to accessing several rights relevant to the ability of workers to participate in the technological organisation of their workplace. First, with the exception of Deliveroo, in all cases the Courts have found gig workers to be workers within the statutory definition and thus entitled to the claimed rights. This is a partial victory, though, as there has been no finding yet that gig workers are ‘employees’ (though admittedly this was not critical owing to ‘worker’ status being sufficient for eligibility for the claimed employment rights in these cases). Second, a common feature of the underlying contractual arrangements is that they contain express contractual terms under which individuals agree that they are not employees or workers within the statutory definition but self-employed. These clauses are accompanied by similar terms denying any obligation of the companies to offer work and of workers to accept work purporting to evidence the lack of mutuality of obligations. Most clauses also refer to the right of those individuals to appoint a substitute, aimed at defeating the personal nature of the work and the ‘worker’ classification. Here the Courts have grounded their gig economy jurisprudence in the Autoclenz opening,130 a trend that was consolidated and deepened by the Supreme Court’s Uber judgment. In the latter judgment, the Supreme Court displaced the privileged role of contractual terms in worker status determination. Drawing on a purposive analysis of the relevant statutes as ‘protect[ing] workers from being paid too little for the work they do, required to work excessive hours or subjected to other forms of unfair treatment (such as being victimised for whistleblowing)’,131 the Supreme Court considered that it ‘would be inconsistent with the purpose of this legislation to treat the terms of a written contract as the starting point in determining whether an individual falls within the definition of a “worker”’,132 because this ‘would reinstate the mischief which the legislation was enacted to prevent’.133 Here the Court makes a major step away from the contractual frame of employment status by rejecting the 124 125

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Ibid., 420. Uber BV v. Aslam [2018] EWCA Civ 2748; see also Uber BV v. Aslam [2017] UKEAT 0056_17_1011 (10 November 2017) upholding Aslam v. Uber BV [2016] EW Misc B68 (ET) (28 October 2016); Addison Lee Ltd v. Lange & Ors UKEAT/0037/18/BA. Dewhurst v. Citysprint UK Ltd ET/2202512/2016 (6 January 2017). Ms E Leyland and others v. Hermes 1800575/2017 (22 June 2018) Employment Tribunal Decision. Independent Workers Union of Great Britain and Central Arbitration Committee and Roofoods Limited t/a Deliveroo [2018] EWHC 3342 (Admin) (5 December 2018) upholding Independent Workers’ Union of Great Britain (IWGB) and RooFoods Limited T/A Deliveroo, TUR1/985/2016. Uber BV and others (Appellants) v. Aslam and others (Respondents) [2021] UKSC 5. Autoclenz Ltd v. Belcher [2011] UKSC 41. Uber [2021] UKSC para. 71. Ibid., para. 76. Ibid.

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contractual agreement as a starting point for employment status determination. Having cleared the contractual route, the Supreme Court concluded that the service provided by Uber drivers ‘is very tightly defined and controlled by Uber’.134 For the finding of subordination and control, the Supreme Court focused on Uber control over remuneration rates, the actual contractual terms, and information provided to the driver. Other ways of control were identified in relation to the monitoring of acceptance as a basis for forced log-outs along with the use of customer ratings as an internal performance management tool. In addition, the Supreme Court highlighted the specific use of technology as ‘a means of exercising control over drivers’ by referring to the fact that the driver essentially has to follow the route prescribed by the app since his or her ability to deviate in practice can lead to complaints, meaning that he or she ultimately bears the financial risk of any deviation not approved by the passenger.135 Along similar lines, the fact that in City Sprint the courier was unable to decline a job without a good reason136 and in Addison Lee the private hire driver faced sanctions and potential ‘unallocation’ if he rejected a trip without an acceptable reason137 was used to identify a certain degree of workers’ obligation to accept jobs. In the judgments it is not entirely clear, however, whether control by the gig companies is considered to make it easier to establish a sufficient level of mutuality of obligations for workers or whether the mutuality test altogether becomes a less relevant consideration for this determination. Regarding substitution clauses, judicial analysis turns on a largely speculative inquiry as to their ‘genuineness’. While in Hermes the Court focused on the reality that management ‘retains the right to veto a substitute’ in disregarding these clauses,138 in Deliveroo the Central Arbitration Committee reached the opposite conclusion by noting that ‘the central and insuperable difficulty for the Union is that we find the substitution right to be genuine’.139 This was despite the fact that given the arrangements of Deliveroo and the training requirements, it made little sense for Deliveroo drivers to appoint a substitute instead of logging off or abandoning a delivery midway which were contractually permitted. Special emphasis was given to one incident where apparently one rider, after accepting a ride in a coffee place, gave it to another worker because he wanted to continue chatting with his girlfriend. The Central Arbitration Committee acknowledged that ‘it does sound a little surprising, but even if the whole situation was crafted to provide an example of a mid-job substitution, it effectively demonstrates the capacity of a Rider to do such a thing, should they want to’.140 This formalistic exercise had grave consequences as it was used to deprive Deliveroo riders of their right to engage the statutory union recognition procedure for collective bargaining purposes. Third, the courts have shown a willingness to depart from express contractual terms and look at the practices of the companies for identifying the reality of contractual obligations. They have also been rather critical and suspicious of gig economy terminology used by gig companies. In CitySprint the Court described as ‘window-dressing’ the company’s statement that couriers ‘make their services available to CitySprint’ rather than working for CitySprint.141 In disregarding these clauses in the facts of each case, the Courts have generally stressed the degree of control exercised by the gig companies. 134 135 136 137 138 139 140 141

Ibid., para. 101. Ibid., para. 98. CitySprint, paras. 49–53. Addison Lee, paras. 8–71 upholding para. 11 of the Employment Tribunal Decision. Hermes, paras. 3.60.3–30.60.6 (p. 24). IWGB and RooFoods, TUR1/985/2016, para. 100. Ibid., para. 81. Citysprint, para. 55.

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However, in the case of Uber a driver is considered ‘working’ only if he or she has the app switched on, is ‘in the territory in which he [or she] is licensed to use the App, and is ready and willing to accept trips’.142 A similar conclusion was reached in CitySprint where Dewhurst was considered working only when on circuit.143 The general direction of the courts at this point is to resist the finding of ‘umbrella contracts’ between gig workers and their employers with the result that employment is constructed as a series of short, intermittent engagements. Besides the significant employment status litigation, there have been two other relevant judicial fora. In November 2019, Uber lost its Transport for London licence to operate on public safety grounds, including fraudulent practices related to driver photos.144 But in late September 2020 Uber succeeded in obtaining a new licence as the judge was ‘satisfied that they are doing what a reasonable business in their sector could be expected to do, perhaps even more’.145 More recently, the App Drivers and Couriers Union (ADCU) brought a legal action in Amsterdam, where Uber’s headquarters are located, requesting Uber to disclose all data about the ADCU.146 In its complaint under the GDPR, the union highlighted the degree of control ‘exercised by means of algorithms and automated decision-making’147 and the need to have more data to assess its statutory rights (in terms of minimum wage and holiday pay) and the absence of discrimination but also as ‘necessary to organize and to build collective bargaining power’.148 But gig workers have not confined their struggle against technological authoritarianism to the judicial arena. They have advanced strategies of collective mobilisation to get their voices heard in the public debate. In 2016, London Deliveroo drivers staged a protest against the shift from hourly payment to piece-based payment,149 gathering outside Uber’s offices and organising flying picketing that led to a U-turn by the company.150 In a remarkable instance of subversive technological politics, Deliveroo drivers exploited the standard app offers to new customers to order discounted food so as to persuade more Deliveroo drivers to join their strike. The IWGB used these protests as a springboard for unionisation. Gig worker demands targeted low pay, lack of sufficient work owing to high supply, lack of sick pay and adequate injury compensation, and lack of coverage for health and safety risks.151 One factor that facilitated their mobilisation was that, owing to the automated nature of control through apps, they were largely ‘free from the direct managerial gaze’.152 In 2019 there were Uber strikes as part of an international protest wave over better pay and working conditions at the time of the company’s initial public offering.153

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Uber [2021] UKSC para. 123 – see more generally paras. 121–37. Citysprint, [87]. ‘Uber loses licence to operate in London’, BBC News (25 November 2019), www.bbc.co.uk/news/business-50544283. Westminster Magistrates’ Court in the Matter of an Appeal Under the Private Hire Vehicles (London) Act 1998, Uber London and Transport for London, para. 26; see further M. Amaxopoulou, ‘Sticks and carrots: Lessons from regulating Uber as a private hire operator in England’, King’s Law Journal, 31(2) (2020), 260–74. Application Pursuant to Art. 15(1) GDPR and Art. 35(1) UAVG (unofficial translation), https://ekker.legal/wpcontent/uploads/2020/07/Court-application-Uber.pdf. Para. 10(1). Ibid., para. 10(2). A. Tassinari and V. Maccarrone, ‘Riders on the storm: Workplace solidarity among gig economy couriers in Italy and the UK’, Work, Employment and Society, 34(1) (2020), 35, 42. Ibid. Ibid., 43 Ibid., 45. K. Paul, ‘Uber drivers plan shutdown over “poverty wages” as company goes public’, Guardian (24 April 2019), www .theguardian.com/technology/2019/apr/24/uber-drivers-strike-ipo.

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The demands included an increase in fares, a reduction of Uber’s commission, a clear employment status for all workers, and an end to unfair dismissals.154 Moving to the policy arena, the employment status question became a flagship issue in the socalled Taylor Review commissioned by then prime minister Theresa May to address concerns over zero-hours contracts and working conditions in the gig economy.155 The review largely framed the problem as one of clarity and recommended that ‘the legislation must do more and the courts less if we are to improve clarity, and ensure that irresponsible employers are not able to game the system and take advantage of working people’, including formulating statutory principles and placing more emphasis on control over the substitution test.156 Bogg has made an insightful critique of this conceptualisation as resting on a de-politicised illusion of the problem as technical, thus obscuring the reality that the boundary is the result of political choices over the balance between rights and duties.157 More recently, the social reaction to the Covid-19 pandemic placed the precariousness of gig workers at the forefront of public concern. The absence of guaranteed sick pay provisions previously praised by companies as part of flexibility suddenly turned into a major public health issue. If gig workers were forced to expose themselves to Covid-19 owing to the prospect of receiving no or low income, there was a risk of them further transmitting the virus to others. This risk was aggravated by the fact that statutory sick pay was available only to employees. And even for those entitled to statutory sick pay (the entitlement was changed from the fourth to the first day of sickness for those with Covid-19),158 it was set at a very low level (£95.85 per week from 6 April 2020, which is less than 30 per cent of the national minimum wage). The government established an income replacement scheme (mostly up to 80 per cent) for employees or workers but in practice excluded those workers who are not paid through the tax systems provided for employees, as is the case for most gig workers. However, a similar scheme for self-employed offered an 80 percent income replacement capped at £2,500 per month.159 Some companies such as DPD and Hermes overcame the initial reluctance to provide sick pay pursuant to their view that their staff are self-employed by developing company sick pay programmes.160

VI QUO VADIS? THE FUTURE OF LABOUR LAW AND TECHNOLOGICAL AUTHORITARIANISM

What is the future for the relationship of UK labour law and technological authoritarianism? In 1996, Bob Hepple described UK labour law as based on an ‘end-of-history’ vision resting ‘on the framework of decollectivized, deregulated, and deinstitutionalized neo-liberal labour law’.161 This is an accurate description of the current state of UK labour law the configuration of which has contributed significantly to the intensification of technological authoritarianism at work. 154

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J. Kollewe, ‘Uber drivers strike over pay and conditions’, Guardian (8 May 2019), www.theguardian.com/technology/ 2019/may/08/uber-drivers-strike-over-pay-and-conditions. Taylor et al., Good Work: The Taylor Review. Ibid., 33. Bogg, ‘Employment status in the social democratic constitution’. See the Social Security Contributions and Benefits Act 1992 (amended by the Coronavirus Act 2020) and the Statutory Sick Pay (Coronavirus) (Suspension of Waiting Days and General Amendment) Regulations 2020. See T. Novitz, ‘Covid-19 and labour law: United Kingdom’, Italian Labour Law e-Journal, 13(1) (2020), 1–11; K. Ewing and Lord Hendy, ‘Covid-19 and the failure of labour law: Part 1’, ILJ, 49(4) (2020), 497–538. See R. Booth, ‘Coronavirus: Unions attack “paltry” sick pay for self-isolating couriers’, Guardian (16 March 2020), www.theguardian.com/world/2020/mar/16/coronavirus-unions-attack-paltry-sick-pay-for-self-isolating-couriers. B. Hepple, ‘The future of labour law’, ILJ, 24(4) (1995), 303–22, at 303.

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The significance of the 2019 election victory of the Conservative Party, and the resounding defeat of the Labour Party, which for the first time in decades put forward a radical proposal for an overhaul of labour law in the direction of democratisation through sectoral bargaining, removal of major restrictions on industrial action, and worker representation on company boards, cannot be overstated.162 It meant the United Kingdom entering what has been described as ‘decades of disruption’ from existential risks, demographic pressures, political shifts, and socioeconomic trends such as technological changes, with weak collectivist institutions generally unable to offer a systematic democratic limit to employers’ technological authoritarianism.163 This framework is not only hostile to worker demands for democratic control over technological decisions; it also constrains the possibility of a social construction of technological change in a direction that is not dictated merely by market and capital interests but is sensitive in an inclusive manner to the interests of a broader range of affected actors. To be sure the present political, legal, and economic conjuncture in the United Kingdom is extremely volatile, with UK law in an obvious transitional stage. Major factors of uncertainty are the post-Brexit fate of EU-derived labour rights and the associated labour and human rights architecture,164 the conclusion and the effect of new trade agreements by the United Kingdom and their impact on labour law,165 the Covid-19 impact on the economy, politics, and society, the cost-of-living crisis, and, not least, the future of the United Kingdom as a union. If we are to succumb to the temptation of formulating possible narratives for the next decade(s), we can identify three main ones. One finds perfect expression in the TUC call for a Future of Work Commission that, by bringing together trade unions, employers, and independent experts, will ‘ensure that new technology is introduced with the consent of workers, with new technology agreements agreed by trade unions in workplaces across the country’.166 The TUC also calls for wider distribution of the benefits of technological change in the form of a ‘4-day week with no drop in living standards as an ambition for the twenty-first century’.167 These ideas move in the direction of embedding the ‘technological question’ deep into the ‘power question’ in the workplace, that is, viewing technology as a terrain of power dynamics in society. In this narrative, labour law is seen as playing a major part in the task of democratising technology through workers’ empowerment and hence as being more part of the solution than the problem. For this task, effective bipartite and/or tripartite processes are necessary. These proposals for workers’ technological empowerment were also part of the 2019 Labour Party Manifesto, which called (in rather weak terms, though) for ‘introducing a legal right to collective consultation on the implementation of new technology in workplaces’.168 A different narrative that is much more likely to dominate will be founded on the fundamental acceptance of the current neo-liberal status quo in terms of worker voice as currently formulated. But at the same time it will reflect the broader consensus over the value of individual rights in public discourse, which may lead to strengthening some individual rights, such as a stronger right to privacy or data protection. The Taylor Review’s focus on more individualistic narratives of 162

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Labour Party, ‘Tackle poverty and inequality’ in It’s Time for Real Change: The Labour Party Manifesto 2019, 57–86, https://labour.org.uk/wp-content/uploads/2019/11/Real-Change-Labour-Manifesto-2019.pdf. H. Quilter-Pinner, C. McNeil, and D. Hochlaf, The Decades of Disruption: New Social Risks and the Future of the Welfare State (London: Institute for Public Policy Research, 2020). See K. Ewing, ‘Implications of the post-Brexit architecture for labour law’, King’s Law Journal, 28(3) (2017), 403–24. See N. O’Connor, ‘“Unchartered” waters: Fundamental rights, Brexit and the (re)constitution of the employment law hierarchy of norms’, European Labour Law Journal, 12(1) (2021), 52–82. TUC, A Future that Works for Working People (London: TUC, 2018), 38. Ibid. Labour Party, ‘Tackle poverty and inequality’, 61.

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‘voice’ and ‘choice’ in employment law, which masks a deep neglect of the question of power distribution in the workplace, is an example of this narrative.169 The 2019 Conservative Party Manifesto rhetorically approximates this approach. On the one hand, it talks about the need for ‘strik[ing] the right balance between the flexibility that the economy needs and the security that employees deserve, introducing new protections for workers while preserving the dynamism and job creation that drive our shared prosperity’ and ‘prioritis[ing] the principle of fairness in the workplace’.170 However, it is silent on any meaningful set of reforms for reversing the overall decollectivised environment. Technology is mentioned only in the context of innovation but without reference to any process of democratisation of its control through workers’ involvement.171 If this narrative predominates, the focus is more likely to be concentrated on the issue of training and skills to help workers cope with technological change but without any integration into a more radical transformation of the authoritarian structure enabled by the neo-liberalisation of UK labour law over the previous decades. A third narrative would construe the imperative of technological change as a discursive legitimation for a further labour law deregulation potentially seizing on the lack of EU law restraints in the post-Brexit era. With the obvious caveat associated with the difficulty in predicting the future, we can identify certain reforms that may be at the centre of public debate over the next years. First, there has been discussion of a potential domestic Bill of Rights. This was already mentioned in the 2015 Conservative Manifesto as an alternative to the ECHR.172 A government consultation was launched in December 2021 (concluded in July 2022) that focused mostly on freedom of expression and Convention rights.173 A Bill was introduced to repeal the Human Rights Act 1998 (the latter incorporates the ECHR into the domestic order and provides for a judicial duty to interpret domestic law in accordance with Convention rights).174 This Bill was recently abandoned by Rishi Sunak’s government, yet the discussion is far from over and labour and technological rights could be part of relevant debates about a Bill of Rights in the future. Second, the employment status question is expected to remain at the centre of public attention. Even though it is improbable that politicians will heed the call by Freedland and Kountouris for a move away from a contract of employment towards a more inclusive model of personal work relations,175 there is an open question as to whether the legislator should be more prescriptive in formulating the legal tests and even as to the legitimacy of the tripartite classification adopted by the statute and the Courts. Following from the Taylor Review, a House of Commons Committee,176 despite acknowledging that ‘questions of employment 169

170

171 172

173

174

175

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K. Bales, A. Bogg, and T. Novitz, ‘“Voice” and “choice” in modern working practices: Problems with the Taylor Review’, ILJ, 47(1) (2018), 46–75. See Conservative Party, Get Brexit Done: Unleash Britain’s Potential – The Conservative and Unionist Party Manifesto 2019 (2019), https://bit.ly/44OA93s, 38. Ibid., 38–40. Conservative Party, Strong Leadership; A Clear Economic Plan; A Brighter, More Secure Future – Conservative Party Manifesto 2015 (2015), https://bit.ly/3OAgvm3, 60. See also L. Abbott, Defending Liberty: The Case for a New Bill of Rights (Manchester: Industrial Systems Research, 2019). Ministry of Justice, Consultation Outcome: Human Rights Act Reform: A Modern Bill of Rights, Consultation Response (London: Ministry of Justice, 2022), https://bit.ly/3rRx0RJ. UK Parliament, Bill of Rights Bill, originated in the House of Commons, Session 2022–23, https://bills.parliament.uk /bills/3227. M. Freedland and N. Kountouris, The Legal Construction of Personal Work Relations (Oxford: Oxford University Press, 2011). House of Commons Work and Pensions and Business, Energy and Industrial Strategy Committees, A Framework for Modern Employment (HC 2017–19, 352), 11.

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status are often not clear-cut, and legislative reform would not entirely eliminate the need for the courts’, continued: [I]t is evident that clearer legislation on employment status could be valuable in preventing confusion and promoting fair competition between businesses. This would lessen the need to go to court, and most importantly, protects vulnerable workers. We recommend the Government legislates to introduce greater clarity on definitions of employment status. This legislation should emphasise the importance of control and supervision of workers by a company, rather than a narrow focus on substitution, in distinguishing between workers and the genuine selfemployed.177

These discussions are likely to be informed by the question of regulation of the gig economy, especially considering the trend in litigation towards rejecting the assumption that gig economy workers are self-employed. A major question relates to whether the Supreme Court judgment in Uber will exert a broader gravitational impact. Will it extend to ‘employees’ as compared to ‘workers’, hence granting gig workers more comprehensive collective labour rights and a right against unfair dismissal? Will it effect a broader construction of labour law status according to the purpose of the statutory provisions?178 Until now, though, the courts have refused to engage strongly with human rights arguments on employment status litigation.179 Whatever the outcome of these legal reforms and case-law, Bogg is right to advocate for an acknowledgement of the political nature of the employment status question, meaning that it cannot be divorced from overall patterns of contestation and empowerment.180 The gig economy cases brought by workers as part of collective union strategies testify to this link. Third, another issue related to technological governance may arise in relation to issues of data retention and data governance as a result of workers’ efforts to gain more control over their data. Fourth, the erosion of the standard employment relationship could make the issue of social protection for the many self-employed workers and those deemed ‘workers’ more urgent. This issue was already exposed by the Covid-19 crisis, and calls for more universal solutions (e.g. basic income) may find more prominence.181 In addition, it is almost certain that there will be a general debate over the role of automation and AI, and their impact on employment law. Finally, the defeat of the Labour Party in the 2019 election makes a potential renewal of labour law highly unlikely, at least in the short term. This is even more unlikely in the current climate of further restrictions on industrial action, which in July 2022 included the repeal of a regulation prohibiting the use of agency workers as strike replacements182 (the repeal was quashed by a High Court decision following a judicial review application on the grounds of breach of the duty to consult)183 and the Strikes (Minimum Service Levels) Act 2023 granting virtually unrestrained power to ministers and employers to set minimum service levels during strikes in ‘important public services’.184 However, the vision of collective bargaining and industrial action as demands 177 178

179 180 181

182

183 184

Ibid., 9–10. Emphasis in the original. Bold removed. See G. Davidov, ‘The status of Uber drivers: A purposive approach’, Spanish Labour Law and Employment Relations Journal, 6(1–2) (2017), 6–15. Deliveroo [2018] EWHC 3342 [24]–[55]. Bogg, ‘Employment status in the social democratic constitution’. See the House of Commons Library, ‘The introduction of a universal basic income’ (2020) CDF0096 for a brief overview of the parliamentary debate on this issue. I. Katsaroumpas, ‘Heading in the wrong direction: “Global Britain” and ILO standards on industrial action’, UK Labour Law Blog (7 September 2022), https://bit.ly/3DFPuah. Aslef v. Secretary of State for Business and Trade [2023] EWHC 1781 (Admin), https://bit.ly/3rQm2fr. See further I. Katsaroumpas, ‘Crossing the Rubicon: The Strikes (Minimum Service Levels) Act 2023 as an Authoritarian Crucible’ (2023) Industrial Law Journal (advance online, dwad023).

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for a potential democratic rationalisation of technology may continue to be part of the public debate. The overall key question for the future of labour law in the United Kingdom is whether technological progress will be cast as part of a broader question of democratic deficits at work or instead used to exacerbate such deficits under a de-contextualised power-insensitive approach.

VII CONCLUSION

This chapter developed an account of the dynamic relationship between UK labour law and technological authoritarianism at work, which gives rise to democratic deficits in technological governance. It introduced the term ‘technological authoritarianism at work’ as a concept that furthers the research strands of technology and authoritarianism as developed by Collins and Anderson and examined various areas of UK law for their contribution to this authoritarianism. This is a complex and multifaceted undertaking owing to the multiple areas of law and legal issues involved. At the risk of losing some nuance at the margins, it seems fair to state that the democratic deficits in technological governance that were present even in the post-war period of collective laissez-faire have been widened in the neo-liberal period. Consequently, the limiting function of labour law vis-a`-vis the employer’s technological authoritarianism is severely weakened. There has been an overall shift in protection from collective to individual constraints, but their limiting function towards employers’ technological authoritarianism is seriously hampered by the absence of strong collective rights that could enable effective forms of contestation. This British experience of persistent technological authoritarianism at work should invite broader reflections about the vital links between labour law and democratisation of technology. In this sense, the technological question is deeply intertwined with the ‘political question’ and the ‘labour law question’.

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16 Old Problems and New Technologies in the American Workplace Jeffrey M. Hirsch

I INTRODUCTION

Defining the employment relationship in the United States is not an endeavor for timid souls. The hallmark of American work law, especially its classification of employees and employers, is confusion. And that confusion has only intensified as emerging technologies have changed both the way that many people work and their relationship to the companies that profit from that work. The result of this trend has been an amplification of a long-existing problem: the exclusion of workers from workplace protections because they fall outside statutory definitions of the employment relationship. In a reflection of the United States’ federalist governing scheme and patchwork approach to workplace regulation, employment classification questions are highly dependent on geography, sector of employment, and type of claim.1 Basic employment law, for instance, is rooted in state law, leading to different approaches among states.2 Further, because the United States lacks a unified workplace governance regime, even within the same jurisdiction there are typically different definitions of employer and employee depending on the law at issue. Although many of these definitions share similarities, it is possible that a plaintiff bringing a multi-claim lawsuit based on a single set of facts could be classified as an employee for one claim but not an employee for others.3 Moreover, the factors required for any given classification test are so numerous and factdriven that it can be very hard to predict outcomes for close cases. The consequences of these questions are enormous. Workers who are not classified as statutory employees are completely excluded from virtually all workplace protections, such as minimum wage, overtime premiums, leave, anti-discrimination protection, safety and health measures, and collective representation.4 Employment classification issues have existed as long as there has been workplace legislation,5 but emerging technology has exacerbated these issues by expanding the use of gig and other 1

2

3

4 5

See Mitchell H. Rubinstein, “Employees, employers, and quasi-employers: An analysis of employees and employers who operate in the borderland between an employer-and-employee relationship,” University of Pennsylvania Journal of Business Law, 14 (2012), 605, 647–9 (noting different classification standards under various federal work law statutes); Jeffrey M. Hirsch, “Revolution in pragmatist clothing: Nationalizing workplace law,” Alabama Law Review, 61 (2010), 1025, 1038–49 (describing fragmented workplace regulatory laws). See Nationwide Mut. Ins. Co. v. Darden, 503 US 518, 524 (1992) (holding that default employee classification rules are based on state common-law rules); V. B. Dubal, “Wage slave or entrepreneur? Contesting the dualism of legal worker identities,” California Law Review, 105 (2017), 65, 72 (describing different classification schemes). Jeffrey M. Hirsch, “The law of termination: Doing more with less,” Maryland Law Review, 68 (2008), 89, 95–6 (describing and criticizing a diverse set of employment rules). Jacquie Lee, “Gig workers have scant protection from job bias,” Bloomberg Law (February 9, 2019). See, e.g., NLRB v. Hearst, 322 US 111 (1944) (holding that “newsboys” were employees under the NLRA, a decision that prompted Congress to amend the NLRA to explicitly exclude independent contractors).

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“on-demand” labor, which is often a poor fit with classification tests that were established many decades ago.6 Although the labor market is undergoing significant, technology-driven changes, the traditional American tests for employment status have largely remained static. These tests are old and based on a model of the workplace – one with clearly defined roles and far less use of contingent labor – that is no longer relevant for a growing number of workers.7 In its place is a far more fragmented labor market, with work being done by gig workers and other individuals who possess greater flexibility in how and when to work, face a variety of often-changing terms and conditions, and often lack a traditional workspace. These conditions threaten workers’ ability to be classified as employees under most work laws, even though they are frequently as dependent on the businesses that profit from their labor as more clearly defined employees.8 Adding to this dilemma are businesses’ increasingly aggressive attempts to avoid being deemed statutory employers, either by using an intermediary or by classifying workers as independent contractors. These strategies, which are prevalent in the tech industry,9 among others, not only absolve businesses of liability under workplace laws but also significantly reduce their tax burden.10 The impact of these arrangements on gig workers is grim.11 Despite the increasingly poor conditions faced by these workers, attempts at reform have been limited. As described in Sections V and VI, these efforts largely fall into three categories: litigation, legislation, and innovation. The primary means to challenge the classification of gig and other workers has been through litigation seeking judicial determination that an employment relationship exists. This has occurred under both federal and state law, with little consistency in the outcomes.12 Legislation, however, promises the most benefit to gig workers through updates of the older, more ill-fitting classification rules. Although there has been little movement at the federal level, many states have enacted legislation that would classify some gig workers as employees.13 Even in California, which is the most high-profile example of state legislation seeking to make gig and other similar workers employees, several tech companies were able to 6

7

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9

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11 12

13

See Cotter v. Lyft, Inc., 60 F. Supp. 3d 1067, 1081 (ND Cal. 2015) (emphasizing the difficulty in applying the employee classification test to on-demand workers); Jeffrey M. Hirsch and Joseph A. Seiner, “A modern union for the modern economy,” Fordham Law Review, 86 (2018), 1727, 1739–45 (describing the classification challenges faced by gig workers). See Cotter, 60 F. Supp. 3d at 1081 (“The test . . . developed over the 20th Century for classifying workers isn’t very helpful in addressing this 21st Century problem”). See Nationwide Mut. Ins. Co. v. Darden, 503 US 518 (1992) (establishing factors for the common-law “right-tocontrol” test); Sec’y of Labor v. Lauritzen, 835 F.2d 1529 (7th Cir. 1987) (analyzing factors for the “economic realities” test used by the FLSA and the FMLA). Pew Research Center, Gig Work, Online Selling and Home Sharing (November 17, 2016) (finding that 8 percent of respondents had used the platform economy for a job or task), www.pewinternet.org/2016/11/17/gig-work-onlineselling-and-home-sharing/. US Government Accountability Office (GAO), Employee Misclassification: Improved Outreach Could Help Ensure Proper Worker Classification, GAO-07-859T (2007), 2, www.gao.gov/new.items/d07859t.pdf; see also Shu-Yi Oei and Diane M. Ring, “Tax issues in the sharing economy: Implications for workers” in Nestor M. Davidson, Miche`le Finck, and John J. Infranca (eds.), Cambridge Handbook on the Law of the Sharing Economy, 343–56 (Cambridge: Cambridge University Press, 2018); Kathleen DeLaney Thomas, “Taxing the gig economy,” University of Pennsylvania Law Review, 166 (2018), 1415. See infra notes 39–40. Compare, e.g., Saleem v. Corp. Transportation Grp., Ltd., 854 F.3d 131 (2d Cir. 2017) (holding that “black car” drivers were independent contractors under FLSA); O’Connor v. Uber Techs., Inc., 82 F. Supp. 3d 1133 (ND Cal. 2015) (holding, in denial of summary judgment for Uber, that drivers were presumptively employees under California Labor Code; parties subsequently settled). See Robert Sprague, “Using the ABC test to classify workers: End of the platform-based business model or status quo ante?,” William & Mary Business Law Review, 11 (2020), 733, 748–9 (listing seventeen states and two territories that have adopted the ABC test in some instances, especially unemployment compensation schemes, although noting that the test has yet to produce significantly different results).

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secure a major exception to the new law.14 Moreover, several states have moved in the opposite direction and enacted laws explicitly preventing gig workers from being considered employees.15 Finally, various worker advocacy groups have attempted to innovate around the employment classification problem, or at least mitigate its impact. Largely by pressuring companies through non-traditional collective action, these groups have been able to achieve improvements in work conditions even where workers are not formally classified as statutorily protected employees or a targeted business does not official employ the workers.16 However, these innovations remain a small part of the overall gig economy and it remains to be seen whether they become more prevalent or have a more widespread impact.

II THE TRADITIONAL EMPLOYMENT RELATIONSHIP IN THE UNITED STATES

Numerous classification issues can arise in workplace disputes, but the two most prominent ones, particularly in industries reliant on technology, are: (1) whether a worker should be classified as an “employee” or an “independent contractor”; and (2) whether a business organization should be considered a “joint employer.” The independent contractor issue, in particular, has prompted a significant amount of litigation and political turmoil, including a recent battle in California in which Uber, Lyft, and other gig companies set a record for spending in a campaign to carve out an exemption from a new state statute that expanded the definition of employee.17 The various employee classification tests used in the United States are too numerous to cover comprehensively here, but the main federal tests provide a good illustration of how courts typically determine whether a worker is an employee or an independent contractor. The most common analysis – often referred to as the “right-to-control test” – acts, in some form, as the default for most federal and state work law statutes.18 The need for some sort of judicial test is compelling, as most statutes use unhelpful and circular definitions of employee and employer.19 The right-to-control test is based on common law agency principles, particularly those related to vicarious liability,20 and uses the following factors to determine whether the worker is more like an employee or an independent contractor: (1) the hiring party’s right to control the manner and means by which the product is accomplished; (2) the skill required; 14 15

16 17

18 19

20

See Section II of this chapter. See Sarah Kessler, “Handy is quietly lobbying state lawmakers to declare its workers aren’t employees,” Quartz (March 30, 2018) (noting that three states have enacted legislation to require platform workers to be classified as independent contractors and similar legislation in five other states). A recent federal bill – which seems to have little chance of passage in the near future – would protect the employer’s ability to classify gig workers as independent contractors, while providing some protections such as those against discrimination and harassment, as well as safety and leave rights. See Worker Flexibility and Choice Act, HR 8442, 117th Cong. (2021–22). Ibid. See Ryan Menezes, Maloy Moore, and Phi Do, “Billions have been spent on California’s ballot measure battles. But this year is unlike any other,” L.A. Times (November 13, 2020). See Nationwide Mut. Ins. Co. v. Darden, 503 US 318 (1992). See, e.g., Title VII, Civil Rights Act, 42 USC §§ 2000e(b) (“The term ‘employer’ means a person . . . who has fifteen or more employees . . . and any agent of such a person”); 2000e(f) (“The term ‘employee’ means an individual employed by an employer”). See Dubal, supra note 2, at 84–5 (describing the roots of employee definition under the NLRA, which was based on the common law “respondeat superior” test for holding a principal vicariously liable for an agent’s tort).

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the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party’s role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.21

The main alternative analysis at the federal level is the “economic realities test.” This test, which is broader than the right-to-control test, applies to the federal Fair Labor Standards Act (FLSA),22 which establishes the federal minimum wage and overtime premiums, and the Family and Medical Leave Act (FMLA).23 In contrast to other federal work law statutes, the FLSA and the FMLA have a more expansive definition of an employer – one who “suffers or permits work”24 – which has led courts to adopt the broader economic realities test. Under this test, courts weigh a set of factors to determine whether the economic realities of a work relationship look more like those of an employee or an independent contractor. Uniquely to the FLSA and the FMLA, the overarching question is whether, as a matter of economic reality, the worker is dependent on the business and therefore an employee under those statutes.25 The factors used to determine whether this economic reality exists are: (1) (2) (3) (4) (5) (6)

the level of control the business maintains over the worker; the opportunity for profit or loss maintained by the worker in the business; the amount of capital investment the worker puts into the process; the degree of skill necessary to perform the job; whether performance of the job is integral to the operation of the business; and the permanency of the relationship between the worker and the business.26

The concern for economic dependence reflects the FLSA’s origins in the Great Depression and the law’s concern with protecting workers who lack leverage vis-a`-vis the businesses for whom they provide work. That said, while economic dependency is a factor that is unique to the FLSA and the FMLA, many of the other factors, particularly the business’ control over the worker, are typical of virtually all American employee classification tests.27 As a result, in most instances, both tests are likely to end up with the same result. In addition to the employee classification issue, the other major source of confusion regarding the employment relationship is whether a business may be considered a “joint employer.” The more complex relationships seen in the modern labor market have exacerbated this problem as an increasing number of workers perform services for an entity that does not directly employ 21 22 23 24 25 26 27

Ibid., at 323–4. 29 USC §§ 201–19. Ibid. §§ 2601–54. Ibid. § 203(g). Sec’y of Labor v. Lauritzen, 835 F.2d 1529, 1534–5 (7th Cir. 1987). Ibid. See generally Matthew T. Bodie, “Participation as a theory of employment,” Notre Dame Law Review, 89 (2013), 661, 724 (discussing worker classification tests).

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them.28 This leads to disputes about whether such businesses should be jointly liable for work law violations. Like the independent contractor issue, joint employment is often confusing and increasingly political. The concept of joint employment itself is not controversial, as most work law statutes have long been interpreted to permit multiple firms to be held liable for violations involving a given set of employees.29 What is divisive, however, is how broadly this joint employment liability should be constructed. Because a joint employment finding can lead to joint and several damages for the business that does not directly employ the workers,30 many companies – such as franchisors31 – view the issue as vital.32 And while joint employment is increasingly under the political microscope, technological advances, such as more expansive monitoring capabilities that make it easier to control work, make determinations under the doctrine ever more difficult.33

III THE EMERGENCE OF THE FISSURED WORKPLACE

Neither the classification of workers as independent contractors nor multiple businesses exerting control over workers is a new phenomenon in the United States. Technological advances, however, are accelerating these trends. For instance, app-based work platforms make it easier for businesses to enjoy the fruit of individuals’ labor while keeping enough separation from the workers to classify them as independent contractors. Similarly, computing and communication technologies allow these and other businesses to profit from and control the work performed by employees of another entity. These types of practices have led to increasingly confounding questions about the workers’ classification and which entities should be considered employers. The consequences of these trends, in combination with relatively weak government benefits and services in the United States, are severe. Workers who lack a legal employment relationship tend to earn lower pay; have no job security; suffer more work injuries; and lack access to sufficient resources, such as housing, childcare, and health care.34 They, of course, also do not enjoy even the most basic protections of American work laws. In addition to technology-driven opportunities to avoid a formal employment relationship, businesses have numerous legal incentives to either classify workers as independent contractors or resist attempts to be treated as joint employers. The most obvious reason is that coverage of all work laws is limited to a statutory employment relationship that can be avoided if an employment 28 29

30

31

32

33 34

See Section III (discussing “fissured” work relationships). Courts have used a variety of theories, but the joint employer doctrine is more common and will be the focus here. See, e.g., Lihli Fashions Corp. v. NLRB, 80 F.3d 743, 748 (2d Cir. 1996) (discussing the NLRA’s alter ego and single employer doctrines); Ferrara v. Oakfield Leasing Inc., 904 F. Supp. 2d 249, 260–1 (EDNY 2012) (distinguishing single employer and joint employer doctrines). See Virgo v. Riviera Beach Assocs., Ltd., 30 F.3d 1350, 1362–3 (11th Cir. 1994) (joint and several liability under state agency law). But see Torres-Negron v. Merck & Co., Inc., 488 F.3d 34, 41 n.6 (1st Cir. 2007) (holding that “a finding that two companies are an employee’s ‘joint employers’ only affects each employer’s liability to the employee for their own actions, not for each other’s actions”). See Jeffrey M. Hirsch, “Twenty-first century employers” in Richard Bales and Charlotte Garden (eds.), The Cambridge Handbook of U.S. Labor Law for the Twenty-First Century, 128–39 (Cambridge: Cambridge University Press, 2019), 129–31 (discussing the impact of joint employment on franchises, including the NLRB case against McDonald’s). See US Chamber of Commerce, Opportunity at Risk: A New Joint-Employment Standard and the Threat to Small Business (2015), https://bit.ly/3Q8iTBq. See Hirsch and Seiner, supra note 6, at 1744. See US GAO, Contingent Workforce: Size, Characteristics, Earnings, and Benefits, GAO-15-168R (2015), 3, 24–54, www.gao.gov/assets/670/669899.pdf.

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relationship does not exist.35 However, other factors are also quite important. In the United States, health insurance and other benefits are provided mainly through employment and many businesses lower costs by excluding independent contractors from these optional benefits. Moreover, firms can achieve significant tax savings by classifying workers as independent contractors rather than employees.36 The combination of legal incentives and technological advances has led to what David Weil refers to as the “fissured workplace.”37 It is an economy in which a growing number of individuals do work, such as gig work, that benefits an entity that is not their official employer. Although there are no consistent measurements of this type of work, some surveys have estimated that between one-quarter and one-third of workers participate in the gig economy in some form.38 In addition, the Department of Labor has estimated that 10 percent of workers relied on gig work for their primary income.39 Gig work, contracting, and franchises are the most common examples of the fissured workplace, but no matter the form the result is largely the same: workers are typically not considered statutory employees and, even if they are, the business that controls many aspects of their work is not considered their employer. This leaves workers without much recourse to enforce their legal rights. It is unsurprising, therefore, that gig workers fare poorly. Income from gig work has been steadily declining year-to-year and gig workers score low on several quality of life measures.40 In other words, they are among the workers who most need protection, yet often have very little.

IV THE IMPACT OF TECHNOLOGY ON THE WORKPLACE

While the tax and liability avoidance incentives have remained stable for some time, the rapid advancement of technology is straining the conventional notion of the employment relationship in new ways. A variety of emerging technologies have made it easier for businesses to structure work in ways that avoid, or at least confuse, the existence of an employment relationship,41 35

36 37

38

39

40

41

See generally US Department of Labor, Wage and Hour Division, Misclassification of Employees as Independent Contractors (2017), www.dol.gov/whd/workers/misclassification/; Danielle Tarantolo, “From employment to contract: Section 1981 and antidiscrimination law for the independent contractor workforce,” Yale Law Journal, 116 (2006), 170. See Thomas, supra note 10. David Weil, The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It (Cambridge, MA: Harvard University Press, 2014), 3–4, 94–5 (describing a “fissured” workplace as one in which workers perform services for businesses that do not directly employ them). Cornell University IRL School and the Aspen Institute, “Gig economy data hub – How many gig workers are there?” (n.d.) (citing studies from 2016–18 finding that 25 percent to 30 percent of respondents participated in gig work), www .gigeconomydata.org/basics/how-many-gig-workers-are-there; Gallup, “The gig economy and alternative work arrangements” (2018) (finding that 36 percent of respondents participated in gig work), www.gallup.com/work place/240929/workplace-leaders-learn-real-gig-economy.aspx. US Bureau of Labor Statistics, “Contingent and alternative employment arrangements – May 2017” (2018), www .bls.gov/news.release/pdf/conemp.pdf. See Hirsch and Seiner, supra note 6. The income problem seems to be getting worse over time. For instance, one study found that app-based transportation workers have seen a 53 percent decrease in their monthly income from 2013 to 2018. JPMorgan Chase, The Online Platform Economy in 2018 (2018) (finding that monthly income dropped from USD 1,469 to USD 783, although not measuring hours worked and not finding much change in non-transportation appbased earnings), www.jpmorganchase.com/institute/research/labor-markets/report-ope-2018.htm. See, e.g., US GAO, Employee Misclassification: Improved Outreach Could Help Ensure Proper Worker Classification, GAO-07-859T (2007), 2, www.gao.gov/new.items/d07859t.pdf (Statement of Sigurd R. Nilsen, Director Education, Workforce, and Income Security) (describing increased use of independent contractors); Katherine V. W. Stone, “Legal protections for atypical employees: Employment law for workers without workplaces and employees without employers,” Berkeley Journal of Employment & Labor Law, 27 (2006), 251, 283.

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especially by structuring their operations in a manner that creates separation between labor and the company.42 Even seemingly basic developments in communications and transportation have led to more flexible work hours, fewer ties to a physical workspace, and more varied work conditions – all of which employers can use to argue for independent contractor status under most employee classification tests.43 In contrast, innovations in monitoring technology allow companies far greater information about workers’ activities, often resulting in attempts to control those activities in ways that increase the chance of an employment relationship being found.44 The National Labor Relations Board (NLRB), for instance, pursued a major – and politically controversial – case against McDonald’s, alleging in part that the company’s use of monitoring technology allowed it to exert enough control over franchise employees that it should be considered their joint employer.45 Similarly, artificial intelligence (AI) has emerged as a means to exert more control over workers,46 which can in turn impact determinations about whether an employment relationship exists.47 Uber, for example, combines AI and psychology in a variety of ways, such as setting prices, communicating with drivers, and nudging drivers to accept rides in places and at times that most benefit the company.48 It is no surprise then that a large number of claims have been brought against Uber and other gig companies, challenging their classification of workers as independent contractors.49 Some of these suits have resulted in very large payouts – including USD 100 million settlements with both DoorDash and Uber – that were motivated in part by the gig companies’ desire to avoid a legal determination about their classification practices.50 42

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See Jeffrey M. Hirsch, “Future work,” University of Illinois Law Review (2020), 889, 925 n.264 (describing the impact of emerging technologies on employee classification issues); Adriene Hill, “The D.I.Y. career,” New York Times (March 24, 2014), at F1, www.nytimes.com/2014/03/25/your-money/freelancers-piece-together-a-living-in-the-tempeconomy.html (noting a GAO study showing an increase in the contingent and self-employed workforce). See Hirsch, supra note 42, at 924–8 (discussing the impact of emerging technologies on employee classification issues). Ifeoma Ajunwa, Kate Crawford, and Jason Schultz, “Limitless worker surveillance,” California Law Review, 105 (2017), 735 (describing workplace monitoring). This monitoring also raised privacy concerns, particularly given the paucity of privacy protections for workers. See Hirsch, supra note 42, at 928–38 (describing emerging monitoring technology and lack of privacy protections for workers). The United States’ at-will rule also exacerbates these control and surveillance issues as it provides a means for businesses to obtain at least superficial consent from workers in most cases. See ibid.; see also Electronic Communications Privacy Act, 18 USC § 2701(c)(2) (creating an exception for otherwise unlawful access to stored communications when individuals, such as employees, consent to access). See NLRB, “NLRB Office of the General Counsel issues consolidated complaints against McDonald’s franchisees and their franchisor McDonald’s, USA, LLC as joint employers” (December 19, 2014), https://bit.ly/44UtjJ3; Kate Gibson, “Should McDonald’s be responsible for how its franchises treat workers?,” Moneywatch (March 11, 2016). See Hirsch, supra note 42, at 899, 930, 948 (discussing employers, such as Uber, using AI to exert more control over workers). See supra note 20 (describing the right-to-control test). While AI can be promoted as a means to reduce bias in personnel decisions, it has also raised concerns about introducing or maintaining bias in personnel decisions. See Ifeoma Ajunwa, “The paradox of automation as anti-bias intervention,” Cardozo Law Review, 41 (2020), 1671; Pauline T. Kim, “Data-driven discrimination at work,” William & Mary Law Review, 58 (2017), 857, 860. See Alex Rosenblat, “When your boss is an algorithm,” New York Times (October 12, 2018); Noam Schreiber, “How Uber uses psychological tricks to push its drivers’ buttons,” New York Times (April 7, 2017); see generally Matthew T. Bodie, Miriam A. Cherry, Marcia L. McCormick, and Jintong Tang, “The law and policy of people analytics,” University of Colorado Law Review, 88 (2017), 961, 964–73 (describing the history and development of data-driven “people analytics” personnel decisions). See, e.g., Tan v. GrubHub, Inc., 171 F. Supp. 3d 998 (ND Cal. 2016); Truong v. Amazon.com, Inc., 2015 WL 6501019 (Cal. Super. Ct. 2015); Zenelaj v. Handybook, 82 F. Supp. 3d 968, 975 (ND Cal. 2015); Iglesias v. Homejoy, Inc., No. 3:15-cv-01286 (ND Cal. March 19, 2015); Peppler v. Postmates, Inc., No. 2015-CA-006560 B (DC Super. Ct. August 25, 2015); Jeung v. Yelp, Inc., 2015 WL 4776424 (ND Cal. 2015); Sumerlin v. Maplebear, Inc., No. BC 603030 (Cal. Super. Ct. December 2, 2015) (Instacart); Taranto v. Washio, Inc., No. CGC-15–546584 (Cal. Super. Ct. June 29, 2015); Otey v. Crowdflower, Inc., 2014 WL 1477630, at *1 (ND Cal. 2014). See Chris Marr, “The art of settling but not resolving gig worker status disputes,” Bloomberg Law (September 20, 2022).

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As emerging technologies have provided businesses more opportunities to create working conditions that favor their interests, those technologies have also made it more difficult to determine whether an official employment relationship exists. The tests used to determine employment status have long been criticized, but perhaps never as much as now. These tests are largely products of a bygone era dominated by manufacturing and other jobs that usually made it easy to distinguish employees from independent contractors.51 But tech-based industries do not fit this model nearly as well. One federal court struggling to apply a traditional employee classification test to gig workers aptly remarked that its task was the equivalent of being “handed a square peg and asked to choose between two round holes.”52 This comment underscores the difficulty in having to decide whether a worker is an employee or an independent contractor, especially in novel situations that often involve facts that straddle both options. And that difficulty is exacerbated when powerful interests with strong stakes in the outcome are actively involved in shaping policies that, as a result of this pressure, often shift with the political winds.53 The result, as Section V describes, is messy and often unsuccessful reform efforts that have left the current state of the law in this area as unclear as ever.

V REFORMING GIG WORK

Enhanced flexibility and fissures between workers and businesses have contributed to increasingly blurred lines between who is classified as an employee and who an independent contractor, and which entities should be considered employers. For instance, gig jobs in which workers lack a fixed workplace or hours would traditionally mean that they are independent contractors, but current technology allows businesses to exert a level of control over such workers that puts them in virtually the same position as employees.54 And unlike in the United Kingdom, whose Supreme Court recently held that Uber drivers were statutory employees,55 there is no clear national answer to this question in the United States. Instead, a variety of jurisdictions and actors within each jurisdiction provide their own approaches, which are not always consistent. For instance, disparate judicial holdings may result from differences in state laws or the political views of state courts.56 This has resulted in a lack of predictability and turned many reform efforts – both those in favor of workers and those in favor of businesses – over to the legislative or regulatory level. Illustrating both the politics involved with employment classification issues and the impact of new technology have been several recently proposed and implemented measures that especially target gig work. On the federal level, for instance, the Trump administration finalized a new rule changing the employee classification test for the FLSA and the FMLA by redefining how to determine whether a worker is economically dependent on a business.57 The rule was announced on January 6, 2021 – after the 2020 presidential election – and set to take effect in 51 52 53

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See Hirsch and Seiner, supra note 6, at 1739. Cotter v. Lyft, Inc., 60 F. Supp. 3d 1067, 1081 (ND Cal. 2015). See generally Hirsch and Seiner, supra note 6, at 1783. See infra notes 57–64 (discussing different federal employee classification rules under different presidential administrations) and 69–71 (discussing gig companies’ spending for California’s Proposition 22). See Hirsch, supra note 42. Ellen Milligan, “Uber grants 70,000 U.K. drivers worker rights after ruling,” Bloomberg Law (March 16, 2021). See supra note 12; Miriam A. Cherry, “Beyond misclassification: The digital transformation of work,” Comparative Labor Law & Policy Journal, 37 (2016), 577, 579–94 (describing employee classification cases against “on-demand” companies). US Department of Labor, Independent Contractor Status under the Fair Labor Standards Act, 86 FR 1168 (January 7, 2021).

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March.58 Under the rule, the traditional six-factor test59 would have been replaced with an analysis that first considered the nature and degree of a business’ control over work and the worker’s opportunity for profit or loss based on personal initiative or investment.60 The other factors – the amount of skill required, the permanence of the working relationship, and whether the work was part of an integrated unit of the business’ production – were then to be used mainly when the two predominant factors pointed in different directions.61 The emphasis on entrepreneurial opportunity (basically the opportunity for profit or loss) was an attempt to expand the independent contractor classification, especially for gig work.62 Tech companies frequently tout gig work’s flexibility and the chance to “be your own boss,”63 and this proposed rule seemed specifically aligned to that messaging. Later in 2021, the Biden administration’s Department of Labor unsuccessfully tried to stop the rule’s implementation;64 however, in 2022, the agency published a new draft rule that would return the analysis to the traditional six-factor test.65 On the state level, California has been ground zero for the battle over the classification of gig and other similar workers. In 2018, the California Supreme Court issued a ruling that used the so-called ABC test for determining employee status under the state wage law, whose definition of the employment relationship was virtually identical to the federal FLSA’s.66 But the California Supreme Court’s test made it harder to classify workers as independent contractors by requiring businesses to establish all three of the ABC factors: (A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.67 The next year, in Assembly Bill 5 (AB 5), the California legislature codified the ABC test and expanded it to other state labor and employment laws.68 Practically, the most important aspect of this ABC test likely is not the three elements, which reflect parts of other employee classification tests. Rather, what appears more significant is its establishment of the “employee” classification as a default. By requiring employers to prove that a worker is an independent contractor, based on only three factors, the California ABC test will likely result in workers being considered employees in most currently close cases, although, because of litigation-generated delays, the law has not been enforced long enough to judge its effect. 58 59 60 61 62 63

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Ben Penn, “Employers’ gig workers win may be short-lived under Biden,” Bloomberg Law (January 6, 2021). See supra note 25. Independent Contractor Status under the Fair Labor Standards Act, 86 FR at 1179. Ibid. See Penn, supra note 58. See Shu-Yi Oei, “The trouble with gig talk: Choice of narrative and the worker classification fights,” Law and Contemporary Problems, 81 (2018), 107, 125–7 (discussing gig companies’ framing of policy debates, such as employee classification). See Paige Smith, Ben Penn, Genevieve Douglas, and Robert Iafolla, “DOL, independent agency regulations frozen by Biden memo,” Bloomberg Law (January 22, 2021). See United States Department of Labor, Employee or independent contractor classification under the Fair Labor Standards Act, 87 FR 62218 (2022). Dynamex Operations W. v. Superior Ct., 4 Cal. 5th 903, 926 (2018). Ibid. at 957. Assembly Bill 5 (Stats. 2019, ch. 296), codified at Cal. Labor Code § 2775.

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The strong reaction to AB 5 from gig businesses reflected the law’s potential impact. During the 2020 election, Uber, Lyft, and other gig companies bankrolled the most expensive direct ballot measure campaign in California history, spending more than USD 204 million to carve out from AB 5 exceptions for themselves.69 The ultimately successful Proposition 22 (Prop 22)70 ensured that app-based drivers would be classified as independent contractors rather than employees.71 Several other states use variations of the ABC test in certain instances,72 but the extent to which its use will grow remains to be seen. For instance, the federal Protecting the Right to Organize Act (PRO Act), which the United States House passed in 2021, would apply the ABC test and likely result in most gig drivers being classified as statutory employees nationwide.73 But its chances for enactment are very remote in the near term.74 Other states and localities have recently considered adding specific protections for gig workers. For instance, Colorado enacted a law in 2018 to classify gig workers as covered employees under its workers’ compensation system.75 Moreover, the city of Seattle established a novel regulatory system to require collective bargaining on behalf of gig drivers who were classified as independent contractors.76 However, after a federal appeals court held that the ordinance was not immune from federal antitrust law,77 the city eliminated the ability to bargain over wages, leaving mandated bargaining only over things such as working conditions.78 Moreover, prompted by the Independent Drivers Guild and the state AFL-CIO (American Federation of Labor and Congress of Industrial Organizations), Connecticut recently considered legislation that would have implemented a form of sectoral bargaining for these drivers, while still leaving them classified as independent contractors.79 But the bill’s sponsors pulled it back in the face of resistance from the national AFL-CIO, which feared that it would distract from federal efforts to promote unionism.80 In the other direction, several states – spurred on by

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Menezes et al., supra note 17. California Proposition 22 (2020). California, like a few other states, allows the public to vote directly to enact legislation via a “Proposition.” Prop 22 also served to overrule a California appeals court decision that had held that Uber and Lyft drivers should be classified as employees under AB 5. See People v. Uber Techs., Inc., 56 Cal. App. 5th 266 (2020). There is currently a legal challenge to Prop 22, arguing that it violates California’s constitution by, among other things, limiting the state legislature’s ability to grant labor rights to certain workers, excluding drivers from the state workers’ compensation system, and violating the requirement that ballot initiatives be limited to a single subject. Bob Egelko, “California Supreme Court to decide fate of Prop 22, carving gig workers out of state labor law,” San Francisco Chronicle (June 28, 2023). However, Prop 22 did provide for certain new protections for app-based drivers, such as certain types of insurance coverage, limits on working time, and minimum earnings. Litigation challenging Prop 22 is currently ongoing. See Joyce E. Cutler, “Uber appeal of California gig classification law at 9th Circuit,” Bloomberg Law (July 12, 2022). See Jennifer D. Thayer, Amye M. Melton, and David R. Grimmett, “Employment classification in an app-based nationx,” American Bar Association Tax Times, 39(4) (2020), https://bit.ly/44OvrlW. Ibid. See Nick Niedzwiadek and Eleanor Mueller, “Unions’ post-reconciliation PRO Act push,” Politico (August 15, 2022). Marketplace Contractor Workers’ Compensation Unemployment Act, SB 18-171, 71st Gen. Assemb., Reg. Sess. (Colo. 2018). Several other states are considering similar legislation. See Tina Bellon and Munsif Vengattil, “Uber, gig economy companies see California win as national model,” Reuters (November 4, 2020) (noting legislative efforts in Connecticut, Illinois, New Jersey, New York, Oregon, and Washington). Chamber of Commerce of the United States of Am. v. City of Seattle, 890 F.3d 769, 777–8 (9th Cir. 2018) (describing Seattle Ordinance 124968). Ibid., at 780. Uber and Lyft also agreed not to challenge Seattle’s new “Fair Share” legislation, which requires drivers to be paid the local minimum wage and other protections. Kevin Schofield, “Legal challenge to Seattle’s Uber drivers collective bargaining ordinance ends,” Seattle City Council Insight (April 4, 2020). Josh Eidelson, “Connecticut shelves gig bargaining bill among union divisions,” Bloomberg Law (March 26, 2021). Ibid.

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gig company lobbying – have enacted laws that specifically exclude gig workers from statutory definitions of an employee.81

VI NEW APPROACHES TO NEW MODELS OF WORK

There have long been difficulties and controversy regarding the proper scope of the employment relationship, but technology is making the problem more acute. By expanding the opportunities for businesses to maintain control over work performed by individuals whom the businesses argue are not their employees, recent technology represents a growing threat to many workers’ well-being. Responses to emerging technologies’ impact on the workplace reflect not only the varied and defragmented nature of American work law but the reality that meaningful federal statutory reforms have been non-existent for years, largely because of political polarization.82 Some glimmers of real change exist, but comprehensive reform remains unlikely for now. In addition to legislative reform attempts like those described in Section V, unions and other worker advocate groups have sought ways to improve work conditions. Some have litigated the employee classification issue, such as through wage and hour lawsuits83 or labor law claims.84 In contrast, because of the difficulty in formally establishing employee status – which is also required for a union to become an official collective bargaining representative85 – many groups have sought other means of obtaining improved conditions, such as public pressure, boycotts, and temporary strikes.86 At times these groups have even been able to use the threat of litigation over the employee classification question as a bargaining chip. For instance, the so-called Uber Guild in New York City was able to achieve improved terms for Uber drivers in part by agreeing not to press the classification issue in the short term.87 Other groups have used similar tactics, such as the Alphabet Workers Union, which advocates on behalf of Google workers as a “minority union” that does not represent a majority of workers at a company and, as a result, does not enjoy rights under the National Labor Relations Act (NLRA).88 But these efforts thus far are still more the exception than the rule. Despite some successes, the fate of workers in an economy that is increasingly reliant on technological advances remains poor for now. This is true even though policymakers have at least implicitly recognized that many workers are falling through the gaps of our work laws. A stark example is the recent federal response to the COVID-19 pandemic, particularly the extension of family and medical leave and unemployment coverage for gig workers and other independent contractors who typically do not qualify for such benefits. Coverage under the FMLA, the federal family and medical leave statute, has always had large gaps. In addition to the independent contractor–employee classification problem, only statutory employees who have worked at their employer for at least 12 months, with a minimum of 81

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See Michael C. Duff, “All the world’s a platform? Some remarks on ‘marketplace platform’ employment laws,” University of Wyoming College of Law Faculty Articles, 75 (2020), 1 (noting passage of laws in Arizona, Florida, Indiana, Iowa, Kentucky, Tennessee, and Utah), https://scholarship.law.uwyo.edu/faculty_articles/75. See Cynthia L. Estlund, “The ossification of American labor law,” Columbia Law Review, 102 (2002), 1527. See supra note 49. See NLRB Office of the General Counsel, Advice Memorandum in Uber Techs., Inc. (April 16, 2019) (rejecting unfair labor practice charges against Uber because drivers were independent contractors and not employees under the NLRA). 29 USC §§ 152(3), 159. See generally Hirsch and Seiner, supra note 6, at 1746–54 (discussing various “quasi-union” actions). Ibid., at 1749–53 (discussing Uber Guild). See Zoe Schiffler, “Here’s what we know about the Google Union so far,” The Verge (January 5, 2021) (noting also that the Alphabet Workers Union is associated with the Communications Workers of America).

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1,250 hours over that time period, are typically eligible for FMLA leave.89 These thresholds are especially hard to meet for gig and other similarly situated workers, meaning that they will frequently be excluded from the FMLA even if they were able to successfully argue that they were statutory employees. It was significant, therefore, that among the federal responses to the COVID-19 pandemic was the Families First Coronavirus Response Act (FFCRA), which temporarily eliminated the 12-month and 1,250-hour requirements for COVID-19-related leave.90 Its significance extends beyond the workers who were able to benefit from the extension, for it was a rare, official recognition that the FMLA was leaving many workers behind. An even broader pandemic response was the expansion of eligibility for unemployment benefits. In addition to increasing the amount of unemployment benefits and extending the period of time during which individuals could receive benefits, the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided temporary COVID-19-related unemployment benefits to typically ineligible workers. The statute’s Pandemic Unemployment Assistance (PUA) program was enacted specifically to provide unemployment benefits to individuals who lost work because of the pandemic yet were not covered by the preexisting unemployment program, often because they were classified as independent contractors.91 The impact of this expansion cannot be overstated. As of July 2020, approximately 41 percent of all unemployment benefit recipients in the United States were receiving benefits through PUA.92 This suggests that a substantial number of gig and other similarly situated workers have traditionally been excluded from the unemployment insurance system and, therefore, most other workplace laws as well.93 It is far from clear that the extension of unemployment and FMLA coverage to gig and other excluded workers will ever be made permanent, as the FFCRA expired at the end of 2020 and the PUA, following an extension, expired in 2021.94 Even the mere extension of the PUA was a politically fraught issue and, despite the Biden administration’s commitment to workers’ rights, there are few signs that the political will exists to ensure that the FFCRA, the PUA, or similar measures will be revived beyond the pandemic.95 However, at a minimum, these temporary measures serve as official recognition that the American system of limiting workplace protections to those who fit under a relatively narrow classification of “employee” leaves a large number of workers out in the cold.96 89

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Families First Coronavirus Response Act (FFCRA), HR 6201, 134 Stat. 177, 116th Cong. (2019–20). The FFCRA expired on December 31, 2020. Ibid. For various situations related to COVID-19, the FFCRA also provided paid leave, in contrast to the FMLA’s unpaid leave provisions; provided an additional ten weeks of leave to care for a child; covered employees who worked for their employer for only thirty days; and extended coverage to many smaller employers that are normally excluded under the FMLA. Ibid. Pandemic Unemployment Assistance (PUA), 15 USC § 9021; see US Department of Labor, Unemployment Insurance Relief During COVID-19 Outbreak, www.dol.gov/coronavirus/unemployment-insurance (describing the PUA program); Greg Iacurci, “13 million gig workers getting unemployment benefits, 41% of the total,” CNBC (July 7, 2020), www.cnbc.com/2020/07/06/pua-unemployment-benefits-being-paid-to-about-13-million-americans.html. See Iacurci, supra note 91. Most state unemployment insurance schemes classify covered “employees” under the Darden right-to-control test. The PUA benefits were extended to September 6, 2021 under the American Rescue Plan Act of 2021, HR 1319, 117th Cong. (2021–22), § 9011(a)(1)(B). President Biden included paid family and medical leave in his 2021 American Families Plan proposal, but at this point there are no signs that Congress will pass such a measure. See Chris Marr, “Biden paid leave plan aims for lowincome worker accessibility,” Bloomberg Law (April 28, 2021) (noting also that nine states and the District of Columbia have created some form of paid family and medical leave). For instance, before the pandemic, only 29 percent of unemployed workers received unemployment benefits, although not all these workers were excluded because of classification issues. Drew Disilver, “Not all unemployed people get unemployment benefits; in some states, very few do,” Pew Research Center (April 24, 2020), https://bit.ly /44Cj9x8.

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In sum, the future of American workplace regulation is an open question. The federal response to the COVID-19 pandemic raises, in theory, the prospect for longer-term change. But major reform of the classification of employees and the fissured workplace is a heavier political lift, one that will require federal legislative action that does not look likely in the near future. Instead, what we should expect to see is continued experimentation at the state level. Some states, like California, will continue to classify the employment relationship broadly, while other states will use a much narrower classification. This dissimilarity will likely be reflected in federal law as well, especially as control of the executive branch shifts from one political party to the other. The outcome will likely be a continuation of the current fragmentation of American workplace law, characterized by its resulting unpredictability and dissimilarities, as well as the large number of people working outside the protections of the law.

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17 Australia: Reimagining the Regulation of Work Troy Sarina*

Without labour nothing prospers. Sophocles

I THE CHANGING NATURE OF WORK

Work has long been recognised as a core element of the human experience. It helps to shape our personal identity while also ensuring that societies can function, regenerate, and grow. At present, we are in an era where technology is having a profound impact on how work is carried out. Often referred to as the ‘fourth industrial revolution’, technology has accelerated the automation of many types of work around the globe. For example, two of the world’s largest automotive manufacturers, Mercedes-Benz and Audi, are planning to axe close to 20,000 employees in order to transition to cleaner technologies and more modern vehicle production processes.1 Similar examples of such ‘transition’ have taken place in Australia. In 2018, one of Australia’s largest banks, the National Australia Bank (NAB), made 6,000 employees redundant (approximately a quarter of its workforce) as part of a transition to computer systems utilising artificial intelligence (AI) in order to create a more efficient and safe banking environment for its customers.2 These are just a few examples of a much broader disruptive effect that technology is having in the world of work. Recent projections suggest that by 2030 up to 375 million workers worldwide are likely to experience a change in the type and form of work they perform owing to the emergence of new technologies.3 The disruptive effect of technology has led to a narrative surrounding work in modern economies being framed around notions of ‘flexicurity’.4 That is, a demand for greater functional and numerical flexibility so that labour productivity is improved. As a result, workers are now being required to undertake a broader range of tasks while working more flexible work patterns. Demands for such increased flexibility are certainly not new in Australia. For several decades, policy- and lawmaking in Australia have attempted to improve productivity by transitioning to *

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Thank you to Professor Joellen Riley Munton for all her advice, support, and discussions regarding the themes and legal principles discussed in this chapter. Her knowledge and insights were invaluable in preparing this work. C. Rauwald, ‘Mercedes-Benz parent Daimler plans thousands of job cuts’, Bloomberg News (29 November 2019), https://bit.ly/44A3car. C. Yeates, ‘NAB reveals 6000 jobs to go as it announces $6.6b profit’, Sydney Morning Herald (2 November 2017), https://bit.ly/437wPi8. McKinsey Global Institute, Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation (Brussels: McKinsey, 2017). M. De Vos and J. Konings, D’une securite de l’emploi vers une securite du travail sur le marche du travail belge (Limal, Belgium: Anthemis 2007).

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a decentralised model of labour regulation that delivers greater labour market flexibility while promoting alternative forms of work such as contracting to meet the demands of organisations. As a result, the Australian labour market has experienced a significant transformation during the last three decades. In 2019, only 49.5 per cent of workers were employed in ‘regular’ fulltime (thirty-eight hours per week) work, which is a significant decline from 55.6 per cent in 1992.5 Conversely, ‘irregular’ forms of work such as part-time or casual work (fewer than thirtyeight hours per week) have increased from 31.9 per cent in 2004 to more than 33.3 per cent in 2019. Furthermore, there has been a steady rise in independent contractors who accounted for approximately 7.8 per cent of Australia’s labour market in 2021.6 The outcome of this growth in ‘irregular’ work remains double-edged. On the one hand, the emergence of more flexible forms of work has enabled organisations to respond to increased market competitiveness. However, there is also growing evidence of the detrimental effect that automation is having on those performing the work. This is owing to the precariousness of the work itself, limited access to statutory rights and entitlements, as well as the risk of injury in carrying out such work.7 Technological advancements and the rise of the ‘gig economy’ have only accelerated the growth in ‘irregular’ work as well as concerns about how such work is configured under the law. Gig work occurs where a third-party digital intermediary or platform connects a ‘client’ with workers willing to ‘sell’ their labour to the client in order to complete a task.8 In effect, these types of arrangement are aimed at accessing labour within the economy without establishing any ongoing relationship or obligation between the parties involved.9 The recent global pandemic resulting from the Covid-19 outbreak has only accelerated the growth of gig economy work in Australia. A recent survey of more than 14,000 Victorians found that 7.1 per cent of respondents had participated in some form of ‘gig work’ during 2018–19.10 An associated report using data from this survey concluded that the proportion of people currently engaged in gig work at any one time in Australia was likely to be more than 13 per cent.11 Such findings were significantly higher than previous reports that had estimated only 1 to 2 per cent of workers being engaged in such work.12 These developments present significant challenges and opportunities for law- and policymakers in Australia. On the one hand, consideration needs to be given to whether the traditional configurations of employment that have helped to distinguish different classes of workers such as employees and contractors are able to accommodate the more complex irregular forms of work that are becoming prevalent in twenty-first-century economies owing to technological advancements and structural change within those economies. As a result, a Federal Senate committee hearing into job insecurity was established in 2021–2; it acknowledged the growth in precarious work within the Australian labour market. The committee report concluded that there was a need for significant legislative reform to accommodate this rise in alternative forms of work and 5 6 7

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Australian Bureau of Statistics (ABS), Australian Labour Market Statistics, Cat 6105.0 (October 2014). ABS, Characteristics of Employment, Cat 6330 (August 2021). M. Burgess and I. Campbell, ‘The nature and dimensions of precarious employment in Australia’, Labour and Industry, 8(3) (2013), 5–21. T. Sarina and J. Riley, ‘Re-crafting the enterprise for the gig economy’, New Zealand Journal of Employment Relations, 43(2) (2018), 27–35. Ibid. Industrial Relations Victoria, Report of the Inquiry into the Victorian On-Demand Workforce (Melbourne: Department of Premier and Cabinet, 2020), https://bit.ly/46Ajced, 14. Ibid. D. Marin-Guzman, ‘Gig economy covers 7pc of workforce’, Australian Financial Review (18 June 2019), https://bit.ly /3pBsxSl.

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the impact that insecure work was having on wages and conditions.13 Such developments lead to a more fundamental question that needs to be answered. That is, how must employment law evolve to ensure that work continues to sustain and regenerate our society? The remainder of this chapter is dedicated to outlining how adaptive Australian employment law has been in responding to this challenge. In doing so, this work will highlight the tensions that remain as well as the possibilities to build a modern regulatory architecture that delivers mutual benefits to workers, organisations, and society.

II THE ARCHETYPE: HOW HAS THE CONFIGURATION OF WORK AND EMPLOYMENT EVOLVED?

The configuration of work in Australia has relied on distinguishing between an ‘employee’ working under a contract of service and a ‘contractor’ who is engaged under a contact for service. This distinction has been made by applying common law definitions and tests that Australia inherited from Britain, given its colonial ties.14 The first test concerns the degree of control that a person has over how work is to be performed. Such a test was born out of master and servant law that applied in a time when servants required from their masters specific instruction on how to perform work.15 However, more recently the application of the control test has moved beyond determining who controls the nature of the work to be performed. Instead, the application of this test now focusses on the extent to which an employer is able to determine where and when work is performed as well as the ability to ‘dictate the terms and conditions of work’.16 As modern work becomes more irregular, applying this control test has been held to be ‘indeterminate’ in establishing the existence of an employment relationship owing to this test being ‘both under and over inclusive’.17 Riley has previously highlighted the limitations of applying a simple control test to determine the status of modern workers. For example, many professional consultants may agree to surrender ‘control over times and procedures’ to one client while still retaining the capacity to be ‘independent business people’.18 A second test developed at common law is known as the organisational integration test. This test focusses on whether a worker serves the interests of the employer’s own business by carrying out work that is ‘an integral part of the business’ or whether the worker is carrying out a business on their own account and thereby completing work that is ‘only accessory’ to the employer’s enterprise.19 In Australia, the degree of integration has been assessed by determining whether a worker acts in the capacity of a ‘representative’ of an organisation or as 13

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Federal Government Senate, Select Committee on Job Security, The Job Insecurity Report (Canberra: Department of the Senate, February 2022), https://bit.ly/3D0hQMd. However, two significant High Court decisions in 2022 signalled a departure from UK jurisprudence used to determine employment status. In particular, the ‘classic’ common law tests for determining employment status outlined in this section of the chapter should only be applied to the terms of the contract where the contract is committed to in writing. See CFMMEU v. Personnel Contracting Pty Ltd [2022] HCA 1 (Personnel Contracting) and ZG Operations Pty Ltd v. Jamsek [2022] HCA 2 (Jamsek). These cases are discussed in more detail later in this chapter. See Performing Rights Society Ltd v. Mitchell & Brooker Ltd (Palais De Danse) [1924] 1 KB 762 at 767. J. Riley, ‘The definition of the contract of employment and its differentiation from other contracts and other work relations’ in M. Freedland, A. Bogg, D. Cabrelli et al. (eds.), The Contract of Employment, 321–40 (Oxford: Oxford University Press, 2016), 327. H. Collins, ‘Independent contractors and the challenge of vertical disintegration to employment protection laws’, Oxford Journal of Legal Studies, 10 (1990), 353. Riley, ‘The definition of the contract of employment’, 327. Ibid.

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a principal of their own enterprise.20 Factors that are considered in the application of this test include whether the worker is required to wear the livery of the employer’s business, who supplies the equipment to carry out the work, and who owns the intellectual property and trademarks used in carrying out the work.21 However, like the control test, the application of the integration test in isolation has ‘been criticized for its indeterminacy’.22 A third test used to distinguish employees from contractors focusses on the economic reality of the relationship between the parties. This test was first applied in the United States Supreme Court and was developed in a period when there was a concern that employing enterprises were attempting to avoid the application of various ‘protective’ statutes that provided the right to collectively bargain.23 In applying this test, the economic facts that were found to establish the existence of an employment relationship included the control one party had to determine the total wages earned by workers as well as the degree of control exercised over how, where, and at what price workers could sell products produced by the employing enterprise.24 Under this test, emphasis is placed on the economic reality of the relationship of the parties rather than any ‘technical legal classification [of the relationship]’. This test has been applied in several Australian cases to help determine the ‘true economic relationship’ between parties despite the arrangements being labelled an independent contracting arrangement.25 However, this ‘economic reality’ test has now been rejected in light of the reasoning provided by Kiefel CJ, Keane, and Edelman JJ in Construction, Forestry, Maritime, Mining and Energy Union [CFMMEU] v. Personnel Contracting, who held that an assessment of the totality of the relationship between the parties may only have regard to the term of the contract rather than the reality of their relationship.26 A fourth test established in UK law considers whether there needs to be a mutuality of obligation between parties to create an employment relationship. This question was considered by Stephenson LJ in Nethermere (St Neots) Ltd v. Gardiner, who argued that there must be ‘an irreducible minimum of obligation on each side to create a contract of service’.27 This test developed at a time when new statutes in the UK conferred job employment protection on employees and was used by employers as a strategy to avoid obligations that arose from employee protection legislation. Relying on work by Deakin and Wilkinson, Riley points out that the application of such a test would exclude from employment ‘any worker who accepts casual engagements, with no intention between the parties that there be any reciprocal obligation to continue to provide or accept work’.28 However, this test has ‘no currency’ in Australia as casual (zero hours) employment is classified as a ‘special kind of employment’ under statute, resulting in casuals having access to some employment protections.29 The inherent limitation of these tests is that, in isolation, no individual test provides a definitive classification of workers. As a result, Australian courts tend to consider all these 20

21 22 23 24 25 26 27 28 29

See, for example, Dixon J in Colonial Mutual Life Assurance Society Ltd v. Producers and Citizens Co-operative Assurance Co of Australia (1931) 46 CLR 41. Riley, ‘The definition of the contract of employment’, 328. Collins, ‘Independent contractors’, 370–1. National Labour Relations Board v. Hearst Publications 322 US 111 (1943). Ibid. See, for example, Damevski v. Guidice (2003) 133 FCR 438. Personnel Contracting (n. 14), at [32]–[60]. Nethermere (St Neots) Ltd v. Gardiner [1984] ICR 612 (CA) at [623]. Riley, ‘The definition of the contract of employment’, 329. See, for example, obligations for minimum wage rates and casual loadings in the Fair Work Act (2009) Cth ss. 139, 284.

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tests in conjunction with each other. Often referred to as a multi-indicia test, courts consider a range of factors that include but are not limited to: • the degree of control exercised over the worker; • whether the worker is under an obligation to personally perform the work or whether there is a capacity to delegate tasks; • the type of remuneration system used; • the provisions and maintenance of assets; and • the degree of integration of the worker into the organisation of the other party.30 The ultimate question that the courts are attempting to answer by applying such indices is whether the worker serves the employer’s business or their own. This question was recently considered in Jamsek v. ZG Operations Australia.31 In this case the Federal Court considered whether two truck drivers who were classified as contractors owing to an organisational restructure were in fact employees and therefore had access to unpaid leave and superannuation entitlements provided by statute. In deciding this case, Justice Anderson argued that ‘most fundamentally’ the existence of an employment relationship could not be characterised by simple ‘reference to the terms of a written contract’.32 Instead, the ‘totality’ of the forty-year relationship between the parties needed to be examined to ascertain whether these drivers were in reality contractors or employees. In making its decision, the court considered the fact that these drivers did have ‘a degree of freedom over the operation of their day-to-day activities’. However, this needed to be considered in light of the fact that these drivers were required to work for the company for a significantly large span of hours each day, which left them with little opportunity to work for anyone else.33 Other factors considered were that the drivers’ main source of income was derived from working for this company, that they had not driven or delivered goods for any other business over a forty-year period, and that they had not engaged in any ‘entrepreneurial or profit motivated activity, which is the hallmark of an independent business’.34 In finding that these drivers were employees, Wigney J emphasised the importance of assessing the ‘reality and totality’ of the working relationship rather than relying on ‘contractual labels and theoretical possibilities’ to determine the appropriate classification of workers.35 However, this Federal Court decision was overturned unanimously in 2022 by the High Court in ZG Operations Pty Ltd v. Jamsek; the Court held that any assessment of the totality of the relationship may have regard only to the terms of the contract and not the reality of the relationship between the parties.36 The same principles were adopted in the Personnel Contracting case, which is discussed in more detail in Section III. As a result, Riley Munton (2022) notes that ‘Australian courts and tribunals have now been warned they cannot take account of the way a working relationship evolves in assessing employment’.37 She notes subsequently that there may be several arguments that could be made to justify the conduct of the parties being examined. These include when the contract is not wholly in writing, when 30

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For a comprehensive discussion on the application of this multi-indicia test, see ACE Insurance Limited v. Trifunovski [2013] FCAFC 3. Jamsek v. ZG Operations Australia [2020] FCAFC 119. Ibid., at [248]. Ibid., at [216]. Ibid., at [244]. Ibid., at [19]. Personnel Contracting (n. 26). J. Riley Munton, ‘Boundary disputes: Employment v independent contracting in the High Court’, Australian Journal of Labour Law, 35(1) (2022), 79–94, at 88.

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the contract has been ‘varied, discharged or replaced by a new oral contract to help establish the existence of a new contract, when the written contract was a sham from the outset’, or when the doctrine of estoppel by convention may be applied.38 Despite the complexities that may arise in applying these evolving tests and principles, determining the classification of a worker remains crucial for several purposes. These include ascertaining whether a worker is covered by Australia’s employment laws including the Fair Work Act (2009) Cth as well as helping to determine liability for any harm or damage caused while performing work. Australia’s first federal labour laws were enacted under the conciliation and arbitration power found in section 51 (xxxv) of the Constitution. This power allowed the federal government to pass laws to help settle industrial disputes that extended beyond the limits of any one state. It is worth noting that this system of conciliation and arbitration presumed the existence of an employment relationship while also helping to establish the birthright of Australian industrial citizens.39 Despite this distinction being crucial for understanding the nature of work, scholars have been quick to note that attempting to categorise modern work into such a ‘binary divide’ represents ‘both a false unity . . . and a false duality’ as work in modern economies comprises ‘various complex relationships’ that are difficult to categorise.40 These consequences of such complex structures are discussed in more detail later in this chapter.

III THE PROTOTYPES: CLASSIFYING WORKERS IN TRIANGULAR RELATIONSHIPS

As outlined at the beginning of this chapter, the proportion of workers classified as contractors in the Australian labour market has continued to rise. Alongside this change, there has also been a rise in market intermediaries that help to connect these workers to organisations who require labour on an increasingly temporary basis. Often referred to as ‘labour hire agencies’, these organisations establish what are effectively triangular relationships between the worker, the agency, and the organisation requiring the work. Riley outlines the process by which these relationships are formed. In effect, labour hire agencies enter a commercial contract with a ‘host’ organisation in which the host organisation agrees to pay a fee to the agency for the supply of workers. This allows the host organisation to exercise day-to-day control over the tasks that these workers are required to perform. The agency then pays the workers remuneration and any costs associated with this engagement. The formation of such relationships effectively ‘separates the contractual relationship from the employment relationship’.41 Such arrangements have had unsatisfactory consequences where workers subject to these arrangements find themselves without any access to a remedy when in a dispute with a host organisation over issues such as dismissal owing to the absence of any direct contractual relationship. However, these workers may be unable to bring a claim against the labour hire agency as their contractual arrangement fails to establish the requisite degree of control to establish any mutuality of obligation, which remains an important marker of a contract of service or ‘wage–work’ bargain.42

38 39

40

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Ibid., at 88–9. R. McCallum, ‘Convergences and/or divergences of labor law systems: The view from Australia’, Comparative Labor Law and Policy Journal, 28 (2006), 455–68. M. Freeland, ‘From the contract of employment to the personal work nexus’, Industrial Law Journal, 35(1) (2006), 1–29. Riley, ‘The definition of the contract of employment’, 333. See, for example, Stevens v. Brodribb Sawmilling Co Pty Ltd [1986] 160 CLR 16. However, in Personnel Contracting (n. 14), the labour hire agency, Construct, was held to be the employer of the worker as the contract between

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Recent decisions examining the status of a worker subject to such triangular relationships signal a growing desire by courts to re-evaluate how workers in such relationships are assessed. In CFMMEU v. Personnel Contracting (2020), Allsop CJ noted that the current ‘dichotomy’ between an employee and a contractor used to characterise workers ‘has produced ambiguity, inconsistency and contradiction’.43 In this case, a young British backpacker was engaged as a contractor of a labour hire agency, Personnel Contracting Pty Ltd (trading as Construct). Construct had entered into a services agreement with a construction company, Hanssen Pty Ltd, to provide labour for its construction projects. The union representing this worker claimed that, despite entering a contracting arrangement with Personnel, the worker was in fact an employee and was entitled to various award entitlements. In making its decision, the court noted that the contractual arrangements established by Personnel reflected the bifurcation of ‘the relationship between the person who supplies the labour from the ultimate end user of that labour’.44 However, relying heavily on issues of ‘contractual characterisation’ to determine the status of a worker is becoming increasingly problematic in modern work arrangements. Allsop CJ argued that ‘a considered, qualitative appreciation of the whole’ relationship needs to be carried out rather than relying on the terms of a contract to act as a ‘default’ or ‘tie breaker’ to characterise the nature of work.45 In this particular case, the court noted that although the young worker had entered a lawful contractor arrangement with Personnel, it was more like a contract of adhesion that had no particular value in helping to ascertain the status of this worker as the terms of the contract were not negotiated. Instead, the worker was simply prepared to sign any documents that would allow him to obtain work. Combined with the fact that this worker had no business or entrepreneurial intention, this led the court to find that the worker ‘merely sought payment for working as a builder’s labourer’.46 This led Allsop CJ to conclude that the true nature of the relationship between the worker and Personnel was more like that of casual employee rather than contractor and therefore the worker was entitled to access the relevant award entitlements. However, ultimately, the Full Bench decided that even though they could see the artificiality of his classification as an independent contractor, they were bound to follow an earlier decision of an appellate-level court (the Supreme Court of Western Australia Court of Appeal), which had considered this particular contract used by Personnel and decided that it created independent contracting arrangements. However, this decision was overturned by the High Court in 2022. It held that the Western Australian Court of Appeal had in fact given too much weight to the ‘labels’ given to the parties of the contract and that, in order to determine statutory entitlements relating to this case, aspects of the way in which the relationship played out ‘on the ground’ needed to be considered to ascertain the nature of the contractual relationship between the parties.47 Riley Munton notes that the factors used to establish that an employment relationship existed between Mr McCourt and Construct included the fact that Construct could direct where McCourt should work and that McCourt had no discretion over what work he performed. The fact that Construct had a right of control over McCourt’s labour was a ‘key asset’ of Construct’s business.48 Riley Munton

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Construct and the worker provided Construct with the requisite level of control to establish an employment relationship. See paras. [89]–[90]. CFMMEU v. Personnel Contracting Pty Ltd [2020] FCAFC 122, Allsop, CJ at [61]. Ibid., at [118]. Ibid., at [18]. Ibid., at [27]. See Personnel Contracting (n. 14), at para [41]. Riley Munton, ‘Boundary disputes’, 84.

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also notes that the majority reasoning in this case confirmed the ‘orthodox Australian view’ that the labour hire company, not the host employer, is the employer.49 IV ‘UBERISATION’: THE CHALLENGES OF APPLYING A BINARY APPROACH TO CLASSIFYING WORK IN THE GIG ECONOMY

The challenges in applying traditional classification tests to the triangular relationships found in the gig economy have further highlighted the inherent tensions and contradictions arising from using traditional characterisation tests. This often results in workers being denied access to a range of statutory protections and entitlements. Developing solutions that overcome this ambiguity is needed to address the inequality and poor working conditions that are often generated from this type of work.50 One area where there has been considerable attention concerns ride and food delivery services in the gig economy. In these cases, two distinct classification issues arise, namely, correctly characterising the status of the digital intermediary itself and the workers who contract with such intermediaries. Intermediaries or platform providers such as Uber argue that they simply provide a ‘communication service’ that connects drivers with passengers through the provision of an application (app) that users can download. By characterising their service in this way, these types of ride-sharing service are deliberately trying to avoid their arrangements with drivers/workers being characterised as any form of labour hire arrangement. However, such characterisations have been criticised as neglecting an important element of the exchange that occurs between the parties in such arrangements, namely payment. Riley argues that services such as Uber require user payments to be deposited into an account directly managed by the intermediary who then distributes payment to the workers after deducting a commission. As a result, a more appropriate classification of such entities would be ‘labour hire intermediaries’.51 Yet recent cases examining the nature of the relationship between digital intermediaries and workers have struggled to provide a definitive answer on the correct classification of these entities or the relationship they have with those workers who sign up to use their service. In Amita Gupta v. Porter Pacific, the Fair Work Commission (FWC) considered whether a driver who had signed up to the ‘Uber Eats partner app’ was in fact an employee of Uber Eats (a food delivery service) and therefore entitled to pursue an unfair dismissal claim based on Uber’s decision to suspend her access to the digital app used to obtain work.52 In reaching a decision, Commissioner Hampton gave significant weight to both the terms of the ‘services agreement’ that Miss Gupta had signed and various indicia to characterise both the status of Uber and the type of contract Miss Gupta had entered. The terms of the services agreement led Commissioner Hampton to characterise Uber Eats as nothing more than a technology company that simply entered into two distinct services agreements, one with workers/drivers and another with parties who prepared the food to be delivered.53 This arrangement was distinguished from a recent United States District Court decision that found that Uber’s ride-sharing service was an entity that did much more than simply connect parties. It in fact controlled and ‘sold rides’, which 49 50

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Ibid. H. W. Arthurs, ‘The false promise of the sharing economy’ in D. McKee, F. Makela, and T. Scassa (eds.), Law and the ‘Sharing Economy’: Regulating Online Market Platforms, 55–72 (Ottawa: Ottawa University Press, 2018). J. Riley, ‘Regulating work in the “gig economy”’ in M. Roennmar and J. Jule´n Votinius (eds.), Festskrift Till Ann Numhauser-Henning, 669–84 (Lund, Sweden: Juristfo¨rlaget i Lund [Lund Legal Foundation], 2017), 672. Amita Gupta v. Portier Pacific Pty Ltd; Uber Australia Pty Ltd T/A Uber Eats (U2019/1001). Ibid., [85].

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characterised the nature of the relationship between Uber and its drivers as one that was more reflective of a contract of service.54 Emphasis was then placed on the degree of control that Uber Eats could exercise over how Ms Gupta was required to complete work obtained using the driver app. Ultimately, Commissioner Hampton concluded that the ‘independent nature’ of the services agreement Ms Gupta signed allowed her to retain a right to control when and how she carried out work. As a result, her worker status was held to be that of an independent contractor.55 However, on appeal to the Full Bench, the previous characterisation of the relationship between Ms Gupta and Uber was questioned. Here, the Full Bench held that the relationship between the parties was more accurately characterised as one where Ms Gupta ‘performed her delivery work . . . and was paid for it’ by Uber.56 Such a characterisation allowed the Full Bench to argue that there was evidence of an employment relationship as the ‘minimum reciprocal obligations of work and payment’ existed between the parties.57 Yet, despite this characterisation of the contractual arrangements, the Full Bench ultimately held that this was a ‘borderline’ case where the existence of an employment relationship could not be established owing to absence of three fundamental indices of an employment relationship, namely (1) a requirement for Ms Gupta to perform work at particular times and in particular circumstances dictated by Uber; (2) evidence of an obligation for Ms Gupta to perform work exclusively for Uber; and (3) evidence of Ms Gupta being presented to the public as serving the business.58 The inherent tension in this decision highlights the challenge that decision-makers continue to face in their efforts to categorise workers into the binary divide between employees and contractors. The Full Bench itself noted that it ‘might be considered that there is some tension’ in the fact that Ms Gupta was found not to conduct her own business but also not to be an employee.59 Such findings only help reinforce the observation that distinguishing between employees and contractors is becoming increasingly murky in modern work arrangements. Rawling and Riley Munton (2022) note that this lack of clarity certainly isn’t helped when an application for judicial review of this case is discontinued; in this case, Ms Gupta accepted a settlement offer made by Uber, resulting in ‘no authoritative court decisions in Australia’ on whether these types of ride-share contract are for the performance of work or the provision of telecommunication services.60 This decision is reflective of several cases where workers have been denied a statutory relief owing to their worker status being characterised as ‘independent contractor’. In Janaka Namal Pallage v. Raiser Pacific Pty Ltd, Mr Pallage made an application to the FWC alleging that he had been unfairly dismissed by Rasier Pacific (trading as Uber).61 In this case, Commissioner Wilson placed less emphasis on the specific terms of the services agreement. Instead, the commissioner applied multiple indicia to ascertain the true nature of the relationship between the parties. Significant emphasis was placed on whether Uber possessed a right to exercise control over how and when Mr Pallage performed work. In arriving at a decision, Commissioner Wilson found that the level of control Uber could exercise over Mr Pallage was ‘relatively weak’ as he could choose the hours he

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O’Connor and Others v. Uber Technologies Inc., 82 F. Supp. 3d, 1133 (N.D. Cal 2015). Amita Gupta (U2019/1001) [87]. Amita Gupta v. Portier Pacific Pty Ltd; Uber Australia Pty Ltd t/a Uber Eats [2020] FWCFB 1698 at [44]. Ibid., [48]. Ibid., [69]. Ibid., [71]. M. Rawling and J. Riley Munton, ‘Constraining the uber-powerful digital platforms: A proposal for a new form of regulation of on-demand road transport work’, University of New South Wales Law Journal, 45(1) (2022), 7–34, at 14. Janaka Namal Pallage v. Raiser Pacific Pty Ltd (U2019/13448).

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worked and which jobs to accept when using the digital app.62 The commissioner did note that provisions in the services agreement constrained Mr Pallage’s capacity to delegate the task of driving. Furthermore, Uber also retained the right to dismiss a worker for serious misconduct while using the digital app. The existence of such factors did suggest some evidence of a contract of service. However, when all factors were considered, the relationship between Mr Pallage and Uber was characterised as one of contractor and agent, therefore denying Mr Pallage the right to proceed with an unfair dismissal application as no employment relationship was found to exist. Similar emphasis was given to the extent of control that digital intermediaries exercise over workers in Rajab Suliman v. Rasier Pacific Pty Ltd.63 In this case, the FWC considered whether a driver who obtained work from using the Uber app should be classified as a casual driver or a contractor owing to the degree of control that Uber was able to exercise over how the work was performed. Here, Commissioner Bissett found that the nature of the relationship between casual workers and an employer differed from that of drivers who had entered into a services agreement with Uber. The main difference was found to be that, unlike with an Uber driver, once a casual worker attends work their employer can compel them to work in exchange for wages provided. Under the services agreement offered by Uber, drivers retain control over whether to offer their services even if they sign onto the driver app, suggesting that the relationship is more appropriately characterised as that of contractor.64 In contrast, a driver who worked for an alternative digital food delivery intermediary, Foodora, was found to be an employee. In Joshua Klooger v. Foodora Australia Pty Ltd, an assessment of the degree of control that Foodora was able to exercise over its drivers led to Commissioner Cambridge characterising the work as akin to that of an employee.65 He argued that despite drivers having the capacity to accept or decline work as part of their services agreement, the start and finishing times and the geographical locations of the work were fixed by Foodora. He went on to argue that this process of allocating work is similar to a ‘variety of electronic and web-based systems that are frequently used to advise, in particular[,] casual employees’ who can secure these shifts by responding to this request.66 In addition to such characterisation, attention was given to the specific terms of the service agreement, which was found to contain clauses that required the worker to adhere to the rostering systems established by Foodora and stipulated the attire that drivers needed to wear while carrying out work, but failed to provide an ‘unfettered right’ for the driver to be able to delegate work on their own terms.67 After assessing the terms of the services agreement and applying multiple indicia to establish an ‘overall picture’ of the relationship, Commissioner Cambridge concluded that the driver was not carrying out their own business and instead was ‘integrated in the respondent’s business and not independent operation’ and therefore was an employee of Foodora.68 The finding in Klooger v. Foodora was tested sometime later in Franco v. Deliveroo.69 At first instance, a single commissioner held that a delivery rider was an employee, but Deliveroo appealed. However, on appeal to the Full Bench of the FWC, the initial was overturned, and the delivery driver was found to be an independent

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Ibid., [37]. Rajab Suliman v. Rasier Pacific Pty Ltd (U2019/2392). Ibid., [38]. Joshua Klooger v. Foodora Australia Pty Ltd (U2019/2625). Ibid., [68]. Ibid., [84]. Ibid., [102]. Deliveroo Australia Pty Ltd v. Diego Franco [2022] FWCFB 156.

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contractor.70 In applying the principle of at first instance relying on the terms of the contract established in the Personnel Contracting High Court decision, the full Bench found that there were four main reasons why Mr Franco should be classified as an independent contractor. These included the degree of control that Mr Franco had to determine the routes he would take to make deliveries. This led the Full Bench to conclude that Deliveroo had no contractual right to control ‘the mode of performance of the work’.71 Furthermore, the Full Bench held that Mr Franco had control over the vehicle he would use to make these deliveries as well as retaining the right to delegate the work he had agreed to perform. Finally, on reviewing the terms of the contract, the Full Bench also found that the fact that Mr Franco was required to pay a fee to Deliveroo for accessing its delivery service and for preparing invoices payable to him was also inconsistent with the existence of an employment relationship.72 These cases provide two important observations. Firstly, they demonstrate that in light of the rulings in Personnel Contracting and Jamsek, the multi-factorial tests used to ascertain the nature of the relationship between the parties in modern triangular relationships like those found in the gig economy must now be applied by Australian courts and tribunals to assess the terms of the contract itself rather than the realities of how the employment relationship may play out between the parties (with some important exceptions noted previously in this chapter).73 Secondly, relying on the interpretation of contractual terms may remain a long and often expensive exercise. Riley Munton notes that the inability to ‘take actual work practices’ into account when assessing employment status marks the loss of a ‘short cut’ that could provide a quick and effective way of determining the ‘boundary issue’ of worker status that seems to becoming increasingly apparent in digital platform work.74 The remainder of this chapter is dedicated to outlining the response of various stakeholders to the regulatory challenges surrounding modern work relationships and the extent to which these responses help deliver mutually beneficial and more sustainable models of work. V REGULATORY OPTIONS FOR ADDRESSING THE CHALLENGES OF CLASSIFYING WORK RELATIONSHIPS IN THE GIG ECONOMY

There has been much debate over how best to respond to the limitations that current common law tests have had in producing an appropriate classification of modern work relationships that exhibit characteristics of a contract both of and for service. There seem to be three distinct ways forward to address this challenge. The first is to persevere with attempting to fit modern forms of work into legal categories that were established in a time when it was much easier to identify a ‘master who directs and controls work’ and the existence of an employment relationship.75 One proposal that reflects this approach is found in a recent report investigating the challenges of regulating work in the on-demand workforce of Victoria. The proposal calls for codifying a ‘worker status’ test into the Fair Work Act. In making this proposal, the authors suggest that assessing the entrepreneurial nature of work undertaken in modern work relationships would help provide a more accurate depiction of the ‘totality’ of the working relationship and the correct status of the worker.76 The application of such a test would involve answering two questions: (1) whether the worker has a business; and (2) whether the ‘work or the economic activity being performed is being performed in and for the business of that person’.77 70 71 72 73

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Ibid. Ibid., at [46]. Ibid., at [48]–[50]. This was seen in Amita Gupta v. Portier Pacific Pty Ltd and has now been confirmed in Personnel Contracting and Jamsek. Riley Munton, ‘Boundary disputes’, 94. Riley, ‘Regulating work in the “gig economy”’, 678. Industrial Relations Victoria, Report of the Inquiry, 193. On Call Interpreters and Translators Agency Pty Ltd v. Commissioner of Taxation (No 3) [2011] FCA 366 at [209].

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A key element of such a proposal would require that any party asserting that a worker was not an employee would bear the onus of proof in proving the worker was engaged in entrepreneurial activities. In carrying out this assessment, the bargaining power of the parties would be expressly considered to ensure that the worker had not simply formed a contract of adhesion to obtain work. The development of such a proposal emphasises that simply ‘amending’ traditional common law tests to obtain a more accurate characterisation of the status of such workers may result in more workers being classified as employees and thereby obtaining access to a range of statutory protections afforded to this class of worker. This approach of refining the application of existing tests is described by the authors themselves as being ‘revisionist and not revolutionary’.78 Pursuing this approach may help to provide greater certainty regarding the application of associated areas of law relating to worker contracts such as taxation and superannuation. Presently, Australian taxation laws are contingent on determining the worker status of individuals and, as the previous discussion has shown, ascertaining this status remains difficult. Under the Income Tax Assessment Act 1997 (Cth) (ITA), employers remain responsible for withholding income tax from employee wages while contractors remain responsible for managing their own tax arrangements. While variations in decisions regarding worker status continue to occur, uncertainty is likely to remain about the tax obligations that apply to platform work. The question of worker status is also used to determine whether any obligation exists to pay a superannuation contribution on behalf of workers. Under the Commonwealth Superannuation Guarantee (Administration) Act 1992 (Cth), employers are currently required to contribute 10.5 per cent of an employee’s ordinary time earnings.79 This obligation does not extend to contractors. As a result, the variation in findings over the correct status of platform workers has meant that many workers have been denied this statutory entitlement. Interestingly enough, some of the largest digital intermediaries operating these platforms have indicated a degree of support for workers who use their services to be entitled to benefits such as superannuation. However, this support is constrained by a concern over their ability to maintain the viability of their business model.80 Whether such a reference to the viability of business models is nothing more than a deliberate attempt to avoid liabilities and obligations that arise from ‘employing’ workers is yet to be seen. An alternative approach to overcoming the worker status question is to explore other areas of law that can provide statutory protections that may shield ‘new economy’ workers from exploitative working conditions. For example, Australian Workplace Health and Safety (WHS) laws provide a regulatory frame that moves beyond the question of distinguishing between employee and contractor and instead applies a broad concept of ‘worker’ to establish obligations to provide safe work practices. As illustrated by the cases discussed in this chapter, a significant amount of the gig economy is currently composed of transport, food delivery, and home services. In completing these tasks, workers have been found to be exposed to a range of hazards and risks, including road traffic as well as work-related violence from colleagues and clients.81 These gig workers are more likely to experience unfavourable working conditions than workers who perform similar work who are engaged under traditional employment contracts.82 This can

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Industrial Relations Victoria, Report of the Inquiry, 188 [1325]. Commonwealth Superannuation Guarantee (Administration) Act 1992 (Cth), s. 12. Industrial Relations Victoria (n. 10), Submission 79: Uber – see Uber, Inquiry into the Victorian On-Demand Workforce: Uber’s Submission, https://engage.vic.gov.au/download/document/7373, at 5. Safework Australia (SWA), The Effectiveness of Work Health and Safety Interventions by Regulators: A Literature Review (Canberra: SWA, April 2013), https://bit.ly/3D3afww. K. Minter, ‘Negotiating labour standards in the gig economy: Airtasker and Unions New South Wales’, Economic Labour Relations Review, 28(3) (2017), 438–54.

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also help address the growing trend for modern work relationships to shift responsibility for managing safety away from ‘client’ organisations towards workers.83 Section 19 of the model WHS Act places an obligation on a person conducting a business or undertaking (PCBU) to provide ‘workers’ with a safe work environment.84 Here, a worker is defined as someone who is ‘engaged[,] or caused to be engaged, directly by the PCBU’. The duty extends to workers whose activities in carrying out such work are ‘influenced or directed’ by the PCBU. The application of such a broad definition has led some scholars to argue that this could establish a duty of care on digital intermediaries such as Uber, depending on the nature of the work and the context of how it is performed.85 In addition, WHS laws establish a set of ‘horizontal’ and ‘vertical’ duties on PCBUs and their nominated officers to consult over how work is to be performed.86 Horizontal duties require PCBUs to coordinate with each other to ensure that work is carried out safely. In contrast, vertical duties require PCBUs to consult with workers who carry out work for the ‘lead’ PCBU or entity that allocates work. The effect of these obligations is that, regardless of worker status, an obligation to consult about how work is to be performed is likely to exist as long as it can be established that digital intermediaries are in fact lead PCBUs.87 By adopting a broad definition of worker, Australian WHS laws may provide a set of regulatory protections that help to ensure that work, regardless of how it is characterised, is carried out in a safe manner. Furthermore, obligations to consult and engage in dialogue with all parties involved in modern triangular relationships help to foster ‘strong and innovative forms of social partnerships’ between emerging institutional actors involved in modern work processes such as digital intermediaries.88 A more radical solution to addressing the worker status issue is to move beyond characterising modern work relationships within the frame of employment law. Instead, emphasis should be placed on the commercial nature of the contracts that digital intermediaries form with ‘workers’ to ensure that those contracts are fair and equitable. Such a proposal is based on the fact that the intermediaries themselves not only exercise a great deal of control over how workers and customers connect with each other but also profit from this process. The Independent Contractors Act 2006 (Cth) allows parties to seek a review of work contracts involving incorporated parties. The advantage of this legislation is that it moves beyond characterisation of the work relationship and instead allows workers to seek a review of the terms of their contract. This review is assessed against ‘objectively determined benchmarks of fair terms’ while offering compensatory remedies and the ability to make variations to the contract. Adopting a similar approach to contract review for on-demand workers would be a relatively straightforward ‘small step’ of application.89 This is just one example of how the law can help to ensure that contracts governing on-demand work are not exploitative and that they recognise the fundamental labour rights of workers.90

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D. Schneider and K. Harknett, ‘Consequences of routine work-schedule instability for worker health and well-being’, American Sociological Review, 84(1) (2019), 82–114. Workplace Health and Safety Act 2011 (Cth) (WHS), s. 19. R. Johnstone, ‘Regulating work health and safety in multilateral business arrangements’, Australian Journal of Labour Law, 32(1) (2019), 41–61. WHS Act, ss. 46–7. J. Horton, A. Cameron, D. Devaraj, R. Hanson, and S. Hajkowicz, Workplace Safety Futures: The Impact of Emerging Technologies and Platforms on Work Health And Safety and Workers’ Compensation over the Next 20 Years (Brisbane: CSIRO, 2018). E. Frino and T. Sarina, ‘Regulating for safe work in a digital age: Building on the adaptive power of workplace health and safety (WHS) laws in Australia’, Journal of Health, Safety and Environment, 36(2) (2020), 91–102. Riley, ‘Regulating work in the “gig economy”’, 680. Ibid.

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Another example of legislation that offers guidance on how regulators might safeguard against the formation of exploitative contracts for workers/drivers in the gig economy is the Owners Drivers Forestry Contractors Act 2005 (Vic) (ODFC Act). The ODFC Act offers a number of protections relating to remuneration, ‘capricious’ termination, access to affordable dispute resolution systems, and the right to freedom of association and collective bargaining, which can be used to enhance the right of workers to determine their own working conditions.91 Examining how these provisions can help avoid the application of pay rates that undercut relevant award rates of pay, Riley argues that standard Uber driver contracts allow Uber to establish fare rates that do not take into account the costs that drivers incur in making their service available, such as car running costs and data charges required to access the partner app that enables them to obtain work.92 However, under the ODFC Act, hirers of drivers are required to publish rates of fares and costs associated with the provision of these services that have been determined by the Minister in consultation with the Transport Industry Council and the Forest Industry Council. This allows drivers to compare the remuneration they are likely to receive to that of someone carrying out the same work who is classified as an employee.93 Failure to disclose such information may subject the hirer to a determination made by the Victorian Civil and Administrative Tribunal (VCAT) that requires the driver to be ‘paid a fair and reasonable rate notwithstanding the terms of the contract’.94 This provides an opportunity for the ‘establishment of an administrative body’ to review fares of similar ride-share arrangements or ‘on-demand workers in different industries’ and thereby could help establish fairer ‘remuneration for their work’.95 Furthermore, the ODFC Act provides a means by which drivers can secure a remedy for being subject to ‘unconscionable conduct’.96 This includes whether the parties are subject to contracts that fail to provide for a regular and systematic review of costs associated with operating as a driver. This type of review can be extended to contracts of other specific classes of worker provided the application is made by a trade union or a nominated ‘negotiation agent’.97 Establishing this capacity to bargain collectively remains a fundamental way for workers to be able to establish more equitable and efficient outcomes in modern economies, and drivers in the gig economy should be provided with a statutory right to do the same.98 The ODFC Act also provides protections against the capricious termination of some categories of worker. For example, drivers of heavy vehicles must be provided with a minimum of three months’ notice in recognition of the substantial investment that owner drivers make in purchasing ‘job specific, expensive rigs’.99 In contrast, the terms of services agreements that govern work undertaken by transport or food delivery drivers allow an intermediary to suspend access to the digital app that drivers use to obtain work when customer reviews fall below a certain level. Such systems rely on a simple algorithm to produce a ‘crude assessment’ of the workers’ performance while denying workers any avenue for appealing such 91 92 93 94 95 96 97 98

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Owners Drivers Forestry Contractors Act 2005 (Vic) [hereinafter ODFC Act], ss. 14(2)(b), 16, 44(1), 47(2), 45. Riley, ‘Regulating work in the “gig economy”’, 681. Ibid. Ibid. Ibid. ODFC Act s. 31. Ibid., s. 29. D. Peetz, ‘Awards and collective bargaining in Australia: What do they do, and are they relevant to New Zealand?’, New Zealand Journal of Employment Relations, 44(3) (2019), 58–75. ODFC Act s. 21.

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a decision.100 In effect, such terms are seen as being ‘patently unfair’; these workers should be provided with a reasonable notice period and opportunity to respond similar to other classes of driver regulated by the Act.101 Finally, the ODFC Act provides drivers with a right to have any complaints mediated by the Small Business Commissioner before proceeding to the VCAT for resolution. This right could easily be extended to drivers working for digital intermediaries, thereby enabling the quick and cheap resolution of any disputes that may arise. Recent reports suggest that these alternative forms of dispute resolution are successful, with only 10 per cent of parties indicating that they would not be willing to participate in such processes. The high rates of participation in such schemes are likely owing to the risk of ‘adverse publicity’ that parties would experience by not participating.102 However, despite the provision of such a service, there have been only four applications involving digital intermediaries/online platforms. None of these cases proceeded to mediation as the parties decided not to pursue the matter or it was resolved before proceeding to hearing.103 This discussion has outlined a number of strategies for creating a regulatory architecture that is able to better accommodate the emergence of new forms of work and places the emphasis on analysing the contract of employment to determine worker status. Some commentors have noted that there are already state-based statutory mechanisms that could increase protection to certain on-demand workers such as delivery drivers. As mentioned previously, these include chapter 6 of the Industrial Relations Act 1996 (NSW), which allows these types of worker to make and register ‘contract determinations’, covering fixed remuneration and other conditions of work, as well as protection from ‘capricious contract termination’. Importantly, this legislation also allows ownerdrivers to collectivise and negotiate the conditions of their work.104 Regardless of which proposals are adopted, what this discussion has shown is the adaptive nature of the law, which will allow it to accommodate the emergence of new forms of work in a way that underpins contractual arrangements with fair standards that deliver mutual benefits to workers, end-users, and intermediaries. In addition to this regulatory response, some consideration needs to be given to how the institutional actors themselves have responded to the emergence of new forms of work.

VI QUO VADIS? THE RESPONSE OF INSTITUTIONAL ACTORS TO THE EMERGENCE OF MODERN WORK RELATIONSHIPS

As explained earlier, the common law relies on characterising the employment relationship ‘exclusively in terms of individual workers and those who engaged them’.105 Workers have historically attempted to enhance their negotiation power by organising in a range of different forms of collective, the most well-known being the trade union. Trade unions have long been recognised as providing employees with a vehicle to enhance their negotiating power; employees 100

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A. Todolı´-Signes, ‘The end of the subordinate worker? Collaborative economy, on-demand economy, gig economy, and the crowdworkers’ need for protection’, International Journal of Comparative Labour Law and Industrial Relations, 33(2) (2017), 1–33. Riley, ‘Regulating work in the “gig economy”’, 682. Industrial Relations Victoria (n. 10), Submission 87: Victorian Small Business Commission – see Judy O’Connell, Response from the Victorian Small Business Commission (5 August 2019), https://engage.vic.gov.au/download/ document/7380, at 2. Ibid. Rawling and Riley Munton, ‘Constraining the uber-powerful digital platforms’, 28–9. R. Johnstone, ‘The regulation of work relationships in an historical context’ in R. Johnstone, S. McCrystal, I. Nossar, M. Quinlan, M. Rawling, and J. Riley (eds.), Beyond Employment: The Legal Regulation of Work Relationships, 6–28 (Annandale, NSW: Federation Press, 2012).

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can apply pressure to their employer often by withdrawing their labour and undertaking industrial action.106 In Australia, trade unions have played a critical role in the ‘emergence of continuing employment as the dominant form of work relationship’ in the economy.107 However, as this chapter has shown, this trend is now under threat as many workers in the gig economy struggle to collectivise owing to their classification as part-time, casual, or contract workers.108 This has not stopped some trade unions from deploying alternative strategies to remain an important agent for promoting fair and equitable work arrangements between workers and digital intermediaries. For example, Unions NSW recently negotiated a number of practices that will apply to workers who sign up with the digital intermediary known as Airtasker. This digital platform is self-described as a digital intermediary that simply ‘outsources’ tasks to workers.109 Unlike with Uber, the rates for work advertised through Airtasker are not set by the digital intermediary itself. Instead, clients ‘offer’ a price they are willing to pay for the service to be performed. This often results in workers accepting pay rates that are below the minimum rates of pay prescribed by statutory instruments that apply to employees. Unions NSW was able to negotiate an agreement to ‘identify and communicate’ the minimum statutory pay rates attached to such work to all workers who sign up to use the digital platform.110 In addition, an agreement was reached between Airtasker and Unions NSW to search for optional personal injury insurance providers as well as establishing various safety and dispute resolution policies that workers can access. Even though these agreements may help to shape the custom and practice of working standards that apply, the long-term impact of such arrangements is likely to remain limited as they lack any real legal enforceability. In the case of Unions NSW, negotiating an agreement with Airtasker to improve peripheral aspects of how work is carried out does not provide these workers with a ‘set of truly enforceable labour standards’ including the application of mandatory minimum pay rates as well as access to independent dispute resolution tribunals.111 The emergence of worker cooperatives is another institutional development appearing in response to the rise of gig economy work. Cooperatives are non-profit organisations that are established to satisfy a ‘mutual purpose’ that has been determined by its members who also own the enterprise.112 Cooperatives are required to establish governing structures that comply with seven main principles established by the International Co-operative Alliance (ICA). These include voluntary and open membership as well as demonstrating a concern for the broader community.113 There is a growing pool of literature showing how some groups of workers from distinct occupational groups are forming ‘platform cooperatives’ that act as an institutional barrier protecting these worker from being exposed to the exploitative working conditions found in contracts of gig economy workers.114 This is achieved by workers not only owning the 106

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H. A. Clegg, Trade Unionism under Collective Bargaining: A Theory Based on Comparisons of Six Countries (Oxford: Basil Blackwell, 1976). Johnstone, ‘The regulation of work relationships’, 18. J. Stanford, ‘The resurgence of gig work: Historical and theoretical perspectives’, Economic and Labour Relations Review, 28(3) (2017), 382–401. See Airtasker.com, ‘How it works’, www.airtasker.com/how-it-works/. Minter, ‘Negotiating labour standards’. Ibid., at 450. T. Sarina and A. Fici, ‘A comparison between Australian and Italian co-operative law’ in A. Jensen, G. Patmore, and E. Tortia (eds.), Cooperative Enterprises in Australia and Italy: Comparative Analysis and Theoretical Insights, 21–36 (Florence: Firenze University Press, 2015). See principles of International Co-operative Alliance (ICA), www.ica.coop/en/cooperatives/cooperative-identity. T. Scholz, Platform Cooperativism: Challenging the Corporate Sharing Economy (New York: Rosa Luxemburg Foundation, 2016), https://bit.ly/3O5qXlm.

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cooperative but also establishing their own digital intermediary to transact with external clients to ‘sell’ their labour or services. This allows the worker members of the cooperative to ‘capture’ the fee often charged by external market intermediaries (which can range from 20 per cent to 35 per cent of the contract price), which can then be redistributed back to the workers themselves.115 This has been a response in part to organisations developing more elaborate human resource strategies that allow them to use digital intermediaries to source high-skilled and high-paid workers through low-paid exploitative work systems in order to extract more value from the work itself.116 By securing ownership of the digital intermediary itself, these workers have developed an alternative strategy that assists them to improve pay and working conditions regardless of their work status. In effect, these types of cooperative can transform workers from price-takers into price-makers.117 Although these platform cooperatives are popular in Europe, their formation in Australia has remained limited owing to a historical legacy where national corporation laws have facilitated the growth of ‘at profit’ organisations across the country. This resulted in an absence of any national cooperative laws until 2012, which constrained cooperatives to individual state jurisdictions and thereby limited their growth.118 However, this has recently changed with all states having now passed uniform cooperative laws enabling them to operate and grow across jurisdictions.119

VII CONCLUSIONS AND CHALLENGES AHEAD FOR REGULATING THE FUTURE OF WORK

This chapter has outlined how technology has accelerated the fragmentation in different types of work relationships appearing in Australia. In underpinning the rise of the gig economy, technology has forced us to look at how work can be arranged and regulated in more effective and sustainable ways. The current legal architecture based on distinguishing between an employee and a contractor has struggled to deliver a consistent answer on how best to regulate triadic relationships between digital intermediaries, workers, and ‘buyers’ of labour to avoid exploitative working conditions and instead provide mutual benefit. Viewing modern work arrangements as commercial interactions provides us with a much more effective avenue for ensuring that digital intermediaries that exercise considerable control over workers are restrained from offering exploitative working arrangements that otherwise may be allowed if traditional employment law tests are applied. In conjunction with refocussing our regulatory lens, we also need to encourage greater social dialogue between institutional actors so we can learn more about how these actors are responding. This chapter has shown how trade unions and workers themselves have developed a raft of innovative responses to the impact that technology is having on work arrangements. Some trade unions have pursued a strategy of partnering with digital intermediaries in an attempt to ensure that workers who enter into these modern arrangements are informed and equipped with some protections (albeit unenforceable) against exploitative worker arrangements. We have also seen how workers themselves are using alternative organisational forms 115 116 117 118

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Sarina and Riley, ‘Re-crafting the enterprise’, 31. D. J. Teece, ‘Business models, business strategy and innovation’, Long Range Planning, 43(2–3) (2010), 172–94. Scholz, Platform Cooperativism, 13. T. Sarina, ‘Australia’ in D. Cracogna, A. Fici, and H. Henry¨ (eds.), International Handbook of Cooperative Law, 207– 30 (Heidelberg: Springer-Verlag, 2013). See ‘Co-operatives national laws’, NSW Government, https://bit.ly/3JHiEJS.

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such as cooperatives to create an institutional shield that provides them with greater control over maintaining working conditions regardless of their worker status. The ultimate outcome of these regulatory and institutional developments is difficult to predict with absolute certainty. However, one thing that is certain is that economies will face a high rate of technological change and increased competitive pressure over the next decade. The economic devastation that countries including Australia experienced owing to the Covid-19 pandemic was significant. As a result, governments are desperate to kick-start their economies out of hibernation while helping to manage inflationary pressures. Australia is looking to achieve this by improving workplace productivity, regulatory reform, and consultation with institutional players including employers, trade unions, and workers. As part of the former Morrison government’s ‘jobmaker’ programme, the former Australian Prime Minister signalled an intention to ‘throw out the industrial handbook’ to revive businesses, employment levels, and productivity.120 The Federal Labor government elected in 2022 remains committed to tackling issues including increased job security as well as re-examining the challenges of regulating modern forms of work. As this volume goes to publication, the Fair Work Legislation Amendment (Secure Jobs Better Pay) Act 2022 was enacted. This Act includes a raft of proposed amendments to workplace regulation that aim to ‘get wages moving . . . and promote job security’.121 This reform package will also ensure that a statutory review of the Act occurs within two years of this law being enacted. Let’s hope that these amendments and the review process can help build a regulatory architecture of modern work that can continue to adapt and respond to future evolutions in both market structures and the nature of work itself. The new government has already introduced a Bill which intends to ensure minimum standards for ‘employee-like’ workers such as those found in the gig economy. However, securing such standards is likely to be a highlight contested process that will be subject to lengthy negotiations between members of parliament.122 If we can achieve that lofty ambition, work will indeed remain capable of delivering a more prosperous and sustainable society.

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G. Jennett, ‘Scott Morrison has thrown out the industrial relations rulebook, but can old enemies work together?’, ABC News (26 May 2020), https://bit.ly/44BAq9p. The Hon. Tony Burke MP, ‘ Senate support for Secure Jobs, Better Pay’, Media Release (28 November 2022), https:// ministers.dewr.gov.au/burke/senate-support-secure-jobs-better-pay-0. Fair Work Legislation Amendment (Closing Loopholes) Bill 2023, s.15ff.

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18 Technological Disruption and the Future of Work in Aotearoa/New Zealand Gordon Anderson

I INTRODUCTION

Labour markets and their supporting regulatory structures will always be subject to disruptive forces. The economic consequences of the recent pandemic, if nothing else, have highlighted the challenges that are likely to be faced over future decades as societies come to grips with a number of disruptive megatrends that will impact on the future character of work, labour, and employment law. While this particular chapter focusses on the disruptive impact of technological change, it is clear that this factor cannot be viewed in isolation. Political debate in Aotearoa/New Zealand is becoming increasingly concerned with the future of work, as is broadly illustrated by the introductory chapter to this collection. In late 2019 New Zealand’s Tripartite Forum on the Future of Work stated that ‘the future of work is being shaped by four global megatrends: technological progress, demographic change, globalisation and climate change’.1 This broad approach to the future of work recognises that the various megatrends cannot be dealt with in isolation; rather, the aim must be to develop a regulatory structure that is sufficiently resilient to cope with the differing impacts of each of those megatrends. This may require bespoke solutions for some particular problems, but it also suggests that a more holistic approach to reform may be necessary. The example that comes to mind in New Zealand, and one that had to be faced up to as a result of the Covid-19 pandemic, is the need to seriously rethink the relationship between labour law and social security law.2 While this chapter deals with technological disruption, given the direction of the debate in Aotearoa/New Zealand it is necessary to discuss this in the context of the responses to the other megatrends identified in the Tripartite Forum document to provide a broad picture of the current debate on the future of work. An initial summary of the position in New Zealand is that while there has been considerable discussion at a general level within and between government, employers, and unions, no firm policy outcomes have yet eventuated. The recent report on work and technological change by the New Zealand Productivity Commission3 suggests that to date there have been no significant changes to employment structures owing to technological change and that such changes would not be expected in the medium-term future. Rather than technological change, the most important driver of change to labour law over the last decade has been the impact of increased immigration. The increasing dependence of some 1

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Future of Work Tripartite Forum, Future of Work Tripartite Forum Strategic Assessment: Priorities for New Zealand’s Future of Work (November 2019), 4. The recent interim report by the New Zealand Productivity Commission, A Fair Chance for All (2022), reflects this evaluation, see www.productivity.govt.nz/inquiries/a-fair-chance-for-all/. New Zealand Productivity Commission, Technological Change and the Future of Work: Final Report (March 2020).

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sectors of the economy on non-resident4 migrant workers has resulted in a rapid growth in the exploitation of such workers and consequently the need for a legislative response. A second driver, although a significantly weaker one, has been changes in the working patterns and conditions for some groups of vulnerable workers, for example the use of zero-hours employment, which has led to demands for legislative reform. Since 2020, as is the case with most countries, the focus of government has been on the economic impact of the Covid-19 pandemic. Covid-19 has forced the government to reconsider matters such as the appropriate levels and types of support for unemployed workers and the necessity to reskill workers for new forms of employment. As is described in Sections IV.A and IV.B, all these matters had already been identified as concerns in the various studies dealing with the future of work. The extent to which immediate necessity will translate into longer-term policy has yet to become apparent and substantial initiatives seem unlikely before the 2023 election.5

II THE ARCHETYPE

For the three decades following the abolition of the industrial conciliation and arbitration system in 1991, the structure of New Zealand employment law has consisted of the foundation of a common law contract of employment on which a statutory regime has been constructed. During the decade in which the strongly contractual, neo-liberal Employment Contracts Act 1991 was in force, statutory intervention in employment relationships was relatively muted, being confined primarily to setting a minimum floor of terms and conditions and providing a level of protection against unjustified dismissal and some other unjustified actions.6 This picture changed with the enactment of the Employment Relations Act 2000 (ERA), an Act that has now remained fundamentally unchanged for two decades and through several changes in government. The ERA enacts an overall legislative structure for both individual and collective employment relationships.7 This includes the establishment of a specialist Employment Relations Authority and an Employment Court, both of which have jurisdiction over all employment relationship problems as well as the enforcement of the Act’s penalty provisions.8 The Act regulates most aspects of employment law including freedom of association and union membership, the recognition and operation of unions, collective bargaining and industrial action, and the negotiation and compulsory content of individual employment agreements. The provisions of the ERA are complemented by a number of acts that set out minimum employment standards and minimum entitlements.9 4

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Non-resident migrant labour is used to encompass all workers who do not have a right to remain permanently in New Zealand. The Labour Party was elected with the majority of seats in Parliament in the general election held on 17 October 2020. Before the election, Labour governed in coalition with the New Zealand First Party. The election was the first in which any party received a clear majority since the MMP election system was first used in 1996, but the opportunity this presented for significant reforms has not been utilised. For an account of the law before 1991 and between 1991 and 2001, see Gordon Anderson, Reconstructing New Zealand’s Labour Law: Consensus or Divergence? (Wellington: Victoria University Press, 2011), chs. 2–5. The ERA, s. 4(2) defines an ‘employment relationship’ in very wide terms extending beyond the employer–employee relationship to include, for example, a union–employer relationship, a union–member relationship, and a number of relationships that arise during collective bargaining. ERA, ss. 161 and 87. The Authority has initial jurisdiction and decisions can be appealed to the Court. Appeals from the Employment Court can, with leave, be made to the New Zealand Court of Appeal, but only on points of law. Principally the Holidays Act 2003, the Minimum Wage Act 1983, the Wages Protection Act 1983, and the Equal Pay Act 1972.

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For the purposes of this chapter it is not necessary to go into the details of the Act, but two key features should be identified.10 The first is a comprehensive statutory obligation requiring the parties to an employment relationship to act in good faith. This duty applies across all aspects of the employment relationship and specifically requires the parties to be proactive and responsive in their relationships with each other.11 The obligation is not confined to collective-bargaining but applies to all dealings in the course of an employment relationship. The second feature, in contrast with the Employment Contracts Act, is a willingness to deal generally with the content of individual employment contracts but also with some other classes of contract that pose particular problems. These are discussed further in Sections III.A–III.C. A Employee v. Contractor Distinction New Zealand’s employment law follows the traditional common law pattern of making a clear distinction between employees and other categories of worker. The great majority of workers are employees.12 Typically, most statutory rights and protections are predicated on the existence of a common law employer–employee relationship and do not extend to other contractual arrangements.13 While the traditional common law tests are still relevant in determining employment status, the courts are now required by statute to ‘determine the real nature of the relationship between’ the parties,14 which effectively requires the courts to consider the underlying economic relationship between the parties. This test was intended to overrule a strongly contractual approach taken to employment relationships by the Court of Appeal during the 1990s.15 Broadly speaking, the courts have interpreted the statutory test as a formulation of the common law fundamental test but also recognising that an ‘open-textured’ approach must be taken in determining whether or not a worker is an employee. The Supreme Court has stated that the common law tests are not to be applied exclusively but are to be used ‘in conjunction with other relevant matters . . . in an endeavour to determine the real nature of the relationship, as directed by s 6(2)’.16 The full implications of this new test became apparent only slowly, but it is now clear that it will make it increasingly difficult to categorise workers in a way that does not reflect the true economic or commercial nature of the relationship. This is most obvious in the case of grey-zone employees who are classified as contractors, but it does have wider implications.17 A recent case illustrates this point: Prasad v. LSG Sky Chefs18 concerned workers in a triangular employment relationship. The workers were technically employed by a labour hire company as contractors who were then contracted to work on the premises and under the control of Sky Chefs. The 10

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For a summary, see Anderson, supra note 6, ch. 6; for a range of perspectives, see Gordon Anderson with Alan Geare, Erling Rasmussen, and Margaret Wilson (eds.), Transforming Workplace Relations in New Zealand 1976–2016 (Wellington: Victoria University Press, 2017). ERA, s. 4. The details of this obligation in specific circumstances are set out in other sections of the Act: for example, collective bargaining in ss. 32–9 and individual bargaining in s. 60A. The figure was 88 per cent in December 2018 (Statistics NZ, Household Labour Force Survey). This figure has not varied greatly over several years. Gordon Anderson and Dawn Duncan, Employment Law in Aotearoa New Zealand, 3rd ed. (Wellington: LexisNexis, 2017), ch. 5. ERA, s. 6(2). TNT Worldwide Express (NZ) Ltd v. Cunningham [1993] 3 NZLR 681 (CA). Bryson v. Three Foot Six Ltd [2005] NZSC 34 at [33]. For an overall account, see Anderson et al., supra note 13, at ch. 5. Prasad v. LSG Sky Chefs New Zealand Ltd [2017] NZEmpC 50. Leave to appeal this decision was refused by the Court of Appeal.

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Employment Court held not only that the workers were employees but that they were employees of Sky Chef. More recently the Court has had to consider the vexed question of the employment status of owner drivers. Leota v. Parcel Express Ltd19 concerned a typical courier driver who had a limited capital investment in that he owned his own van, but was otherwise totally integrated into the business of the courier company. The Court held that the driver was an employee rather than an independent contractor, placing considerable emphasis on the fact that the ‘business’ in question was wholly that of the courier company and that in no way could the driver be regarded as being in business on his own account. While the current approach of the Employment Court has been endorsed by both the Court of Appeal and the Supreme Court, it seems likely that the law will again be considered more fully by the higher courts in the near future. Although in one case the Employment Court held that Uber drivers were not employees, that decision ran counter to the approach noted above.20 That case has effectively been overridden by a second judgment from the Employment Court.21 This judgment considered Uber’s business model in considerable detail and had little difficulty concluding that Uber drivers fell within the statutory definition of an employee. Interestingly, the Court was also prepared to accept that Uber drivers were jointly employed by a group of Uber entities. The judgment was marked by a strong purposive interpretation of the Employment Relations Act and of its social purpose. Although judicial developments seem to be increasingly bringing grey-zone workers within the category of employees, the potential for the exploitation of contractors continues to be a subject for policy debate. In November 2019 the Ministry of Business, Innovation and Employment (MBIE) was authorised by Cabinet to release a discussion document, Better Protections for Contractors.22 The stated reason for public consultation was that ‘[t]he government wants to ensure all workers in New Zealand have access to decent work with minimum standards and conditions’. The document noted particular concerns with two groups of workers: those who in substance are employees but are misclassified as independent in order to reduce their entitlements, and grey-zone workers who nominally operate their own business but in reality enjoy neither the choice nor the flexibility usually associated with self-employment and who are dependent for the great bulk of their income on a single employer.23 The Labour Party’s 2020 election manifesto indicated that it intended to develop a better statutory regime to protect dependent contractors,24 but, while it did institute an inquiry into the problem,25 no legislative response has occurred as a result of the recommendations. B Typical and Atypical Work New Zealand employment law provides considerable flexibility to employers in the way they construct their labour force. Employment law makes no formal distinction in employment26 status between permanent full-time employees, part-time employees, and 19 20 21 22

23 24 25 26

Leota v. Parcel Express Ltd [2020] NZEmpC 61. Atapattu v. Raiser New Zealand Ltd [2020] NZEmpC 230. E Tu` Inc v. Raiser Operation BV [2022] NZEmpC 192. Ministry of Business, Innovation and Employment, Better Protections for Vulnerable Contractors (November 2019), www.mbie.govt.nz/have-your-say/better-protections-for-contractors/. Ibid., at 10. New Zealand Labour Party, Our Manifesto to Keep New Zealand Moving: Labour 2020 (2020), 20. Supra note 22. New Zealand Productivity Commission, supra note 2, at 25.

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casual employees;27 nor does it attempt to constrain the circumstances in which various categories of employee may be employed. Unlike some countries, New Zealand has not created an intermediate class of workers falling between employees and contractors.28 The law does, however, provide some protections to prevent the exploitation of these different types of worker. This is especially so where they may be attempts to categorise workers as fixed term or casual to exclude or limit rights under protective legislation. Examples of such practices include the use of short fixed-term contracts or casual employment to avoid statutory entitlements to service-based leave or casual contracts to attempt to limit access to protection against unjustified dismissal.29 The ERA, while permitting the use of fixedterm employees, does require there to be ‘genuine reasons based on reasonable grounds’ for requiring the employment to be for a fixed term.30 Similarly, the misclassification of employees as casual can be remedied through section 6 of the ERA when considering the real nature of the relationship. Legal responses to the changing nature of work are discussed in the following section.

III THE CHANGING NATURE OF WORK

The broad profile of the Aotearoa/New Zealand workforce does not yet seem to have undergone significant structural changes over the last two decades either because of changing technologies or because of other changes. The Productivity Commission’s March 2020 report concludes that there have been no significant changes in the types of employment arrangement over the past decade. The proportion of casual workers has remained consistent at approximately 5 per cent for more than a decade and the proportion of fixed-term and temporary workers has remained constant at around 4 per cent. The proportion of the workforce that is self-employed has fluctuated between 10 per cent and 12 per cent for the last two decades.31 Unemployment is also low and labour-market participation high at 80 per cent, an unprecedented combination.32 The report also notes that occupational churn, which the Commission regards as the best single measure of the labour market effect of technological change, is at historically low levels.33 While some aspects of the character of work and the composition of the workforce have changed significantly, technology has not been the major driver in this process. The Productivity Commission report suggests that, rather than increasing, the rate of technological change is essentially static.34 This position is one shared by Bishen Rogers.35 Based on a review of the technical capacity of existing technology, Rogers concludes that automation is not a major threat to the jobs of current workers and is unlikely to be so for at least the medium-term future. Rogers argues that the more immediate threat to contemporary workers is not job displacement but the use of new 27

28

29 30 31 32 33 34 35

For example, New Zealand never adopted the doctrine of mutuality of obligation that impacted casual employees in the United Kingdom. See Gordon Anderson, Douglas Brodie, and Joellen Riley, The Common Law Employment Relationship: A Comparative Study (Cheltenham: Edward Elgar, 2017), 55. See, for example, the definition of ‘worker’ in s. 296 of the Trade Unions and Labour Relations (Consolidation) Act 1992 (UK). Entitlements to sick leave and parental leave, for example, become available only after six months’ service. ERA, s. 66. New Zealand Productivity Commission, supra note 2, at 28–9. Ibid., 25. Ibid. Ibid., 29. Brishan Rogers, Beyond Automation: The Law & Political Economy of Workplace Technological Change, Roosevelt Institute Working Paper (New York: Roosevelt Institute, 2019).

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technology by employers to monitor, control, and discipline workers and to increase worker productivity by work intensification. In many ways this process seems already to be well underway as evidenced by the monitoring and control of workers in Amazon’s warehouses (or as they seem to be called ‘fulfilment centres’). As Rogers suggests, policymakers would be better focussed on considering the disruptive implications of these uses of technology rather than much longer-term job displacement. The major changes in the nature of work have not been driven by technological change but rather by demand-led changes to the composition of the labour force and employment practices in some sectors of the economy. Sectors such as agriculture and horticulture, construction, hospitality, cleaning, catering, and aged care have become particularly reliant on short-term migrant workers. Essentially, the increased demand for labour in those areas has been increasingly met by migrant workers on non-resident visas. The potential for exploitation of this form of worker is of course not unique to New Zealand. The legislative response to such exploitation, which also extends to other forms of casual and insecure work, is noted in Section II.B. For the purposes of this chapter it is not necessary to discuss migrant exploitation in any detail.36 However, the reforms noted may also have application in relation to exploitative practices growing out of technological developments, particularly where legal ownership may be based offshore but there is some commercial presence within New Zealand. A Labour Supply Contracting In many of the industries noted just now, it is an increasingly common practice for business owners not to employ workers directly but to obtain them from third-party labour supply companies. This may take the form of triangular employment relationships such as that noted in the Sky Chefs case. In seasonal industries such as horticulture, it is more likely to take the form of an outside contractor using its own labour force to harvest produce for a grower. Given the seasonal nature of such employment and the temporary visa status of workers, this form of employment is particularly vulnerable to exploitation. While the law has been strengthened to deter some forms of exploitation, the government has yet to move to require the licensing of labour supply companies. It has, however, signalled that such licensing is likely in the near future.37 B Contracting Out Peripheral Work Since the deregulation of the labour market in 1991 it has become increasingly common for many firms, including state-sector employers such as hospitals and schools, to contract out work such as cleaning, laundry services, caretaking, and catering. Tenders for new suppliers of such services are relatively frequent and one of the few areas where a contractor can cut costs is by reducing labour costs. Part 6A of the ERA provides a degree of protection for at least some workers38 who are affected by these practices. 36

37

38

See Gordon Anderson and Lucy Kenner, ‘Enhancing the effectiveness of minimum employment standards in New Zealand’, Economic and Labour Relations Review, 30 (2019), 345. For a picture of the exploitations, see Christina Stringer, Worker Exploitation in New Zealand: A Troubling Landscape (Auckland: Human Trafficking Research Coalition, 2016). Ministry of Business, Innovation and Employment, Addressing Temporary Migrant Worker Exploitation (October 2019), 20. See ERS, Sch. 1A.

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C Zero-Hours Contracts One negative employment development that seems likely to have been enabled by work scheduling software, zero-hours contracting, saw New Zealand’s first regulatory response to the negative employment consequences of such technologies. Zero-hours contracting is of course a widespread practice and essentially a refinement of the long-established use of parttime and casual workers in industries with fluctuating customer demand. In New Zealand it was particularly prevalent in supermarkets and fast-food franchises. While part-time workers have long been typical of such industries, employers saw zero-hours contracting as an opportunity to further minimise labour costs while ensuring that there was a pool of labour available on very short notice. Zero-hours contracting is typified by a significant disparity in obligation and by restrictions on secondary work. Terms typically require an employee to be available for work for specific periods, but impose no reciprocal obligation on the employer to provide work or to guarantee payment for a minimum number of hours. Such contracts also place severe restrictions on secondary work. Given that the major users of such contracts are almost certainly able to predict their labour requirements in considerable detail, it seems more likely that the attraction of zero-hours contracting is in its use to control and discipline workers as much as the cumulative effect of savings in individual labour costs. Following a strong public campaign, Parliament amended the ERA by enacting sections 67 C–67 H to ameliorate these disparities of obligation.39 The Act now requires, among other matters, that an ‘availability’ clause may be used only if there are genuine reasons based on reasonable grounds for including such a clause, there are agreed and specified guaranteed hours, and compensation is provided for the employee being available. Additionally, if shifts are cancelled without reasonable notice, compensation must be provided. Secondary employment restrictions are also subject to detailed reasonableness provisions. D Extending Accessorial Liability For the purposes of this chapter it is not necessary to discuss migrant exploitation in any detail.40 However, it is worth noting some elements of the legislative response to such exploitation that are potentially relevant to at least some technological developments, particularly those attempting to build legal walls between workers and those benefiting from the work. Part 9A of the ERA was passed ‘to provide additional enforcement measures to promote the more effective enforcement of employment standards’.41 From this perspective, one of the more important of the reforms was widening the reach of accessorial liability by extending the liability for breaches beyond the legal employer to encompass persons aiding or abetting the breach, inducing the breach or otherwise, being in any way, directly or indirectly, knowingly concerned in, or party to, the breach, or conspiring with others to effect the breach.42

IV THE PROTOTYPES

Although both the nature of work and the employment characteristics of the workforce have remained largely consistent over the last two decades, the medium- to long-term future of work 39 40 41 42

ER (Amendment) Act 2016. See Anderson and Kenner, supra note 36. For a picture of the exploitations, see Stringer, supra note 36. ERA, s. 142A(1). See further Kerry O’Brien, ‘Accessorial liability in Australian and in New Zealand workplace laws’, New Zealand Journal of Employment Relations, 44 (2020), 51.

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has been the subject of considerable debate, if not, to date at least, a driver of significant policy changes. The future of work was a particular concern of the New Zealand Labour Party even before its election to government in 2017. Prior to the 2017 election, Labour had set up a Commission to examine the future of work.43 When elected to government it furthered that work through two initiatives. The first was to instruct the New Zealand Productivity Commission ‘to provide an independent assessment of the scale and potential impacts of rapid44 technological change and its disruptive impact on the future of work and the workforce in New Zealand’.45 The second was the creation of the Future of Work Tripartite Forum, a partnership among the government, Business New Zealand, and the New Zealand Council of Trade Unions. While these initiatives indicate a strong commitment to dealing with the issues arising from technological and economic disruption, it remains unclear what steps the government will take during its next term of office to adapt legal structures to accommodate long-term changes. Labour’s 2020 election manifesto is largely silent on any such initiatives. This is not surprising given that since the report was released in March the government’s attention has been almost entirely focussed on managing the health and economic consequences of the Covid-19 pandemic. As with most countries, the next few years are more likely to be focussed on dealing with the immediate economic and social problems arising from Covid-19 than the longer-term implications of technological change. A The Productivity Commission Report The Productivity Commission’s report is largely positive about the impacts of technological change and does not predict significant negative employment consequences as a result of technological change. The main focus of the report is twofold: first, it places a strong emphasis on encouraging technological change, which it sees as slowing rather than speeding up. The Commission’s vision of the impact of technological change is strongly positive and it sees change as driving long-term productivity growth and improving human well-being. Essentially it argues that New Zealand needs more technology, not less, and its primary recommendations focus on what it sees as the necessary policy changes in education and training to equip the future workforce to deal with technological change.46 Its recommendations include encouraging micro credentialling and improving access to vocational education and training.47 What the report also recommends is that any policies to assist workers to adapt to technological change should maintain New Zealand’s high levels of labour market flexibility.48 Second, the Commission’s key message on labour law is that it should be updated but not significantly reformed.49 The relentlessly positive tone of the report stresses the benefits of digital platforms and none of the negatives. For example, it lauds the ability of digital platforms to better match workers and skills to jobs, but fails to mention well-identified problems embedded into such algorithms. The report is totally silent on the use of artificial intelligence (AI) technology to monitor and control employees and its use as a tool for work intensification. Similarly, problems such as risks to health and safety, and protection of privacy are barely noted. 43 44 45 46 47 48 49

New Zealand Labour Party, The Future of Work (2016). New Zealand Productivity Commission, supra note 2, ch. 4.6. Ibid., at v. Ibid., ch. 4. Ibid., 99. Ibid., 97 R3.1. Ibid., ch. 4.8.

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The report does refer to some concerns expressed by the Council of Trade Unions, for example increased monitoring and surveillance of workers and the problem of enforcement, as is arising with overseas-based companies. However, the Commission’s response is that, while rules and policies that protect workers from exploitation should be rigorously enforced, it should be done through general employment law. The report does concede that it ‘has not seen compelling evidence that reductions to current employment protections would improve the ability of New Zealand firms to adopt technology’.50 And the Commission specifically states that it ‘makes no recommendations that would impose additional constraints on digital platforms’.51 The Commission does recommend that the government should update the legal test for employment status.52 What is interesting about this recommendation is that the discussion in the report seems to misunderstand what the current legal test is and indeed the resulting recommendation seems to very closely coincide with the current approach of the Employment Court.53 A more positive aspect of the Commission’s report is that it recognises the need to improve income smoothing for displaced workers and to improve labour market assistance for displaced workers.54 The report notes that, unlike most Organisation for Economic Co-operation and Development (OECD) countries, New Zealand does not have an unemployment insurance system tied to a person’s prior income. The report recommends a solution such as unemployment insurance, but also notes that ‘relatively minor’ adjustments to the current benefit and tax policies could conceptually increase income replacement rates. B The Future of Work Tripartite Forum The Future of Work Tripartite Forum ‘aims to support New Zealand businesses and workers to meet the challenges and opportunities presented in a rapidly changing world of work, and provides a place for these three social partners to discuss issues and work together to identify and implement solutions’.55 In November 2019 the Forum issued a document setting out a strategic assessment of future work priorities.56 The document states: The Future of Work Tripartite Forum was established to co-ordinate the responses of government, business and unions for future of work issues. At a broad level, the three partners have common goals: to see a productive economy that generates good jobs, and to see that risks and rewards of economic transitions are fairly shared across groups and generations. The Forum recognises that achieving these goals will require work across five broad themes: › › › › › 50 51 52 53 54 55

56

Creating more adaptive and resilient institutions Raising workplace productivity and wages Responsive skills systems enabling learning for life Helping workers find and keep decent jobs Protecting vulnerable workers. Ibid., 46. Ibid., 86. Ibid., 68. Ibid., 86. Ibid., ch. 4.6 and 4.7. More information on the Forum can be found at www.mbie.govt.nz/business-and-employment/employment-andskills/future-of-work-tripartite-forum/. Future of Work Tripartite Forum, supra note 1.

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The Forum identified four themes as the focus of its work programmes: • • • •

Shaping the strategic direction and focus of Industry Transformation Plans. Identifying priorities to facilitate in-work training and lifelong learning. Identifying priorities to support workers who are displaced or at risk of displacement. Advising on options for protecting non-standard workers.

Work on this project stalled as a result of the Covid-19 crisis, but more recently work has resumed with regular tripartite meetings. Reports indicate steady if not spectacular progress on some key initiatives. The MBIE’s most recent update, for September 2022, indicated Ma¯ori and the future of work, support for displaced workers, the preparation of Industry Transformation Plans, and the facilitation of in-work training.57 As with the Productivity Commission report, there is a strong focus on income support, including a controversial social unemployment insurance scheme (now abandoned), and on improved workforce training.58 C Uptake of Technology in Human Resources (HR) It is difficult to gain even an approximate indication of the extent to which firms have invested in technological solutions. However, a survey conducted in 2019 provides a useful indication of technological uptake by HR professionals.59 Participants in the survey numbered 180 HR professionals who tended to be New Zealand oriented, with only 11 per cent working for organisations based outside New Zealand. However, the range of industries covered seemed reasonably representative although, not unexpectedly, more representative of larger employers. The key findings indicate that the uptake of human resource information systems (HRIS) has been comparatively recent and fragmented, and has not led to high levels of satisfaction with the systems. However, the report also indicates that participants who did not already have a core HRIS plan intended to introduce one within the next three years. A few other key findings of the survey give some indication of the way in which the HR profession is utilising technological solutions. First, the primary use of technology is for core HR functions such as payroll, occupational health and safety reporting, remuneration, workforce management, and HR analytics and intelligence. The use of the technology for wellness applications, performance management, and organisation management was relatively low. The report did, however, indicate that a majority of firms plan to introduce or to improve performance management functions within the next three years. It is also apparent from the report that one of the major factors inhibiting stronger uptake of technology is the practical problems associated with doing so. The four major challenges identified by participants were in relation to aligning and integrating different systems, the affordability of the technology, time and resource constraints in organisational support, and the usability of some of the systems. This particular finding suggests that as HRIS become more integrated and comprehensive and user-friendly, the adoption of such systems is likely to accelerate. There are at least some anecdotal indications of increasing uptake of surveillance technology as a result of the move to working at home during the Covid-19 crisis. Hubstaff, 57

58 59

Work programme progress update as at 13 September 2022, www.mbie.govt.nz/dmsdocument/25534-workprogramme-progress-update-as-of-13-september-2022; for the background papers, see MBIE, Future of Work Tripartite Forum, www.mbie.govt.nz/business-and-employment/employment-and-skills/future-of-work-tripartiteforum/. MBIE, Future of Work: Status Update (n.d.), www.mbie.govt.nz/assets/future-of-work-status-update.pdf. Mary Ellen Gordon and Jocelyn Cranefield, Technology for HR in NZ (Wellington: Victoria University and Probity Consulting, October 2019).

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a United States-based company that develops and markets employee time-tracking software, boasted a threefold increase in New Zealand sales during the first month of lockdown alone.60 As firms become more familiar with the need to collect accurate and comprehensive data, it is also likely that there will be an uptake in usage, particularly as New Zealand employers become more familiar with rapidly developing cloud-based systems. Do¨rrenba¨cher et al.61 have pointed out that cloud HR systems are designed more and more with a view to enhancing shareholder returns and maximising the value derived from workers, an objective that increasingly allows the micro-management of workers’ lives and actively promotes exploitation at work. D Regulatory Implications Finally, on this point, two observations might be made. First, New Zealand employers may be particularly sensitive to the regulatory risks involved in adopting overseas technological solutions. Employers have recently had to remediate extremely large underpayments of holiday pay (hundreds of millions of dollars in total) that arose, in part at least, owing to some electronic payroll systems not being attuned to New Zealand’s regulatory requirements for calculating holiday pay. The second is that the available research suggests that the short- to medium-term impact of technology and AI will be to further enable Digital Taylorism and the Digital Panopticon, matters that the Productivity Commission chose not to deal with. This is unfortunate in that the implications for workers are extremely serious. The boundary between private life and work life is becoming less and less distinguishable, and heightened digital monitoring of workers poses significant threats for worker health and safety as both the psychological and the physical pressures of work are increasingly intensifying. These disruptive consequences do not, however, seem to be widely recognised. A recent review of New Zealand’s privacy law did not see workplace monitoring as a significant issue unless it is done without notification. Raising a more general awareness of these threats and then generating the political momentum to deal with them is probably the most important challenge that technological advances pose for New Zealand workers. In the absence of any challenge, monitoring technologies become an embedded reality in the workplace and increasingly in the private space, and effective regulation tends to then become politically impossible.

V ‘UBERISATION’

The Productivity Commission’s report points out that there is very little New Zealand data available on the number of jobs or changes in the proportion of jobs offered through job mediating platforms. The Commission refers to research from the United States suggesting that relatively few households, 1 per cent, earned income through such work and that in most cases such work was neither a primary source of income nor undertaken for significant periods of time.62 There is nothing to suggest that this pattern is not repeated in New Zealand, and what 60

61

62

Emma Hatton, ‘Employee surveillance software sales surge in lockdown’, RNZ (2 June 2020), www.rnz.co.nz/news/ national/418055/employee-surveillance-software-sales-surge-in-lockdown. Christoph Do¨rrenba¨cher, Mike Geppert, Daniel Pastuh, and Matthias Tomenendal with assistance from Nadja Schaffert, Cross-Border Standardisation and Reorganisation in European Multinational Companies (Brussels: European Trade Union Institute (ETUI), 2018). New Zealand Productivity Commission, supra note 2, at 29.

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anecdotal evidence is available would tend to confirm this. Indeed, to take the case of Uber drivers, it seems highly unlikely that the demand for rides varies between Uber and more traditional taxis. Such work tends to peak during morning hours and late afternoon / early evening, periods that are ideal for secondary work. Given the minimal impact of such work, it is not surprising that there have been no legislative initiatives to regulate platform-mediated work. What little regulation there has been has focussed on determining whether or not ride-sharing services should be subject to the same regulatory regime as standard taxi services. Indeed, it seems that more regulatory attention has been focussed on other transport innovations such as Lime (owned by Uber) and other electric scooters than has been devoted to the employment implications of ride-sharing or other platform-mediated work.

VI QUO VADIS?

Probably the key lesson that can be taken from the New Zealand experience is that the uptake of technology is cautious and slow. Consequently, labour markets have not been subject to significant technological disruption. Disruption has occurred in some industries, banking and finance and newspapers probably being the most significant, but, as the Productivity Commission’s report shows, technological innovation to date has not disrupted long-standing employment patterns. The report on HRIS, while applying only to a relatively small area, tends to support this finding. The second key indication is that the focus of policy development on the future of work in New Zealand will be on a range of disruptive factors that will include technological disruption but likely place greater emphasis on the economic disruption caused by adaptation to climate change and the combined effects of globalisation and demographic change. It also seems reasonably clear that in the short to medium term the focus of policy development will be not on employment and labour law but on educational and social welfare policies. Broadly speaking, the Productivity Commission report suggests that the New Zealand education system requires a major overhaul at both school and tertiary levels. The Commission recognises that, while New Zealand adults have high levels of literacy, numeracy, and problemsolving skills, there is evidence that the skill levels of fifteen-year-olds have been declining over time. It is also noted that some particular groups, including Ma¯ori and Pasifika students, suffer from poor educational outcomes. For tertiary education, the Commission recommends a number of reforms, but the key theme is that tertiary educational outcomes should be considerably more flexible, with, for example, greater recognition of micro-credentialling and less emphasis on the need to achieve traditional tertiary qualifications. Tertiary education is one area where there has been major reform. The government has enacted legislation creating a single New Zealand Institute of Skills and Technology.63 The new entity came into existence on 1 April 2020 and replaces a large number of regionally based polytechnics. Apart from its role in managing a single administrative system for vocational education, the Institute sits at the centre of a number of industry and regional groups, providing advice on the needs of vocational education.64 The second area where policy development seems likely is that of developing some form of social insurance to protect and provide income smoothing for displaced workers. While the 63 64

See Tertiary Education Commission, www.tec.govt.nz/rove/reform-of-vocational-education/. The government has yet to announce any plans relating to university education.

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Commission recommended such a development, it did not suggest any particular model. Since the Commission’s report in March 2020, the government has had to take major initiatives to provide income protection for workers displaced as a result of Covid-19.65 While the National Wage Subsidy Scheme suffered from design flaws, it had the effect of changing the debate around the work–welfare interface and makes the political possibility of reform more likely. Following a report on the social welfare system in 2019,66 the government committed to undertaking a review of much of the social welfare system, including the introduction of a social insurance scheme, but the project has not progressed. The picture that emerges for New Zealand is that there is relatively little disruption to labour and employment as a result of technological change. Technological change is obviously occurring, but at a pace that allows labour markets to adjust without major disruption. There is, however, a strong concern within government and the social partners about the possibility of future disruptions with consequences for the future of work and therefore the need to make provision for the just transition of workers within the affected areas. That said, the concern is not so much with technological disruption as with the impact of climate change, including the demographic and immigration patterns that are likely to occur as a result of climate change. While policy work to ensure just transition is underway and one would hope that the Covid-19 crisis has driven home the need for that work to continue as expeditiously as is feasible. However, as the Labour Government largely paused or abandoned its reform programmes and with a more conservative government elected in 2023, it is difficult to be optimistic that a more progressive and longer term reform programme will be implemented.

65

66

On the labour law response to Covid-19, see Dawn Duncan, ‘COVID-19 and Labour Law: New Zealand’, Italian Labour Law e-Journal, 13 (2020). Welfare Expert Advisory Group, Whakamana Ta¯ngata: Restoring Dignity to Social Security in New Zealand (2019).

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19 Technological Disruptions in Labour and Employment Law: South Africa Debbie Collier and Lindani Mkhwanazi

I INTRODUCTION

Technological innovation has disrupted standard forms of employment and fragmented the world of work, creating new digital sites of work and new modes of work organised around digital platforms.1 The arrangements for platform work, which vary in form and substance,2 defy classification in terms of the traditional configuration of employment and bypass the boundaries of South African labour law. Even the net of protection designed to provide labour rights for atypical (non-standard) forms of work is inadequate and excludes vulnerable workers in the digital economy from its scope.3 As such, work in the digital economy is largely ‘characterised by an absence of effective labour regulation’.4 In South Africa, as is common practice elsewhere, platform workers tend to be engaged in a triangular (or multi-party) relationship, ‘in which users [consumers] contract with the platform to access the service of their choice, while the platform contracts with workers to deliver it’.5 Within this relationship, the platform worker is typically styled as an independent contractor (or own-account or self-employed worker) and hence falls outside the scope of labour protection. The challenge for labour law is to evolve and innovate alongside the technological innovations disrupting the world of work. This necessitates finding new ways to think about how we regulate the world of work, new pathways to enable labour standards and

1

2

3 4 5

Digital platforms have been described as ‘virtual marketplaces that connect providers of goods and services with consumers’ (C. Johnson, H. Bester, P. Janse van Vuuren, and M. Dunn, Africa’s Digital Platforms: Overview of Emerging Trends In The Market (South Africa: Impact2Impact, Cenfri, and FinMark Trust, 2020), https://cenfri.org /wp-content/uploads/Africas-digital-platforms-trends-report.pdf, at 4. The authors study the trends in eight African countries, including South Africa, and (at p. 2) report a significant increase – ‘robust growth’ – in digital platforms (‘a 37% increase year on year’ in 2019). See also the database on the digital platforms in these eight countries at http:// access.i2ifacility.org/Digital_platforms/. See also D. du Toit, S. Fredman, and M. Graham, ‘Towards legal regulation of platform work: Theory and practice’, Industrial Law Journal (ILJ), 41 (2020), 1493–1523 and the sources cited therein. Platform work is work organised around ‘the growing range of online platforms through which a “huge array” of services and products are offered in return for payment or otherwise’ (D. du Toit, ‘Platform work and social justice’, ILJ, 40 (2019), 1–11, at 3). Digital platforms include platforms providing online shopping, freelance services, goods rental, ticketing services, e-hailing, and other transport, courier, and logistics arrangements. Johnson et al., Africa’s Digital Platforms. Related terms include the ‘platform economy’ or the ‘on-demand’, ‘gig’, or ‘sharing economy’. Platform work can be either location-based (e.g. Uber drivers) or web-based (e.g. freelance graphic designers). See Section III.B. Du Toit et al., ‘Towards legal regulation of platform work’, 1493. Ibid., 1495.

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decent work to thrive,6 and new means to deliver on the constitutional promise of social justice.7 In the first part of the chapter, an overview is provided of the ‘archetype’ labour law rule in South Africa (with its historical roots in exclusionary practices) for determining who is an employee. This is followed by a consideration of the changing nature of work and the regulatory responses to non-standard forms of employment. The digital platform landscape in South Africa is subsequently explored, and its impact on employment and arrangements for work are considered, as well as responses to the developments, including (inconclusive) litigation by Uber drivers to ascertain their status as employees or otherwise. The chapter concludes with a reflection on the future direction of labour law in South Africa and highlights the importance of inclusive systems for social protection. Alternative strategies such as the Fairwork public ranking system for digital platforms8 and the various sites of regulation for ensuring compliance with labour standards are considered. Finally, the mechanisms in South Africa for social dialogue and public participation in the development of a labour and employment law regulatory framework that responds to platform work as well as to other technological disruptions in the world of work are considered.

II THE ARCHETYPE

Exclusionary practices and the enduring nature of the ancient distinction between an employee and an independent contractor9 lie at the heart of the traditional configuration of the employment relationship in South Africa and continue to influence developments, even as we move into the so-called fourth industrial revolution. A Traditional Configuration of the Employment Relationship The (traditional) configuration of the employment relationship, and its regulation in South Africa, is best explained by journeying through the historical context and examining the sources of South African labour law. (i) Historical Overview Until 1994, exclusionary and unjust laws and practices based on race operated in all spheres of life. In employment law,10 racial exclusion was achieved through provisions, such as those in the Industrial Conciliation Act (ICA),11 that, in addition to the independent contractor 6

7

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See S. Fredman, D. du Toit, M. Graham et al., ‘Thinking out of the box: Fair work for platform workers’, King’s Law Journal, 31(2) (2020), 236–49, https://doi.org/10.1080/09615768.2020.1794196. The Constitution of the Republic of South Africa 1996 was adopted to, among other things, ‘heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights’ (Preamble). See Fredman et al., ‘Thinking out of the box’; Fairwork website, https://fair.work/en/fw/homepage/. The Fairwork project, based at the Oxford Internet Institute and the WZB Berlin Social Science Center, evaluates and ranks the conditions of work of digital platforms in thirty countries, including South Africa, against five principles of fair work. The distinction between contracts of locatio conductio operis and those of locatio conductio operarum, rooted in Roman law, has influenced the development of South African law, stemming from the mixed legal system in South Africa with aspects inherited from both the Dutch legal system and the English common law system. It was only in the mid-1980s, during the height of the struggle against Apartheid, that a more racially inclusive labour law system began to take shape; in 1994 South Africa transitioned to democracy and adopted a Bill of Rights that guaranteed fair labour practices and the right to equal protection of the law. Industrial Conciliation Act 1924.

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distinction, shaped the meaning of who is an employee. More specifically, the ICA excluded ‘pass bearing’ persons12 (who were African men)13 from the definition of an employee and prohibited the registration of Black trade unions. The exclusion of African workers endured, although the ICA was amended in 1930 to permit the extension of collective agreements to workers excluded from the definition of an employee. However, rather than being an act of inclusion, the objective was to protect white workers from being ‘undercut by cheap African labour’.14 It was only in the mid to late 1970s that it became clear that the segregationist approach to industrial relations was untenable. South Africa experienced slow economic growth and increased labour unrest: unregistered African trade unions emerged and sporadic strikes were initiated.15 These developments resulted in the appointment of the Wiehahn Commission in 1977 to examine labour legislation and industrial relations in the country, and make recommendations that would bring peace to industrial relations.16 The Commission provided its recommendations in 1979, notably recommending that: (a) African workers be permitted to join registered trade unions and be directly represented on industrial councils or conciliation boards; (b) an industrial court with extensive jurisdiction over unfair labour practices be established; and (c) the definition of ‘employee’ be amended to include African workers within the scope of labour legislation.17 Many of the recommendations were accepted and amendments to the ICA were enacted; in 1981, it was renamed the Labour Relations Act.18 This laid the foundation for inclusive trade union federations19 to emerge and for agreement between the federations and employers20 on the importance of compliance with the revisions, ultimately leading to the Laboria Minute signed by the union federations and the South African Employer’s Consultative Committee on Labour Affairs (SACCOLA) in 1990 and formally recognised by the government,21 paving the way for the constitutional dispensation’s more sophisticated and racially inclusive approach to the regulation of labour relations in South Africa. 12

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S. 24 of the Industrial Conciliation Act 1924 defined an employee as excluding any person ‘whose contract of service or labour is regulated by any Native Pass Laws and Regulations or by Act No. 15 of 1911 or any amendments thereof or any regulations thereunder, or by Act No. 40 of 1894 of Natal or any amendment thereof’. See also S. Godfrey, ‘Labour relations law in context’ in D. Du Toit, S. Godfrey, C. Cooper et al. (eds.), Labour Relations Law: A Comprehensive Guide, 6th ed., 3–69 (South Africa: LexisNexis, 2015), 6. A curious loophole was that African women did not have to carry passes until 1952, and therefore were not excluded from the ICA until 1952 when the Native Law Amendment Act 54 of 1952 was introduced to close the loophole. D. Collier and E. Fergus (eds.), Labour Law in South Africa: Context and Principles (South Africa: Oxford University Press Southern Africa, 2018), 23. See also Godfrey, ‘Labour relations law in context’, 8. Godfrey, ‘Labour relations law in context’, 7. The Apartheid regime and its laws and policies that enforced segregation remained entrenched for several decades, giving rise to a racially exclusive system, and in 1956 revisions to the ICA gave legal force to job reservations (for the benefit of white workers) and imposed a prohibition on the registration of any new multi-racial trade union. Collier and Fergus, Labour Law in South Africa, 26. See also ‘Apartheid legislation 1850s–1970s’, South African History Online (SAHO) (last updated 14 October 2022), www .sahistory.org.za/article/apartheid-legislation-1850s-1970s. See ‘The Durban strikes and the resurgence of the trade union movement in 1973’, SAHO (last updated 1 March 2022), www.sahistory.org.za/article/durban-strikes-and-resurgence-trade-union-movement-1973. W. Visser, ‘The Wiehahn Commission and the miners’ strike of 1979: White labour and the beginning of the end of Apartheid in South Africa’, Journal for Contemporary History, 36(3) (2011), 52. Collier and Fergus, Labour Law in South Africa, 26; Godfrey, ‘Labour relations law in context’, 10. Ibid. Such as the Congress of South African Trade Unions (COSATU) and the National Council of Trade Unions (NACTU). The South African Employer’s Consultative Committee on Labour Affairs (SACCOLA). Ibid.

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It is against this backdrop and the deep scars of decades of legislated discrimination and entrenched systemic injustice, poverty, and inequality22 that the current framework should be considered. South Africa has high levels of unemployment;23 approximately 34 per cent of workers are engaged in the informal economy.24 Black people, and women in particular, are disproportionately represented in informal and low-paid work and are more likely to be unemployed. (ii) The Scope and Application of Labour Law Post-1994 The employment relationship in South Africa today is shaped by the provisions of the Constitution of the Republic of South Africa 1996, as well as international law (the labour standards of the International Labour Organization [ILO]) and various labour statutes. In this regard, the primary labour statutes25 differentiate between an employee and an independent contractor, affording rights to an employee only. In limited cases, rights are afforded to workers, a term that, unlike the term employee, does not expressly exclude independent contractors.26 The Constitution, too, uses a more inclusive term – everyone – with the Bill of Rights providing that ‘everyone has the right to fair labour practices’;27 however, the term has been interpreted restrictively. In South Africa, the Constitution is the supreme law of the country; law or conduct inconsistent with the Constitution is invalid.28 The Bill of Rights, in chapter 2 of the Constitution, provides an extensive list of fundamental human rights and freedoms that the state cannot encroach.29 In addition, the Bill of Rights ‘binds a natural or a juristic person if, and to the extent that, it is applicable’.30 The Constitution affirms the importance of international law and requires that a court, tribunal, or forum interpreting the Bill of Rights(a) must promote the values that underlie an open and democratic society based on human dignity, equality and freedom; (b) must consider international law; and (c) may consider foreign law.31 22

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‘South Africa is one of the most unequal countries in the world, and the COVID-19 pandemic is exacerbating these inequalities’ (D. Francis, I. Valodia, and E. Webster, ‘Politics, policy, and inequality in South Africa under COVID-19’, Agrarian South Journal of Political Economy, 9(3) (2020), 342–55, at 346). While the official (StatsSA) unemployment rate in the fourth quarter of 2021 stood at 32.5 per cent, there are estimates that ‘the COVID-induced lockdown and the associated economic slowdown are likely to lead to a significant increase in unemployment, with some estimates forecasting unemployment of 50%’ (Francis et al., ‘Politics, policy and inequality’, 352). Ibid., 347. These being the Labour Relations Act 1995, the Basic Conditions of Employment Act 1997, and the Employment Equity Act 1997. Notably, the Occupational Health and Safety Act 1993 and the Compensation for Occupational Injuries and Diseases Act 1993 do not expressly exclude an independent contractor from the definition of an employee; similarly, the National Minimum Wage Act 2018 introduces the definition of a worker, which also does not exclude an independent contractor. Although the term ‘worker’ in the National Minimum Wage Act 2018 does not expressly exclude an independent contractor, the corresponding term ‘employer’ is used in determining the application of the Act (the Act applies ‘to all workers and their employers’ (s. 3)), which arguably may have the same effect as an express exclusion of independent contractors. S. 23 of the Constitution of the Republic of South Africa Act 1996. Ss. 1(c) and 2 of the Constitution of the Republic of South Africa 1996. T. Cohen, ‘Scope and application’ in D. Du Toit, S. Godfrey, C. Cooper et al., Labour Relations Law: A Comprehensive Guide, 6th ed., 71–110 (South Africa: LexisNexis, 2015), 73. S. 8(2) of the Constitution of the Republic of South Africa 1996. S. 39(1) of the Constitution of the Republic of South Africa 1996.

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Section 36 of the Constitution provides that law of general application, which would include labour legislation, may limit the rights in the Bill of Rights to the extent that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality, and freedom. As such, although section 23(1) of the Constitution provides that ‘everyone’ has the right to fair labour practices, and section 23(2) shifts to the term ‘worker’, providing the right of every worker to freely associate and be part of a trade union, to engage in collective bargaining, and to strike, which seems to cast a wide net for legal protection, interpretation of the Constitutional right to fair labour practices nevertheless remains tethered to the archetypal configuration of the employment relationship. (iii) Interpreting the Constitutional Right to Fair Labour Practices Although section 23 uses the term ‘everyone’ as opposed to ‘employee’, the juxtaposing of ‘labour practices’ orientates the section towards an employment relationship between workers, employers, and their respective organisations. Hence, the right to fair labour practices is not seen to extend protection beyond the class of persons intended by the provision as a whole.32 This was confirmed in the Constitutional Court decision in South African National Defence Union v. Minister of Defence,33 where it was held that the term ‘worker’ in section 23(2) includes workers who perform work in relationships similar or ‘akin’ to employment.34 While section 23 provides the foundation for labour rights to be extended beyond workers who are employees in terms of a contract of employment, to benefit from the Constitutional right to fair labour practices, a worker must nonetheless be in a work relationship that has the qualities of an employment relationship. Furthermore, in South African National Defence Union v. Minister of Defence, the court stressed the obligation to consider international law and highlighted that ‘the conventions and recommendations of the International Labour Organization (the ILO), one of the oldest existing international organizations, are important resources for considering the meaning and scope of “worker” as used in s. 23 of the Constitution’.35 (iv) The Application of International Standards in South African Law The ILO labour standards, in the form of conventions36 and recommendations, have shaped, and continue to shape, South African labour law.37 In the context of determining who is an employee, the approach in South Africa38 is consistent with the ILO’s Employment Relations Recommendation 198 of 2006, which provides guidance on determining the existence of an employment relationship and mechanisms to deal with ‘disguised employment’. 32

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See H. Cheadle, ‘Labour relations’ in H. Cheadle and D. Davis, South African Constitutional Law: The Bill of Rights, ch. 18 (South Africa: LexisNexis, 2020), s. 18.2. South African National Defence Union v. Minister of Defence & Another (1999) 20 ILJ 2265 (CC). The Constitutional Court held that soldiers in the South African National Defence Force (SANDF) were covered by s. 23(2) of the Constitution although expressly excluded from the application of labour legislation regulating, among other issues, collective bargaining. South African National Defence Union (n. 33), para. 24. Ibid., para. 25. Out of the twenty-seven Conventions ratified by South Africa, twenty-four are in force and include the eight fundamental Conventions; see www.ilo.org/dyn/normlex/en/f?p=1000:11200:0::NO:11200:P11200_COUNTRY_ ID:102888 for a complete list of Conventions that have been ratified. See s. 39 and the provisions on international law in ch. 14 of the Constitution 1996. See Code of Good Practice: Who Is an Employee, Government Gazette, No. 1744 (2006).

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Paragraph 9 of Recommendation 198 indicates that determination of the existence of an employment relationship should be guided by facts relating to: (a) the work being performed; and (b) the remuneration of the worker, regardless of the contract arrangements, or other factors, stating otherwise (the approach is one of ‘substance over form’), and specific indicators are provided in paragraph 13 to establish the existence of an employment relationship, including: (a) the fact that the work: is carried out according to the instructions and under the control of another party; involves the integration of the worker in the organization of the enterprise; is performed solely or mainly for the benefit of another person; must be carried out personally by the worker; is carried out within specific working hours or at a workplace specified or agreed by the party requesting the work; is of a particular duration and has a certain continuity; requires the worker’s availability; or involves the provision of tools, materials and machinery by the party requesting the work; (b) periodic payment of remuneration to the worker; the fact that such remuneration constitutes the worker’s sole or principal source of income; provision of payment in kind, such as food, lodging or transport; recognition of entitlements such as weekly rest and annual holidays; payment by the party requesting the work for travel undertaken by the worker in order to carry out the work; or absence of financial risk for the worker.39 Recommendation 198 suggests the inclusion of a legal presumption that an employment relationship exists based on the presence of the circumstances reflected in the indicators.40 In this regard, amendments introduced in 2002 had already incorporated a presumption of employment into the Labour Relations Act (LRA), the Basic Conditions of Employment Act (BCEA), and the Employment Equity Act (EEA) in South Africa. The presumption assists with interpreting and applying the statutory definition of an employee, and the starting point is therefore the definition of an employee. (v) The Definition of an Employee and Presumption of Employment The LRA, the BCEA, and the EEA define an employee as (a) any person, excluding an independent contractor, who works for another person or for the State and who receives, or is entitled to receive, any remuneration; and (b) any other person who in any manner assists in carrying on or conducting the business of an employee.41 [italics added for emphasis] Although independent contractors are expressly excluded from the definition, the presumption of employment – a rebuttable presumption – will assist a worker who is engaged as an independent contractor in a sham arrangement that disguises an employment relationship.

39 40

41

Para. 13 of Convention 198. In this regard, para. 11 of Recommendation 198 provides that for the purpose of facilitating the determination of the existence of an employment relationship, members should, within the framework of the national policy referred to in this Recommendation, consider the possibility of the following: (a) allowing a broad range of means for determining the existence of an employment relationship; (b) providing for a legal presumption that an employment relationship exists where one or more relevant indicators is present; and (c) determining, following prior consultations with the most representative organizations of employers and workers, that workers with certain characteristics, in general or in a particular sector, must be deemed to be either employed or self-employed. S. 213 of the LRA, which mirrors the definitions in the BCEA and the EEA.

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The presumption, read together with the Code of Good Practice: Who Is an Employee,42 provides a comprehensive framework for determining whether a worker is an employee, and is expressly intended to assist with identifying employment relationships in various arrangements including ‘disguised employment, ambiguous employment relationships, atypical (or nonstandard) employment and triangular relationships’.43 The presumption applies to persons earning below an earnings threshold44 (and, above the threshold, the presumption provides guidance to determine who is an employee) where a person alleges that they are an employee in terms of the LRA or the BCEA (or other employment statutes) and any one of the following seven factors are present: (a) the manner in which the person works is subject to the control or direction of another person; (b) the person’s hours of work are subject to the control or direction of another person; (c) in the case of a person who works for an organisation, the person forms part of that organisation; (d) the person has worked for that other person for an average of at least 40 hours per month over the last three months; (e) the person is economically dependent on the other person for whom he or she works or renders services; (f) the person is provided with tools of trade or work equipment by the other person; or (g) the person only works for or renders services to one person.45 The party claiming to be an employee must establish the facts relied upon in terms of the statutory presumption.46 The presumption is rebuttable and applies alongside the common law test of employment. In terms of the common law, initially the control test47 was used to determine the existence of an employment relationship;48 over time this was replaced by the dominant impression test, which draws on the overall impression gleaned from the terms of the contract.49 The dominant impression test (see Table 19.1) remains relevant in determining an employment relationship, although the focus has expanded to the realities of the relationship: the realities test looks beyond the terms chosen by the parties in terms of the applicable contractual arrangements. In essence, the relevant considerations that demarcate employment and selfemployment are whether the facts establish ‘[a] [a]n employer’s right of supervision and control; [b] whether the employee forms an integral part of the organisation with the employer; and [c] the extent to which the employee [i]s economically dependent upon the employer’.50 42

43 44 45 46 47

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See s. 200A of the LRA and s. 83A of the BCEA on the presumption of employment. See also the Code of Good Practice (n. 38). Item 2, Code of Good Practice. With effect from 1 March 2022 the earnings threshold is ZAR 224 080.30. S. 200A of the LRA. Item 15, Code of Good Practice. The control test is premised on the idea that an essential requirement of the employment relationship is that the employer has the right to direct the employee as to what work has to be done and the manner in which it should be done; see Cohen, ‘Scope and application’, 90. The control test was primarily used for determining the employer’s vicarious liability, rather than assisting in distinguishing between independent contractors and employees. R. le Roux, ‘The evolution of the contract of employment in South Africa’, ILJ, 39 (2010), 139–65, at 148–9. Ibid., 155. Collier and Fergus, Labour Law in South Africa, 79, citing State Information Technology Agency (Pty) Ltd v. Commission for Conciliation, Mediation and Arbitration & Others (2008) 29 ILJ 2234 (LAC).

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table 19.1 The dominant impression test Employee

Independent contractor

Object of the contract is to render personal services. Employee must perform services personally.

Object of contract is to perform a specified work or produce a specified result. Independent contractor may usually perform through others. Employer may choose when to make use of Independent contractor must perform work (or produce services of employee. result) within period fixed by contract. Employee obliged to perform lawful Independent contractor is subservient to the contract, not commands and instructions of employer. under supervision or control of employer. Contract terminates on death of employee. Contract does not necessarily terminate on death of employee. Contract also terminates on expiry of period of Contract terminates on completion of work or production service in contract. of specified result.

B Establishing an Employment Relationship The locus classicus for the dominant impression test is Smit v. Workmen’s Compensation Commissioner,51 where the Appellate Division was required to determine the status of an insurance agent in terms of the Workmen’s Compensation Act of 1941. The task of the court was to determine the nature of the relationship between the agent and the company by observing the ‘true construction of the contract which then existed between them’.52 In this regard, the court summarised a list of factors indicating the difference between a contract of employment and a contract of service entered into by an independent contractor (see Table 19.1). These factors remain relevant today and have been incorporated into the Code of Good Practice: Who Is an Employee.53 Applying the relevant factors to Uber drivers54 does not produce an unequivocal result, although the classification as independent contractor does seem ill-suited.55 Uber drivers must perform services personally and may not perform through others; the contract endures indefinitely, subject to the platform’s contract terms, and will terminate on the driver’s death.56 Much of the work performed by Uber drivers, and the remuneration they receive, is controlled by

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1979 (1) SA 51 (A). Ibid., at 51H–52A. Item 32, Code of Good Practice. The Code of Good Practice was described as having ‘codified the South African case law on the issue’ by the commissioner of the Commission for Conciliation, Mediation and Arbitration (CCMA, South Africa’s independent employment tribunal) in Uber South Africa Technological Services (Pty) Ltd v. National Union of Public Service and Allied Workers and South African Transport and Allied Workers Union obo Morekure and others [2017] 11 BALR 1247 (CCMA) at footnote 1. The arrangements between the digital platform and drivers working for e-hailing platforms are typical of locationbased platform work, and reflect the type of relationship between platform workers and digital platforms, and the precarious nature of platform work more generally. The CCMA, although maintaining that Uber drivers are employees, concedes (albeit in an action brought against Uber SA and not Uber BV) that ‘certain factors indicate that drivers are employees and others indicate that they are not’, in Uber South Africa [2017] (n. 53), at para. 52. However, the CCMA decision was overturned on review in Uber South Africa Technology Services (Pty) Ltd v. National Union of Public Service and Allied Workers (NUPSAW) and others [2018] 4 BLLR 399 (LC). See further Section IV.B.

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algorithms and technology provided by the Uber app. However, it is not a foregone conclusion that Uber drivers would be (or would want to be)57 classified as employees.58 Moreover, as Fredman et al. point out, ‘platforms are adept at reconfiguring their conditions of work to avoid the legal definition of employee, or at fragmenting their corporate structure to evade the jurisdiction of courts in the region where workers in fact find themselves’.59 While change in the labour market is a constant,60 the emerging technologies of the so-called fourth industrial revolution are likely to accelerate the rate of change and outpace legal reform. For example, although various forms of atypical work are recognised, and regulated, in South Africa, identification of an employment relationship remains pivotal for a worker to qualify for protection, regardless of whether the work is ‘standard’ or ‘atypical’, leaving platform workers outside the net of protection. This is so, notwithstanding the intention of the amendments being to regulate atypical work to ‘provide for the liability of employer’s obligations in order to prevent simulated arrangements or corporate structures that are intended to defeat the purposes of the [Labour Relations] Act or any other employment law’.61

III THE (CHANGING) NATURE OF WORK

‘Typical’ or standard employment describes a model of employment governed by a contract of employment and usually conducted on a full-time basis for an indefinite period directly with an employer.62 Standard employment entails work governed by formal arrangements and regulated by labour law. However, standard employment is not the norm in many developing and African countries, where work is frequently performed in the informal economy.63 The challenge is therefore not only to ensure that atypical workers are treated fairly and engaged in decent work but also to transition work from informality to the formal economy.64 57

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Fredman et al., ‘Thinking out of the box’, 244, discuss a survey involving workers employed by eleven digital platforms in South Africa and point out that ‘of the 29 workers who responded, 16 preferred to be seen as independent contractors’. However, the authors caution that ‘this could be because they conflate self-employed status with the flexibility which they value, even if it is illusory in practice, or because they have imbibed the rhetoric of the platform economy, and regard themselves as entrepreneurs. This reinforces the need to fashion decent work standards for all workers, regardless of classification.’ The Labour Court in Uber SA v. NUPSAW and others [2018] emphasizes, at para. 98: [T]his judgment does no more than conclude that on the facts, the drivers were not employees of Uber SA, and that they therefore have no right to refer an unfair dismissal dispute to the CCMA as against Uber SA. Whether the drivers are employees of Uber BV (either alone or in a co-employment relationship with another or other parties), or whether they are independent contractors of Uber BV, is a matter that remains for decision on another day. It was not the question before the commissioner, and it is not the question before this court. Fredman et al., ‘Thinking out of the box’, 236. For more on the South African context, see, for example, J. Theron, ‘The shift to services and triangular employment: Implications for labour market reform’, ILJ, 29 (2008), 1–22. Explanation of Clause 46 in the Memorandum of Objects on Labour Relations Amendment Bill 2012. Labour Relations Amendment Bill B16 – 2012. The explanation goes on to emphasise the importance of providing for employer liability ‘in the context of subcontracting and outsourcing arrangements if these arrangements are subterfuge to disguise the identity of the true employer’. Collier and Fergus, Labour Law in South Africa, 9, 13; P. Benjamin, ‘Decent work and non-standard employees: Options for legislative reform in SA – Discussion document’, ILJ, 31 (2010), 845. According to ILO statistics, ‘informal employment is the main source of employment in Africa, accounting for 85.8 per cent of all employment, or 71.9 per cent agriculture’ (ILO, Women and Men in the Informal Economy: A Statistical Picture, 3rd ed. (Geneva: International Labour Office, 2018), www.ilo.org/wcmsp5/groups/public/--dgreports/---dcomm/documents/publication/wcms_626831.pdf, 29). See the ILO Transition from the Informal to the Formal Economy Recommendation, 2015 (No. 204) [hereinafter R204], www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_ILO_CODE:R204.

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Work in the informal economy is generally recognised as ‘a major challenge for the rights of workers including the fundamental principles and rights at work, and for social protection, decent working conditions, inclusive development and the rule of law’.65 Non-standard or atypical work arrangements provide employers with a flexible supply of labour to accommodate variations in demand,66 and to minimise the cost (and risks) associated with employment. In turn, workers engaged in atypical work arrangements are likely to be engaged on inferior terms and lack the employment security enjoyed by employees engaged on an indefinite basis. A The Evolving Shape and Forms of Atypical Work Atypical forms of work commonly result from conditions of informality and the processes of casualisation and externalisation. In this regard: Casualisation refers to a form of employment that is either part-time or temporary (in that it is for a fixed term), or both part-time and temporary. The important point to note about casualisation is that there is still a direct employment relationship with an employer. On the other hand, externalisation occurs where the employment contract is replaced by a commercial contract.67

Externalisation involves the use of commercial contracts, and may include the use of intermediaries,68 including labour brokers and contractors, to secure a supply of labour, while avoiding employment. In this regard, work performed in the platform economy tends to involve an externalised and triangular (or multi-party) relationship,69 in which there is no direct employment relationship between the worker and the platform, and the platform operates as an intermediary between the worker and the customer. B Regulatory Responses to Non-standard Forms of Employment Amendments to the LRA, proposed in 2012,70 and enacted in 2014,71 sought to ‘protect three categories of non-standard employees: employees placed by temporary employment services, employees engaged on fixed term contracts and part-time employees’.72 The amendments were incorporated into chapter IX, titled ‘Regulation of Non-Standard Employment and General Provisions’, regulating employees employed on a part time basis,73 those employed on fixed-term contracts,74 and those placed temporarily with a client through a labour broker (‘temporary employment service’).75 65 66

67 68

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Preamble, R204. It also allows workers who may not want or be able to take up full-time/permanent work to enter the labour market. For example, women with care responsibilities may seek part-time work. Collier and Fergus, Labour Law in South Africa, 13. Externalisation need not involve an intermediary, however, and includes, for example, an arrangement whereby an employee’s contractual arrangements are changed from ‘employment’ to ‘independent contractor’ to avoid the costs associated with employment. An example is drivers whose contractual terms are changed from employment to an ‘owner-driver’ (independent contractor) contractual arrangement. See also Building Bargaining Council (Southern & Eastern Cape) v. Melmons Cabinets CC I & another (2001) 22 ILJ 120 (LC). For example, arrangements with the e-hailing service platform Uber involve multiple parties, including Uber SA and Uber BV. Labour Relations Amendment Bill B16 – 2012. Labour Relations Amendment Act 6 of 2014. Labour Relations Amendment Bill (n. 70). S. 198C and 198D of the LRA. S. 198B and 198D of the LRA. S. 198A and 198D of the LRA.

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According to section 198A, a temporary employment service (TES) is any person who, for reward, procures for or provides to a client other persons who perform work for the client and are remunerated by the TES; the TES is the employer of the persons whom it has procured or provided to the client. Section 198A(3)(a) introduced a mechanism to prevent the abuse of TES by way of a deeming provision: an employee employed by a TES who does not engage in ‘temporary services’76 and earns below a determined remuneration threshold77 will be deemed to be employed by the client. Put more simply, if a low-earning employee is placed with a client for more than three months and they are no longer a substitute for a temporarily absent employee of the client, that employee will be deemed to be employed by the client.78 Fixed-term employees are those employed on a contract that is fixed to end at the occurrence of an event, the completion of a task, or a fixed date, notwithstanding the employee’s normal or agreed retirement age.79 Where an employer contravenes section 198B(3),80 the contract of employment may be construed as being indefinite as the characteristics of a fixed-term contract would have been eroded. The LRA accepts that there are justifiable instances where a fixed-term contract is warranted.81 Lastly, part-time workers are those ‘remunerated wholly or partly by reference to the time that the employee works and who works less hours than a comparable full-time employee’.82 Protection is reserved for specified part-time employees.83 In terms of the protection afforded to these employees, the LRA states that such employees must be treated on the whole not less favourably than a comparable full-time employee doing the same or similar work and must be provided with access to training and skills development on similar terms as a comparable fulltime employee doing the same or similar work.84 The LRA also requires that the employer provide part-time employees with the same access to opportunities to apply for vacancies provided to full-time employees.85 However, the regulatory responses to non-standard forms of work, at best, may have improved the rights of workers who labour, under fixed-term, part-time, or agency

76

77

78 79 80

81 82 83

84 85

S. 198 A(1) of the LRA defines ‘temporary services’ as work for a client by an employee: (a) for a period not exceeding three months; (b) as a substitute for an employee of the client who is temporarily absent; or (c) in a category of work and for any period of time which is determined to be a temporary service by a collective agreement concluded in a bargaining council, a sectoral determination or a notice published by the Minister, in accordance with the provisions of sub-ss. (6) to (8). This has been outlined in the BCEA and is currently set at ZAR 205 433.30, which is roughly GBP 9,625 or USD 12,430 per annum. A. van Niekerk and N. Smit (eds.), Law@work, 5th ed. (South Africa: LexisNexis, 2019), 72. S. 198B(1) of the LRA. S. 198B(3) of the LRA lays out that employing an employee on a fixed-term contract or successive fixed-term contracts for longer than three months is permissible only if: (a) the nature of the work for which the employee is employed is of a limited or definite duration; or (b) the employer can demonstrate any other justifiable reason for fixing the term of the contract. See list found in s. 198B(4) of the LRA. S. 198C(1)(a) of the LRA. Exclusions are set out in s. 198C(2) and are part-time employees who: earn above the BCEA earnings threshold (see n. 44); or work for less than twenty-four hours a month; or are in the first three months of continuous employment with an employer; or work for an employer with fewer than ten employees (or fewer than fifty employees where the employer conducts only one business and that business, which is not part of an existing or dissolved business, has been in operation for less than two years). S. 198C(3)(a)–(b) of the LRA. S. 198C(5) of the LRA.

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arrangements, alongside employees in traditional forms of standard employment, but they have not resulted in the extension of rights to workers performing new forms of work linked to the platform economy.

IV THE PROTOTYPES

Connectivity continues to expand on the African continent,86 and not surprisingly this is accompanied by growth in the platform economy and the emergence of new platform businesses. A An Overview of Digital Platforms Operating in (and beyond) South Africa In a study of 8 countries on the continent,87 Johnson et al. identify a total of 365 digital platforms (64 per cent offered ‘place-based’88 activities) operating in these countries in 2019, amounting to ‘a 37% increase year on year’.89 Although most of these platforms are ‘homegrown’ (originating from countries in Africa), the data suggest that the platforms originating from outside the continent (such as Uber, Airbnb, and booking.com) benefit from ‘first-mover advantage’ and tend to have a dominant share of the market.90 Johnson et al. categorised the platforms as follows (with some platforms operating in more than one category):91 • • • • • • •

online shopping (goods) – 98 platforms (up from 67 platforms in 2018) online shopping (restaurants) – 24 platforms (down from 27 in 2018)92 freelance (services) – 91 platforms (up from 71 platforms in 2018) e-hailing – 81 platforms (up from 53 platforms in 2018) logistics/courier – 53 platforms (up from 38 platforms in 2018) rental – 36 platforms (up from 26 platforms in 2018) other – 33 platforms (up from 27 in 2018).

Of the countries included in the study, South Africa has the highest number of platforms (142) and users per platform.93 The next section considers the working arrangements that are typically in place between digital platforms and their workers, alongside gaps in the protection of workers contracted to these platforms.

86

87 88

89 90 91 92 93

It is estimated that sub-Saharan Africans’ internet usage increased from 7 per cent in 2010 to 28 per cent in 2019 (Johnson et al., Africa’s Digital Platforms, 5, citing International Telecommunications Union (ITU), Measuring Digital Development: Facts and Figures 2019 (2019), FactsFigures2019.pdf (itu.int)). Internet penetration tends to be higher in North African countries (e.g., Egypt, Morocco, and Tunisia all have penetration rates above 65 per cent). The eight countries are Ghana, Kenya, Nigeria, Rwanda, South Africa, Tanzania, Uganda, and Zambia. Place-based, or location-based, activities have the potential to absorb labour and may contribute to job creation on the continent. Johnson et al. found that ‘4.8 million individuals earned an income through transactional platforms and over 60% reported this income as being essential for meeting basic needs’ (Johnson et al., Africa’s Digital Platforms, 2). Ibid. Ibid., 5. Ibid., 2–3. This downward trend could represent the merging of platforms and not necessarily fewer suppliers trading online. Johnson et al., Africa’s Digital Platforms, 7.

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B Working Arrangements between Digital Platforms and Gig-Economy Workers Globally, the ‘Uber driver’ seems emblematic of the location-based gig-economy worker94 in terms of the working arrangements between the driver and the platform, and this is the case in South Africa too. In terms of the contractual arrangements in place, Uber BV is the contracting party in an arrangement with an Uber-driver, or a partner-driver, or a partner,95 and: Uber BV does not control or direct the drivers in their performances under the services agreement – the drivers retain the sole right to determine when and for how long they will use the Uber App. The parties to the agreement specifically agree that the relationship between them is solely that of a principal and independent contractor. They specifically agree that the services agreement is not an employment agreement, nor does it create an employment relationship between Uber BV and the driver.96

Uber-drivers are yet to directly challenge the veracity of Uber BV’s claim that they are not employees in terms of South African labour law, perhaps discouraged by their failed attempts to claim an employment relationship with Uber South Africa Technology Services (Pty) Ltd (Uber SA). Uber SA provides marketing and related support services to Uber BV and, although it may assist drivers with ‘on-boarding’ and related support, Uber SA does not have the power to enter into, or terminate, contracts between Uber BV and its drivers.97 Consequently, the Labour Court has maintained that, in the absence of any contractual relationship between Uber SA and Uber-drivers, there can be no question that Uber SA is the employer.98 However, the question of whether Uber-drivers are employed by Uber BV was left open,99 and it is likely that fresh litigation100 will be launched in the near future – this time against Uber BV – following the United Kingdom decision in Uber BV v. Aslam.101 94

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Web-based platform economy workers – who typically perform ‘crowd work’ consisting of microtasks, mostly of a clerical nature – have not been explored in detail in this chapter. Another type of web-based platform worker is the social media / digital influencer who provides services in the marketing industry. According to the Influencer Marketing Hub, ‘[f]rom a mere $1.7 billion at the time of this site’s beginning in 2016, influencer marketing grew to have an estimated market size of $16.4 billion in 2022. Furthermore, this is expected to jump a further 29% to an estimated $21.1 billion in 2023’; https://influencermarketinghub.com/influencer-marketing-benchmark-report/#toc2. In the South African context, see M. Iqani, ‘Picturing luxury, producing value: The cultural labour of social media brand influencers in South Africa’, International Journal of Cultural Studies, 22(2) (2019), 229–47; and the Advertising Regulatory Board Code of Advertising Practice (Advertising Code), which includes an appendix that regulates social medial marketing done by digital influencers. More generally on crowd work, see ILO, Digital Labour Platforms and the Future of Work: Towards Decent Work in the Online World (Geneva: International Labour Office, 2018), https:// bit.ly/3XEwiDc; and the Fairwork cloud-work ratings, https://fair.work/en/ratings/cloudwork/. These arrangements are discussed by the Labour Court in Uber SA v. NUPSAW and others [2018] (n. 55), at paras. 22– 4. It is the arrangements concerning an Uber driver or a partner driver that give rise to the question of employment status. Ibid., para 30. Ibid., para 27. Although Uber drivers were initially successful in persuading the CCMA to maintain that their status be equated to that of an employee in South Africa – see Uber SA [2017] (n. 53) – the drivers’ success was short-lived as the CCMA’s decision was successfully reviewed by the Labour Court (albeit on a jurisdictional question, as Uber South Africa Technology Services (Pty) Ltd had been cited as the employer and Uber BV should have been joined as a respondent) in Uber SA v. NUPSAW and others [2018] (n. 55). ‘Whether the drivers are employees of Uber BV (either alone or in a co-employment relationship with another or other parties) or whether they are independent contractors of Uber BC is a matter that remains for decision on another day’ (Uber South Africa v. NUPSAW and others [2018] (n. 55), para. 98. On the plans for a potential class action, see ‘Prominent human rights lawyers launch class action for South African Uber drivers’, Leigh Day (22 February 2021), https://bit.ly/3NYGaUX. Uber BV and others (appellants) v. Aslam and others (respondents) (2021) UKSC 5.

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Similarly, drivers performing services for online shopping platforms (such as Takealot.com) in South Africa are engaged as independent contractors. Takealot is the largest online retailer in South Africa,102 and as such will likely come under scrutiny as a leading platform (in the eCommerce category) as part of the Online Intermediation Platforms Market Inquiry (OIPMI), conducted by the Competition Commission to ensure that the leading platforms ‘do not irreversibly tip toward a single dominant operator’.103 Takealot drivers are engaged as a ‘delivery team driver partner’, and, although its drivers have not formally challenged their employment status, an online review suggests that the working arrangements raise questions around conditions of work and the drivers’ employment status and are less than satisfactory from the drivers’ perspective.104 Similarly, workers who contract with domestic work / cleaning platforms (such as sweepsouth. com and Domestly) are engaged as self-employed workers.105 The working conditions for many platform workers are below par and the lack of social security and employment protection is deeply felt. Even if the indicators of employment (the precondition for employment rights) are present, securing rights would require litigation; however, as Du Toit et al. explain, case-by-case litigation ‘does not offer a viable means of addressing the lack of legal protection experienced by platform workers in general’, and ‘even if platform workers are held to be “employees”, the benefits they will gain will be qualified’.106 As a starting point, the requirement for employment status to access decent work standards and fair and equitable treatment as a worker should be abandoned. Fredman et al. argue instead,

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As a result of numerous acquisitions, it is reported that Takealot experienced a 41 per cent revenue increase in the sixmonth period up to September 2020, notwithstanding lockdown restrictions that prevented Takealot from operation for several weeks during this period (A. Madubela, ‘With a 10-year lead, can the leviathan that is Takealot be rivalled?’, news24 (26 March 2021), https://bit.ly/44skuWM. That said, Takealot’s market share of online retail may change in coming years, as Amazon has plans to launch in South Africa. Competition Commission, OIPMI Provisional Summary Report (July 2022), www.compcom.co.za/wp-content /uploads/2022/07/OIPMI-Provisional-Summary-Report.pdf. On the terms of reference for the OIPMI, see Competition Commission, Terms of Reference: Draft for Public Comment (19 February 2021), www.compcom.co .za/wp-content/uploads/2021/02/OIPMI-Draft-ToR-19-02-2021.pdf. However, the inquiry is concerned with competition, and barriers to entry, in digital platform markets and is not concerned with the conditions of work for workers in the digital economy. Of the eleven ‘employee’ reviews on the site, four are positive, with one worker indicating: ‘It’s a good company and workable, as a family man you [are] . . . able to put the food on the table and the working environment is also good all the time.’ The following comments that raise concerns are included among the reviews: ‘[E]ven though you are an independent contractor and it’s a part time gig or side hustle, you get threatened for not being shifted you get fined’; ‘As a contractor at takealot/MrD you provide your own resources car, petrol, cellphone, data and airtime of your own without these you are not able to work or function but you are threatened if you don’t come for a shift even though you are independent, they don’t provide anything’; ‘It was tough because I did not have insurance for my car so I stopped working the when I got an acident [sic] and my car did not work again. They should also assist us with insurance and petrol cards’; ‘It’s not easy doing deliveries here you start working at 5 Mondays and 6 everyday knocking off at 21.00 and at 22.00 on a Friday and Saturday nights. No lunch you eat as you go and there are too much fines and deductions’; ‘It’s not a job that you will intend on working for ever, because you will work till you feel you wonna [sic] die. They treat people like nothing, there’s no level of respect. It’s my first month working there but by January am leaving, or if the pay doesn’t meat [sic] my expectations I will leave on my first my [sic]. And also you will get fined for things you don’t know. Don’t come here if you were expecting to see Jesus because you fine [sic] the devil.’ The online ‘Takealot.com Employee Reviews for Driver’ are available at https://za.indeed.com/cmp/ Takealot.com/reviews?fjobtitle=Driver. Fredman et al., ‘Thinking out of the box’, 244. Du Toit et al., ‘Towards legal regulation of platform work’, 1499.

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based on the principles developed by the Fairwork project,107 for a ‘floor of basic worker rights’ together with a public ranking system for digital platforms.108

V ‘UBERISATION’: A MULTIFACETED REGULATORY RESPONSE

Litigation against digital platforms has yet to bear fruit for platform workers in South Africa. Legislative amendments to address atypical work have had a narrow focus (part-time, fixed-term, and temporary employment services) requiring an employment relationship and have largely disappointed atypical workers and their representatives.109 More recently, an amendment that defines a digital labour platform and establishes the conditions under which the platform is the employer of a worker has been proposed, albeit in the (limited) context of the Employment Services Act 4 of 2014.110 However, this, and other proposals to review the definition of an employee and to extend protection to atypical workers are contested and are unlikely to result in significant legislative reform any time soon. Instead of trying to bring platform workers ‘within the scope of labour law’, and recognising that platforms are skilled at rearranging work to avoid an employment relationship, Fredman et al. argue for an approach in which labour law standards are ‘reshaped to meet the needs of platform workers regardless of their employment status’,111 which is the objective of the Fairwork project. Fairwork – based on empirical studies and the annual ranking (in numerous countries, including South Africa) of digital platforms against its Fairwork principles,112 in the context of both location-based and web-based platform work113 – proposes the development of ‘appropriate labour standards . . . [to provide a floor of basic worker rights] [and] alternative means of compliance, using both reputational means and legal change’.114 The alternative means of compliance envisaged by Fairwork is a public ranking scheme for digital platforms as a form of reputational pressure that would result in improvement of the working conditions of platform workers.115 107

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110 111 112

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See note 8. For more details on the five principles (namely: Fair Pay; Fair Conditions; Fair Contracts; Fair Management; and Fair Representation), see Section V.A. Fredman et al., ‘Thinking out of the box’, 239. The authors propose an approach that uses Ayres and Brathwaite’s regulatory pyramid. In this regard, see J. Braithwaite, ‘Responsive regulation and developing economies’, World Development, 34(5) (2006), 884–98, and his example of responsive regulation in the context of the enforcement of labour standards. As Ramji and Poriazis explain: At the beginning of 2015, it appeared that the position of non-standard workers had immeasurably improved with the passing of amendments to the Labour Relations Act . . . expressly seeking to bring non-standard workers within the fold of labour law’s protections. . . . In five years of using these amendments in representing non-standard workers, we have been dismayed . . . by how swiftly the 2015 amendments have been hollowed out by dispute resolution bodies. B. Ramji and K. Poriazis, ‘The courts, the amendments and the excluded: A critical analysis of the Labour Appeal Court’s approach to triangular employment relationships’, ILJ, 41 (2020), 2274. Clause 3 of the Employment Services Amendment Bill [B 2021]. Fredman et al., ‘Thinking out of the box’, 236. The development of the Fairwork Principles involved an extensive review of relevant literature and high-level stakeholder meetings at the United Nations Conference on Trade and Development (UNCTAD) and the ILO in Geneva, as well as meetings with local (country-specific) stakeholders. See the Gig Work Principles (for location-based work) at https://fair.work/en/fw/fw03-principles/ and the Cloudwork (Online Work) Principles at https://fair.work/en/fw/principles/cloudwork-principles/. Fredman et al., ‘Thinking out of the box’, 237. In turn, the ranking process provides space for iterative engagement with digital platforms and platform workers on working conditions. In addition, the project uses ‘empirical work to develop standards capable of being given legally binding force’. Ibid.

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A A Public Ranking System for Digital Platforms The Fairwork public ranking system is designed around five principles that have been developed in consultation with stakeholders and in workshops at the International Labour Organization (ILO).116 In the South African context, consultations were conducted with platforms and their workers, trade unions, academics, regulators, and labour lawyers.117 The five principles for location-based gig work are Fair Pay, Fair Conditions,118 Fair Contracts, Fair Management, and Fair Representation, and the ranking system involves a ranking out of ten points, with two points allocated to each principle as follows: Principle 1: Fair Pay 1.1 Ensures workers earn at least the local minimum wage after costs (one point) 1.2 Ensures workers earn at least a local living wage after costs (one additional point) Principle 2: Fair Conditions 2.1 Mitigates task-specific risks (one point) 2.2 Provides a safety net (one additional point) Principle 3: Fair Contracts 3.1 Provides clear and transparent terms and conditions (one point) 3.2 Ensures that no unfair contract terms are imposed (one additional point) Principle 4: Fair Management 4.1 Provides due process for decisions affecting workers (one point) 4.2 Provides equity in the management process (one additional point) Principle 5: Fair Representation 5.1 Assures freedom of association and the expression of worker voice (one point) 5.2 Supports democratic governance (one additional point).119 The Fair Pay principle takes into account the fact that platform workers incur substantial workrelated costs (transport between jobs, vehicle maintenance, fuel, etc.) and that workers may spend time on ‘stand-by’ between jobs, where they are available for work but which is unpaid.120 The second principle, Fair Conditions, considers whether the policies and practices of platforms provide protection and measures that mitigate the risks and health and safety hazards that platform workers may be exposed to.121 Fair Contracts measures the accessibility, clarity, and fairness of contract terms.122 In relation to decisions affecting workers, the Fair Management principle requires that workers are entitled to due process in the event of disciplinary action them; in addition, Fair Management requires platforms to adopt non-discrimination policies and practices to address barriers experienced by disadvantaged groups. Finally, Fair Representation requires the

116 117

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119 120 121 122

See supra note 113. Fairwork, Fairwork South Africa Ratings 2020: Labour Standards in the Gig Economy (2020), www.bbrief.co.za /content/uploads/2020/03/Fairwork-South-Africa-2020-report.pdf. Fair Conditions relates to the presence of measures to mitigate the risks that platform workers may be exposed to, such as accidents, injuries, crime, and violence. The principles and the methodology of the ranking system are elaborated on the website. See supra note 113. Du Toit et al., ‘Towards legal regulation of platform work’,1506. FW03 Principles 20.06, https://fair.work/en/fw/fw03-principles/. Contract terms that are considered unfair are clauses that exclude liability of the platform in certain circumstances and that prevent workers from seeking redress against the platform in the event of a grievance. Ibid.

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table 19.2 Fairwork platform ratings 2019–22

SweepSouth GetTOD NoSweat Nomad Now Bottles M4Jam Picup Uber Domestly Uber Eats OrderIn Bolt (Taxify) Wumdrop Mr D Kandua InDriver Droppa SecretAgent

2019

2020

2021

2022

7 – 8 7 7 – 5 5 4 3 – 4 2 – – – – –

8 8 8 – – 7 6 4 4 3 3 1 – 0 – – – –

8 9 8 – – 8 5 4 – 4 – 1 – 7 – – 2 0

7 6 5 – – 6 1 2 – 2 – 1 – 6 3 0 0 0

Source: Fairwork, South Africa ratings, https://fair.work/en/ratings/south-africa/.

promotion of freedom of association by platforms and support for mechanisms that facilitate collective representation and bargaining.123 B Fairwork Ratings of South African Digital Platforms Since 2019 various South African platforms have been rated by Fairwork. These platforms and their respective ratings between 2019 and 2022 are reflected in Table 19.2 (the ratings are out of ten). Importantly, the Fairwork project has impacted developments, and the evidence suggests that ‘[m]any platforms are aware of . . . [Fairwork] research, and eager to improve the performance relative to last year, and to other platforms’.124 In addition to working directly with platforms and platform workers on the ranking system, Fairwork engages with ‘policy makers and government to advocate for extending appropriate legal protections to all platform workers, irrespective of their legal classification’.125 C Inclusive Social Protection and a Floor of Basic Worker Rights As Fairwork points out in its Code of Good Practice for the Regulation of Platform Work in South Africa,126 mechanisms already exist in the BCEA for the Minister to ‘deem any category of 123 124 125

126

Ibid. Fairwork, Fairwork South Africa Ratings 2020 (n. 117), 16. Ibid. In this regard, Fairwork has engaged with the Department of Employment and Labour in South Africa to advocate for a floor of legally enforceable rights. Code of Good Practice for the Regulation of Platform Work in South Africa (October 2020), https://fair.work/wpcontent/uploads/sites/17/2020/11/South-Africa_Code-of-Good-Practice_Full.pdf.

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persons . . . to be (a) . . . employees for purposes of the whole or any part of this Act, any other employment law other than the Unemployment Insurance Act, 1966, . . . or any sectoral determination; or (b) contributors for purposes of the whole or part of the Unemployment Insurance Act, 1966’.127 In addition, section 55 of the BCEA permits the Minister to make a sectoral determination for ‘one or more sector and area’ that may ‘specify minimum conditions of employment for persons other than employees’.128 An example of this is the regulation of working conditions of domestic workers, by way of sectoral determination129 that applies regardless of whether a domestic worker is an employee or an independent contractor. In addition, the Fairwork Code of Good Practice for the Regulation of Platform Work in South Africa130 reports on developments within the National Economic Development and Labour Council (NEDLAC), with which the Council is conducting ‘a policy review to extend the social protection network to the self-employed’,131 adding that ‘to this end, the use of section 69 of the UIA [Unemployment Insurance Act] is under consideration’.132 Moving forward, it is likely that NEDLAC will play an important role in facilitating changes to the regulatory framework; in this regard, regulators who are seeking to ensure that workers are adequately protected by legislation regardless of their employment status should note De Vos’s caution against creating more grey areas by delineating yet another new category of worker.133

VI QUO VADIS?

Social dialogue and public participation processes are firmly entrenched in post-apartheid public life in South Africa; and the flagship national tripartite social dialogue structure, NEDLAC,134 is, for all intents and purposes, a healthy and functional institution, with labour law reform firmly on its agenda. 127

128 129 130

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S. 83(1) of the BCEA. For example, notice was issued in 2020 of the intention to deem persons in the film and television industry employees for the purposes of certain rights, including wages, sick leave and maternity leave, and compensation for occupational injuries. S. 55(4)(k) of the BCEA. Sectoral Determination 7: Domestic Worker Sector, https://bit.ly/3CXk7bd. In terms of the scope and application of the Code: ‘The Code does not argue for changes in the law, though it may identify gaps that should ideally be addressed by legislation. In the absence of such legislation, the Code offers guidelines for interpreting the existing statutory and common law in such a way as to give maximum effect to the basic rights of platform workers.’ Code of Good Practice for Regulation of Platform Work in South Africa, 313. Code of Good Practice for Regulation of Platform Work in South Africa, 39 para. 39, citing Daily Maverick (22 July 2020). After this came South African Law Reform Commission, Maternity and Parental Benefits for SelfEmployed Workers in the Informal Economy, Project 143: Discussion Paper 153 (23 June 2021), www.justice.gov.za /salrc/dpapers/dp153-prj143-MaternityParentalBenefits-July2021.pdf. Code of Good Practice for Regulation of Platform Work in South Africa, 39. See M. De Vos, ‘Work 4.0 and the future of labour law’ (22 July 2018), http://dx.doi.org/10.2139/ssrn.3217834, 22, where he cautions that ‘[i]nserting a new category of so-called “independent workers” in between traditional employees and the self-employed multiplies the qualification issues: who are these “independent workers”, which existing employees and which self-employed workers are henceforth “independent workers” . . . Instead of having one grey area, you now have four.’ The National Economic Development and Labour Council (NEDLAC) was established by the National Economic Development and Labour Act (NEDLAC Act) 1994. See https://nedlac.org.za/. According to s. 5 of the NEDLAC Act, the powers and functions of NEDLAC are to: (a) strive to promote the goals of economic growth, participation in economic decision-making and social equity; (b) seek to reach consensus and conclude agreements on matters pertaining to social and economic policy; (c) consider all proposed labour legislation relating to labour market policy before it is introduced in Parliament; (d) consider all significant changes to social and economic policy before it is implemented or introduced in Parliament; (e) encourage and promote the formulation of co-ordinated policy on social and economic matters.

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Government, under President Cyril Ramphosa,135 has committed to positioning South Africa to take advantage of the opportunities (and manage the challenges) of the rapid advances that are underway in information and communications technology.136 Importantly, the Presidential Commission on the Fourth Industrial Revolution (4IR) report includes a recommendation to ‘amend Labour legislation to accommodate the Gig economy by recognizing Internet project work as legitimate work’.137 Moreover, the 4IR Commission Report recognises that ‘issues such as promoting social dialogue and collective representation of workers and employers, supporting and incentivizing entrepreneurship and harnessing technology for decent work and job creation must be mainstreamed and coordinated in business, labour and entrepreneurship bodies’ and that ‘human capacity in our informal economy and SMME’s [sic] [small, medium, and micro enterprises] requires investment in social protection systems’.138 The institutional and regulatory landscape in South Africa has the capacity to extend social protection and employment rights to workers in the gig economy, and the environment is receptive to initiatives such as the Fairwork project. Engagement with government and policymakers on legislative measures to extend social protection and a floor of workers’ rights regardless of employment status is underway and likely to gain traction in the coming months and years. A complementary pathway to ensuring decent work is the Fairwork public ranking system for digital platforms. In addition, other fields of law and parallel developments in the regulatory space may also impact on working arrangements and conditions of work in the digital economy. These include, among others, tax law and digital taxation, public health, consumer protection law, intellectual property law,139 and developments in competition law.140 Developments in the regulatory space impacting on the taxi industry may also have an impact on working arrangements: in this regard, the National Land Transport Amendment Bill (NLTAB) seeks to regulate, among other issues, the operation of e-hailing services in the country and proposes changes including the requirement of an operating licence.141 Furthermore, the Taxi Industry Empowerment Model envisages regulations that require: e-hailing service providers to participate in the South African market if 135

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Ramaphosa has a formidable reputation both as an experienced trade unionist and as a successful businessperson; in 2019 Ramaphosa was co-chair (with Stefan Lo¨fven, at the time Sweden’s prime minister) of the ILO Global Commission on the Future of Work. See Global Commission on the Future of Work, Work for a Brighter Future (Geneva: International Labour Office, 2019), https://bit.ly/44652Qm. In 2018, in his first State of the Nation Address, Ramaphosa announced the intention to ‘establish a Digital Industrial Revolution Commission, which will include the private sector and civil society, to ensure that our country is in a position to seize the opportunities and manage the challenges of rapid advances in information and communications technology’ (www.gov.za/speeches/president-cyril-ramaphosa-2018-state-nation-address-16-feb-2018-0000#). Shortly after, the terms of reference for a Presidential Commission on the Fourth Industrial Revolution were published in the Government Gazette, No. 43078 (4 December 2018); both the Commission’s Summary Report and Recommendations, and its Diagnostic Report were published in the Government Gazette, No. 43834 (23 October 2020). Summary Report and Recommendations Presented by the Presidential Commission on the Fourth Industrial Revolution (2020), at 119, www.gov.za/documents/report-presidential-commission-4th-industrial-revolution-23-oct -2020-0000. Ibid. Ibid., at 121, details numerous facets of intellectual property law that require reflection in view of the emerging technologies and recommends that the ‘[i]ntellectual property regime . . . be reconsidered in view of the need to be dynamic and enable speedy commercialization of research output into product and services’. The Competition Commission, Competition in the Digital Economy (September 2020), https://bit.ly/43abBjB, recognises the need for ‘intentional regulation’ to ensure that the benefits of the digital economy are harnessed for inclusive growth. National Land Transport Amendment Bill [B 7D – 2016]. See www.uber.com/en-ZA/blog/national-land-transportamendment-bill/.

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they operate through a company registered in South Africa; financial transactions to take place through a bank registered in South Africa; and the company through which the e-hailing service is provided to ensure that at least 25 per cent equity is held by the corporate entity chosen as an empowerment vehicle.142 The regulatory landscape in South Africa is likely to see significant changes taking shape over the next decade or so, and it is critical that stakeholders engage in these processes to drive the direction of development in South Africa.

VII CONCLUSION

Globally, the impact of Covid-19 on labour markets and fragile economies has been devastating; the conditions of lockdown in response to the pandemic flamed the disruptions already sweeping across the world of work. South Africa, a country with dangerously high levels of unemployment and persistent inequality,143 has not been spared from the impact. While the technologies of the fourth industrial revolution present opportunities to accelerate socio-economic development, this requires an equally innovative regulatory response – and ‘intentional regulation’144 – both to avoid the trap of exploitative working arrangements (the race to the bottom) and to ensure decent work and the equitable distribution of the benefits of the digital economy. In this regard, the Fairwork public ranking system for digital platforms and engagements in NEDLAC on law reform mechanisms that extend the legal protection of workers regardless of their employment status provide an encouraging starting point.

142

143 144

Department of Transport, Taxi Industry Empowerment Model: Re-imagining Tomorrow’s Taxi Industry (11 September 2020), www.transport.gov.za/documents/11623/189609/empowerment_discussionSep2020.pdf, at 14. See also ‘Big changes proposed for Uber and other e-hailing services in South Africa’, Businesstech (11 September 2020), https://bit.ly/44sFNYg. South Africa is notorious for the ‘triple scourge’ of poverty, inequality, and unemployment. In this regard, the Competition Commission, Competition in the Digital Economy, at 5 warns that ‘the digital economy in developing countries already threatens a new era of global concentration, and, with it, the further marginalization of vulnerable countries and businesses’. However, with the appropriate regulatory responses, the Competition Commission (ibid.) recognises that the digital economy presents South Africa with an opportunity to reverse the pervasive, tripe scourge of unemployment, inequality and poverty. But that to harness the promised benefits of digitalization South Africa must create a commercial and regulatory environment designed to extract those benefits and distribute them in a way that ensures economic growth that is (1) increased and meaningful employment; (2) equality; and (3) shared prosperity.

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20 Japan: Labour Law and Policy in an Era of Technological Innovation Ryuichi Yamakawa

I INTRODUCTION

This chapter explores the legal and policy issues that Japan is now facing in this era of technological innovation. Like many other industrial countries, Japan is experiencing various facets of technological innovation such as robotisation and utilisation of artificial intelligence (AI). These changes have already had, and will continue to have, considerable influence on the world of work, thereby raising new issues in the realm of labour law and policy. Of course, Japan has its own features with respect to the labour market, employment practices, and legal norms. Such features may have influence on the situation regarding the relationship between technological innovation and labour law and policy. Therefore, issues regarding technological innovation in Japan are worth exploring from a viewpoint of comparative labour law and policy. Section II of this chapter briefly explains the basic legal framework governing Japan’s employment relationship with an explanation of its labour market and employment practices. Next, Section III describes Japan’s current situation regarding changes in the employment relationship, that is, the increase of atypical employment as well as independent contractors instead of regular employees. Then, Section IV focusses on how technological innovation is influencing the labour market and employment relationships in Japan. This section also identifies various issues that current technological innovations have raised under Japanese law. Section V picks up some policy issues currently under discussion in Japan, including discussion by social partners. Section VI concludes by pointing out that it is necessary to tackle such new issues through a wider viewpoint, beyond the boundary of traditional labour policy, and that joint consultation between management and labour is important if technological innovation in the workplace is to be implemented successfully. Among many facets of labour law, this chapter focusses on employment law, that is, individual labour law, which technological innovation influences directly.

II THE BASICS OF EMPLOYMENT RELATIONSHIP AND ITS LEGAL REGULATION IN JAPAN

A Scope of Protections under Japanese Law (i) Protection of ‘Worker’ In Japan, the Labour Contract Act, which regulates an employment contract, uses the term ‘labour contract’, while the Civil Code, one of the most basic statutes on private contractual 332 https://doi.org/10.1017/9781108878647.020 Published online by Cambridge University Press

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relations, contains several provisions regarding an ‘employment contract’. However, it is generally accepted that the terms ‘employment contract’ and ‘labour contract’ have the same meaning.1 It is also generally accepted in Japan that an employment contract or a labour contract is a contract under which an employee provides services to an employer under the employer’s direction and control.2 Meanwhile, the Civil Code contains provisions regarding service contracts other than the employment contract, such as the uke-oi contract (contract for service) and the i-nin contract (delegation contract). Although service is provided by one of the parties under these contracts, it is, unlike the employment contract, not under the direction and control of the other party. The Labour Contract Act uses the term ‘worker’ instead of ‘employee’ to refer to a party who provides services under an employment contract. The Labour Standards Act, which regulates basic working conditions such as working time and payment of wages, also protects a ‘worker’. The definition of the term ‘worker’ under this Act is essentially the same as the ‘worker’ under the Labour Contract Act, except that the Labour Standards Act requires that a worker should be employed at ‘an enterprise or business undertaking’, which covers most business organisations.3 Many other statutes regarding employment relations are also applied to the ‘worker’. Since the meaning of worker is essentially the same as employee, the distinctive element of a worker is the fact that an individual provides service under the direction and control of the other party. In other words, the main criterion that determines the availability of protections under these statutes is whether an individual provides service under the direction and control of the other party to the contract. On the other hand, independent contractors, who mostly provide services under uke-oi or i-nin contracts, are usually outside the protection of labour and employment statutes, although whether an individual is a worker or not is determined based on objective facts rather than languages of contract documents. (ii) Extension of Protection However, some Japanese labour and employment statutes do protect independent contractors to a certain extent. For example, the Labour Union Act, one of the fundamental statutes governing collective labour relations, has a broader definition of a ‘worker’. Article 3 of the Act defines a worker as any person whose livelihood depends on wages, salaries, or equivalent renumerations. This definition does not require ‘being employed’, ‘direction’, or ‘control’ by other persons. The renumeration is required merely to be ‘equivalent’ to wages or salaries. Thus, in order to be protected by the Labour Union Act, an individual need only be ‘equivalent’ to a worker under the Labour Contract Act. Here, factors such as whether an individual is integrated into the organisation of the alleged employer and whether the contractual terms are unilaterally determined by the alleged employer are considered. Also, the factors to determine ‘direction and control’ under the Labour Standards Act and the Labour Contract Act are more liberally applied. Furthermore, an individual being a proprietor does not necessarily negate a finding of ‘worker’ status, unless the proprietor’s independent status is obvious.

1

2

3

See, e.g., T. Araki, K. Sugeno, and R. Yamakawa, Shosetsu Rodo Keiyaku Ho [Detailed Commentary on Labour Contract Act], 2nd ed. (Tokyo, 2014), 76. See Y. Yamamoto (ed.), Shin Chushaku Minpo Dai 14 Kan [New Commentary on Civil Code, Vol. 14] (Tokyo, 2018), 20. Article 9 of the Act provides that ‘worker shall mean one who is employed at an enterprise or business undertaking and receives wages therefrom, without regard to the kind of occupation’.

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Although all independent contractors do not necessarily fulfil this requirement, some have been entitled to the rights to organise and bargain collectively under the Act, including a member of a choir group for opera4 and an individual who provides service for the maintenance of home appliances who is treated as an independent contractor under the contract with the service provider.5 While the Labour Union Act expands the definition of a ‘worker’ itself, the Workers’ Compensation Insurance Act, which applies to a ‘worker’, extends its coverage to certain independent contractors and small business proprietors under the ‘special participation’ system6. If they fulfil certain requirements that make their status close to that of a ‘worker’, they can participate in the workers’ compensation insurance scheme of the Act by paying a special insurance premium even though they are not ‘workers’ under the Act. B Typical Employment and Atypical Employment (i) Typical Employment and Its Legal Status As in many other countries, the typical employment in Japan is a relationship based on an employment contract, usually full-time, without a fixed term of duration.7 In general, regular employees under such contracts are protected from dismissal without just cause. Although the Civil Code, which was enacted in 1896, provides that both parties to an employment contract can terminate the contract by giving only two weeks’ notice without restriction on the reason for termination, case-law that prohibits unjust dismissal has been established and eventually written into statute.8 Thus, Article 16 of the Labour Contract Act provides that the employer’s dismissal should be impermissible and void as an abuse of right if the dismissal is without just cause (abusive dismissal doctrine). Thus, an employee under an employment contract without fixed term enjoys a security in employment, while an employer has a right, also under case-law, to change such employee’s job duty and workplace.9 Long-term employment based on the abusive dismissal doctrine is one of the most important components of Japanese employment practices, together with seniority-based wages and enterprise-based unionism. (ii) Atypical Employment and Its Legal Status Atypical employment in Japan is usually based on (1) employment under contract with a fixed term of duration, (2) part-time employment, or (3) dispatched employment. Under the dispatched employment relationship, an employee is employed by a temporary work agency and dispatched to the agency’s clients, to work under their direction. In addition to fixed-term employees, part-time employees and dispatched employees usually conclude fixed-term employment contracts. An employment contract with fixed term is terminated automatically when the defined term expires. This means that employees under a fixed-term contract are not protected by the abusive dismissal doctrine. Although there is an exception created by case-law 4 5 6 7

8

9

Shin Kokuritsu Gekijo case, [2011] 65 Saiko Saibansho Minji Hanreishu [Civil Cases of Supreme Court] 943. INAX Maintenance case, [2011] 1026 Rodo Hanrei [Labour Cases] 27. Articles 34 and 35 of the Workers’ Compensation Insurance Act. For explanation of various types of employee, see T. Hanami, F. Komiya, and R. Yamakawa, Labour Law in Japan, 2nd ed. (Alphen aan den Rijn: Wolters Kluwer, 2015), 66–77. For the abusive dismissal doctrine in general, see R. Yamakawa, ‘From security to mobility? Changing aspects of Japanese dismissal law’ in D. H. Foote (ed.), Law in Japan: A Turning Point, 483–520 (Seattle: University of Washington Press, 2007). Toa Paint case, [1986] 477 Rodo Hanrei 6.

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that a fixed-term employee is entitled to a similar protection to a regular employee if he/she has a reasonable expectation of renewal owing to special circumstances including prior repetitive renewals as well as remarks from his/her employer suggesting the likelihood of renewal,10 such protection is not available if employers are careful to ensure that such expectation does not arise. Thus, unlike typical regular employees, atypical employees cannot enjoy employment stability under the abusive dismissal doctrine. Indeed, such atypical employment contracts are often utilised by employers as a means of adjusting workforce in the event of business slowdown. Also, the wages of atypical employees in most cases are not based on seniority, since their employment is not expected to continue for a long time. Furthermore, working conditions of atypical employees tend to be unreasonably lower than those of typical employees. This is because the bargaining power of fixed-term employees is considerably lower than that of typical employees; fixed-term employees cannot help but be reluctant in lodging their demands against their employers, because they are fearful that renewal of their employment contract will be denied.

III THE CHANGING NATURE OF WORK IN JAPAN AND RELATED LEGAL ISSUES

A Increase in Atypical Employment and Legislative Responses Atypical employment has been continuously increasing in Japan. In February 1984, the ratio of atypical employees among all employees was 15.3 per cent. For the second quarter of 2022, in contrast, it reached 36.6 per cent. Thus, atypical employment has more than doubled over the past thirty-six years.11 As stated already, atypical employees are generally in a vulnerable position compared to typical employees in terms of employment stability, wages, and other working conditions. Therefore, improvement of atypical employees’ situation has been one of the major issues in Japan’s recent labour policy. Regarding the instability of employment, the Labour Contract Act was amended in 2012 and created a provision that a fixed-term employee who has renewed the contract at least once and has a period of continual employment exceeding five years has the right to convert his/her employment contract into a contract without fixed term so that the abusive dismissal doctrine can be applied. With respect to working conditions, the 2007 amendment of the Part-Time Worker Act prohibited employers from discrimination against a part-time worker because of the status of part-time employment if the part-time employee is in an equivalent situation to that of a regular employee in terms of job duties and duration of employment. The requirement that a part-time employee is in equivalent situation in terms of duration of employment means that a part-time employee should be in substantially the same situation as a regular employee under employment contracts without fixed term. Also, the 2012 amendment of the Labour Contract Act prohibited unreasonably inferior difference in working conditions of fixed-term employees in comparison with employees under employment contract without fixed term. In 2013, the Part-Time Worker Act was amended again to delete the requirement of the equivalent duration of employment and introduce a provision to prohibit unreasonably inferior working conditions. Finally, the 2018 amendment of the Labour Contract Act and the Part-Time Worker’s Act introduced a provision to prohibit discrimination because of the status of fixed-term 10

11

For such case-law, see R. Yamakawa, ‘Limitations on the termination of fixed-term employment contracts: Judicially created rules and their codification in Japanese law’ in J. O. Haley and T. Takenaka (eds.), Legal Innovations in Asia: Judicial Lawmaking and the Influence of Comparative Law, 197–211 (Cheltenham: Edward Elgar, 2014). Somusho Tokeikyoku [Ministry of Internal Affairs and Communication, Statistics Bureau], ‘Rodoryoku Chosa [Labour Force Survey]’, Historical Data, 9(1) (2022), www.stat.go.jp/english/data/roudou/lngindex.html.

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employment. Thus, both protections, that is, prohibition of discrimination because of part-time or fixed-term status and prohibition of unreasonably inferior working conditions are now equally applied to fixed-term employees and part-time employees. At the same time, the Workers Dispatching Act was amended to contain similar provisions. B Increase in Individual Independent Contractors and Distinction from Employees The number of individuals who work as an independent contractor also appears to be increasing in Japan. It is difficult to collect precise data on the numbers of independent contractors who are individuals and worth analyzing from the viewpoint of comparison with employees since it is difficult to clarify such a category among the various types of independent contractor. Indeed, there are no official government statistics in Japan regarding such independent contractors. However, the Cabinet Office of the Government of Japan estimated that the number of independent contractors who do not employ other persons has increased from 1,280,000 in 1985 to 1,640,000 in 2015, which is around a 28 per cent increase in 30 years.12 Technical innovation has the potential to make it easy for an individual to become an independent contractor since the cost of business activities may become lower through the utilisation of technological innovation such as new information technology. Independent contractors who do not meet requirements for being regarded as ‘workers’ or ‘employees’ under employment contracts or workers under labour and employment statutes are generally not entitled to the same protections as are employees or workers, except for certain protections provided by special provisions such as special participation under the Workers’ Compensation Insurance Act, as stated before. Thus, with respect to the availability of protection under labour and employment laws, the distinction between employee and independent contractor is important. As stated before, the main criterion that determines the availability of protections under most of labour and employment laws is whether an individual provides service under the direction and control of the other party to the contract. However, the element of ‘direction and control’ is vague and difficult to apply in practice. Thus, courts have relied on more specific factors to determine whether an individual is an employee. The Report of the Study Group established by the Ministry of Labour, published in 1985, analysed judicial precedents and clarified the factors to be considered.13 The Report begins with two basic elements of the ‘worker’ under the Labour Standards Act, which are (1) the provision of service under the direction and supervision of the other party; and (2) the receipt of remuneration in return for the service rendered. In order to facilitate the application of element (1), the Report clarifies four factors to be considered: (a) absence of freedom to refuse the other party’s request to engage in service; (b) specific direction and supervision from the other party while performing service; (c) restriction in terms of time and place for performing service; and (d) prohibition of delegation of duty to a person other than him/herself. As regards element (2), the Report noted that if remuneration is calculated on the basis of length of time during which the service is rendered (e.g. hourly pay), such remuneration is a factor that supports the finding of ‘worker’ status. The Report also refers to other supplemental factors to be considered. One of the important factors among them is the degree of 12

13

Naikakufu Seisaku Tokatsukan, Keizai Zaisei Bunseki Tanto [Director General for Economic Research, Cabinet Office], Nippon no Freelance ni Tsuite [Freelance in Japan] (Tokyo, 2019), www5.cao.go.jp/keizai3/2019/07seisaku kadai17-0.pdf, 20. Rodosho [Ministry of Labour], Rodo Kijunho Kenkyukai Hokoku [Report of the Study Group on Labour Standards Act] (Tokyo, 1985), 1–4.

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independence of an independent contractor, which is to be determined based on such matters as whether the individual uses his/her own property to perform the service. This suggests that the activities of a ‘worker’ may still have the nature of an independent contractor to a certain degree. Courts have generally relied since the time of this Report on the factors contained within it.

IV TECHNOLOGICAL INNOVATION AND ITS LEGAL RAMIFICATIONS IN JAPAN

A Technological Innovation and Destruction/Creation of Employment Opportunities Technical innovation in the world of work in recent years has many facets as well as various influences, thereby creating a lot of discussions from different viewpoints. First, it is a universal concern that technical innovation, especially such advanced innovation as robotisation and AI, will make human work unnecessary and deprive people of employment opportunities. In Japan, however, such a concern does not appear to be serious, at least for the time being. Several reasons can be pointed to for such an optimistic perception in Japan. The White Paper on Labour Economics published in 2017 by the Ministry of Health, Labour and Welfare noted that the speed of technological innovation is slow in Japan, based on data indicating that the recent increase in the gross domestic product of the information and communication industry is much lower in Japan compared with the United States.14 Another reason for the optimistic perception is the shortage of labour force in Japan. According to estimation by the 2017 White Paper on Labour Economics, although there will be 1.6 million fewer jobs by 2030, owing to technological innovation, this will be offset by more decrease in the labour force.15 Furthermore, the typical employment relationship in Japan is expected to provide certain stability in employment in the event of the transformation of jobs. Japan’s employment relationship is said to be based on ‘membership’ within the company rather than specific ‘jobs’.16 As stated before, a typical employment contract for Japanese regular employees does not specify jobs that each employee should perform. In other words, Japan’s employment relationship is flexible with respect to the content of the employee’s job duties. Employers are supposed to make a good faith effort to maintain employment through such means as changes of job duties or transfers to different workplaces in case the jobs that regular employees have performed disappear owing to changes in economic circumstances, including technological innovation. However, such protection is enjoyed only by regular employees who conclude employment contracts without fixed term. Atypical employees, who usually conclude fixed-term employment contracts, cannot have such protection. Thus, atypical employees are vulnerable regarding job displacement as a result of technological innovation. The recent increase in atypical employment would cause more serious problems than before. Meanwhile, technological innovation can create new employment opportunities. The Cabinet Office predicted that there will be more need for such jobs as professionals on technologies, sales and promotion, interpersonal services, and so on.17 However, skill requirements for these jobs are different from the requirements for routine jobs such as manufacturing and clerical office work. 14

15 16 17

Kosei Rodo Sho [Ministry of Health, Labour and Welfare], Rodo Keizai Hakusho 2017 [White Paper on Labour Economics 2017] (Tokyo, 2017), 110. Ibid., 113. K. Hamaguchi, Nippon no Koyo to Rodoho [Employment Relationship and Labour Law in Japan] (Tokyo, 2011). Naikakufu [Cabinet Office], Heisei 30 Nendo Nenji Keizai Zaisei Hokoku [Annual Report on the Japanese Economy and Public Finance 2018] (Tokyo, 2018), 141.

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It is necessary to obtain not only skills to handle new technologies but also skills for interpersonal communication, skills to make decisions based on the information that technology provides, skills to identify problems or goals, and so on.18 Thus, it is important to provide adequate means such as training to supply qualified workforces and prevent unemployment of individuals arising from technological innovation. B More-Flexible Workstyles such as ‘Telework’ Technological innovation, the development of information and communication technology (ICT) in particular, has the potential to make workstyles more flexible, as workers are freed from the restrictions of place and time of work. Flexible workstyles such as ‘telework’ and ‘flextime’ are useful especially for workers who need to strike a balance between work and other private matters such as family care. The term ‘telework’ usually refers to work from home, but sometimes includes work from a satellite office. Thus, the term ‘telework’ in a broader sense is interchangeable with the term ‘remote work’ or ‘mobile work’. The ‘flextime’ is a system under which each employee has a freedom to choose in a day when to begin or end his/her work. In Japan, an increasing number of corporations have introduced a telework system. According to the 2019 survey of the Ministry of Internal Affairs and Communications, 20.1 per cent of companies in Japan that employ 100 or more employees have already introduced telework.19 However, only 6.7 per cent of employees have experienced telework.20 This is probably because telework is mainly utilised by large companies that have already been accustomed to information technology, and also because only certain categories of employee, such as professionals, are allowed to make use of telework. Furthermore, it is often pointed out that supervision and evaluation of performance are difficult when employees engage in telework. This is especially true in Japan since many employment contracts in Japan do not specify the content of each employee’s job duties, which would provide a basis for supervision and evaluation of workers. One of the other factors that may influence the implementation of telework is its uncertain legal surroundings. The Labour Standards Act has a provision for special treatment when computing working time for an employee who works outside the workplace.21 However, its phrase ‘difficulty in computing working time’ is vague and difficult to apply to telework. Also, it is not clear how the Workers’ Compensation Insurance Act can be applied to accidents that happen when an employee works at home. After the Emergency Declaration in April 2020 owing to Covid-19, however, telework has rapidly gained in popularity. According to the online survey for individual workers conducted in May 2020 by the Japan Institute of Labour Policy and Training (JILPT), a think tank established 18

19

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Kosei Rodo Sho, Rodo Keizai Hakusho 2017, 114–19; Kosei Rodo Sho [Ministry of Health, Labour and Welfare], Rodo Seisaku Shingikai Rodo Seisaku Kihon Bukai Hokokusho [Report of the Fundamental Policy Division of Labour Policy Council] (Tokyo, 2019), 5–6. Somusho [Ministry of Internal Affairs and Communications], Reiwa Gan Nendo Tsushin Riyo Doko Chosa: Kigyo Hen [2019 Communication Usage Trend Survey: Company Survey] (Tokyo, 2019), 13. Somusho [Ministry of Internal Affairs and Communications], Reiwa Gan Nendo Tsushin Riyo Doko Chosa: Setai Hen [2019 Communication Usage Trend Survey: Household Survey] (Tokyo, 2019), 60. Article 38–2 of the Labour Standards Act provides, in para. 1: If a worker engages in work outside of the workplace during all or part of their working hours and it is difficult to calculate working hours, the number of hours worked is deemed to be the prescribed working hours; provided, however, that if it would normally be necessary to work in excess of the prescribed working hours in order to carry out that work, the worker is deemed to have worked for the number of hours that, pursuant to the provisions of Order of the Ministry of Health, Labour and Welfare, it is decided would normally be necessary to carry out that work.

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by the Ministry of Health, Labour and Welfare, 29.9 percent of respondents answered that their companies have instituted telework.22 Still, the spread of telework depends on the size of companies and the categories of their workers. Among workers who work for companies with 1,000 or more employees, 51.2 per cent answered that their employers have instituted telework. Also, 60.3 per cent of managers and 38.6 per cent of professionals answered that they have engaged in telework. This means that there is a need for improvement regarding small and medium-sized companies and workers other than managers and professionals. Also, it remains to be seen whether telework will be one of the major choices of workstyle after the Covid-19 problem cools down. Flextime is even less utilised in Japan. According to the 2019 survey conducted by the Ministry of Health, Labour and Welfare, only 5.0 per cent of companies have instituted a flextime system. While 26.6 per cent of large companies that employ 1,000 or more workers have instituted this system, it is not popular in medium-sized and small companies.23 Although the Labour Standards Act,24 its enforcement regulation, and administrative interpretation have clarified the conditions under which flextime is permissible, Japanese companies have been reluctant to use it. Overall, a flexible workstyle in terms of both place and time for work has not been well developed currently in Japan. C New Business Styles and Related Legal Issues (i) The Platform Economy in Japan Recent technological innovation has enabled development of various new business styles in many countries. One of the developments that has been often discussed from the viewpoint of labour policy is the growth of the ‘platform economy’, known as ‘uberisation’. In Japan, the platform economy is often called the ‘sharing economy’. Here, the term ‘sharing economy’ includes a situation where an owner of land or a house shares such property as a rental parking space or a room for accommodation through a platform mechanism. Although this kind of sharing economy is the subject of some statistical surveys, it is not appropriate for the purpose of this chapter since such owners do not provide their services. Here, to describe it in general terms, a platform company or ‘platformer’ (such as Uber) establishes a matching system between individual service providers (such as the ride-share-service drivers) and customers. The platformer receives a request from a customer and assigns the request to the service provider who can readily perform the requested service. If the service provider is available, he/she contacts the platform company, and the company notifies the client that he/she will perform the service. Regarding payment of the fee, a typical example is that clients pay platformers, rather than service providers, while platformers pay service providers. The development of technologies for locating and communicating with clients and service providers has contributed to the creation of such a business style. Although there are no available statistics on the activities of such platform businesses in Japan for the purpose of this chapter, the development of platform businesses appears to be slow 22

23

24

Japan Institute of Labour Policy and Training, Results of the ‘Survey on the Impact That Spreading Novel Coronavirus Infection Has on Work and Daily Life’ (2020), www.jil.go.jp/english/special/covid-19/survey/documents/20200610 .pdf, 6. Kosei Rodo Sho [Ministry of Health, Labour and Welfare], Heisei 31 Nen Shuro Joken Sogo Chosa [2019 Comprehensive Survey on Working Conditions] (Tokyo, 2019), 5. Article 32–3.

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compared with other countries.25 One of the reasons for this is the limitations on business activities imposed by government regulations. Although the degree of limitation depends on the industry, the ‘Uber’ style ride-share service is prohibited under Japan’s Road Transportation Act, unless the driver who owns automobiles and provides a ride-share service for passengers has obtained a licence from the government as an enterprise to provide transportation service. Thus, Uber Japan, a subsidiary of Uber in Japan, has engaged merely in the online application service for dispatching taxis in conjunction with existing licensed taxi companies. Meanwhile, platform businesses are gradually becoming popular in certain industries for which government regulation is relatively weak. For example, Ubereats, an online food delivery service for which Uber Japan provides a platform, is booming, particularly after the government declared an emergency owing to Covid-19 and Japanese people refrained from going out to eat. Although there is a legal issue as to whether Ubereats drivers are ‘workers’ under the Labour Union Act in Japan, some drivers organised a union, the Ubereats Union, with the purpose of achieving sufficient compensation for accidents during delivery, appropriate renumeration, and transparent operation of the business. The union requested Uber Japan to enter into collective bargaining regarding the issue of changes in renumeration. However, Uber Japan refused this request, contending that the drivers are not ‘workers’. In March 2020, the union filed a complaint before the Tokyo Local Labour Relations Commission, alleging that the company has committed unfair labour practice by refusing to bargain with the union. In October 2022, the Commission issued its decision holding that these drivers are “workers” and ordered Uber Japan to bargain with their union.26 Another phenomenon that is closely related to but distinctive from the platform economy is the gig economy. The term ‘gig economy’ usually refers to business transactions between an individual and a client conducted on a short-term and on-demand basis through online communication. While this part of the nature of the gig economy is also part of the platform economy, since service providers in a platform business often perform short-term and ondemand services, a transaction in the gig economy can take place even in the ordinary twoparty employment relationship where companies that provide the ‘platform’ do not exist. Still, the gig economy and the platform economy share the common feature that individuals who are usually treated as independent contractors become a party to the transactions. (ii) Legal Issues Regarding the Platform Economy As stated, an individual who provides services in a platform business is usually treated as an independent contractor rather than an employee. Legally speaking, however, an issue arises as to whether such an individual is an independent contractor or an employee regarding the applicability of protections under labour law. As the development of the platform economy is relatively slow in Japan, there appears to be no judicial precedent on this issue. Also, legal analysis by academics has only just begun.27 In Japan, as stated in Section II, in order for an individual to be protected under the Labour Standards Act and the Labour Contract Act, he/she must provide service under the direction and control of the other person. Although the question of whether an individual is a ‘worker’ is based 25

26

27

Ministry of Internal Affairs and Communication, Information and Communication in Japan: White Paper (Tokyo, 2018), 18–19. Tokyo Metropolitan Government, Uber Japan Jiken Meireisho Kofu Ni Tsuite [Decision in the Uber Japan case was issued](2022), https://www.metro.tokyo.lg.jp/tosei/hodohappyo/press/2022/11/25/14.html. See, e.g., A. Hamamura, ‘Platform economy to Rodo Ho Jo No Kadai [Labour law issues regarding platform economy]’, Rodo Chosa [Labour Research], [2018–8], 4.

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Platform Provider

Intermediary

Independent Contractor

Service Contract

Individual

Customer

Provide Service

figure 20.1 Service provided by an individual.

Platform Provider (Service Provider)

Provide Service

Customer

Service Contract

Independent Contractor or Employee?

Individual

figure 20.2 Service provided by a platform provider.

on the totality of circumstances in each case, courts and scholars have extracted factors that may influence such determination, as explained in Section III. These factors that are used to determine whether an individual is a worker or an independent contractor have been examined mainly in cases where there is no doubt that the individual at issue provides services for the other person or organisation that is alleged to be an employer. Here, the notion of ‘worker’ has a premise that an individual provides service for the employer as the other party to the contract. When it is asked whether an individual is an ‘worker’ in a case that involves a platformer, however, another issue arises: for whom does such an individual provide services, that is, do they provide services for the platformer or for the customers of the platform business? If such an individual provides services for customers, the platformer is merely an intermediary. In this case, the individual is usually an independent contractor who utilises a platform (see Figure 20.1). On the other hand, if the individual provides services for the platformer, it is the platformer that does business with the clients through the individual (see Figure 20.2). It is in this latter case that the individual can be a ‘worker’ if he/she receives

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direction and control from the platformer. This issue can be resolved by applying the factors that determine the traditional two-party relationship. As a matter of formality or contractual documentation, it is often an individual that provides services to customers. However, the status of ‘worker’ is determined on the basis of objective facts in each case. Thus, it must be questioned whether, under the facts of each case, it is an individual or a platformer that provides services to customers in addition to the traditional factors listed earlier. Although the issue is not the same as that of the platform economy, there are a few cases in which a similar point was discussed regarding the status of franchisees regarding convenience stores in Japan. In these cases, owners of convenience stores who run the stores under franchise agreements organised unions and requested their franchisers to enter into collective bargaining. The franchisers refused to bargain, contending that the owners are not ‘workers’ under the Labour Union Act. The union filed a complaint before the Labour Relations Commissions, contending that the owners (franchisees) are ‘workers’ because they are in fact under the direction and control of the franchiser; their status as independent proprietors is not obvious. Two Local Labour Relations Commissions upheld the unions’ contention and ordered the franchisers to bargain collectively with the union. However, the Central Labour Relations Commission reversed these orders and held that franchisees in these cases are not ‘workers’.28 As stated before, the criteria to determine whether an individual is a ‘worker’ under the Labour Union Act are different from those contained in the Labour Standards Act, and different factors are considered. It must still be asked in common whether an individual provides services for franchisors or customers both under the Labour Standards Act and under the Labour Union Act. Although the Central Labour Relations Commission considered these factors, the Commission took into consideration the fact that the franchisees engaged in retail activities with consumers. The Commission held that the franchisees cannot be regarded as being integrated into the organisation of the franchisers as long as the franchisees engage in retail activities independently from the franchisors. On the other hand, if the franchisees do not have such independence, they can be regarded, in substance, as performing services on behalf of their franchisers. The Commission found that the franchisees in these two cases do not lose their independence as owners of convenience stores who engage in retail activities. Considering all other factors for the determination of a ‘worker’ under the Labour Union Act, such as obviously independent proprietorship, the Commission concluded that the franchisees in these cases are not ‘workers’. Although the Commission admitted that the bargaining powers of the franchisees are weak in comparison with those of the franchisers, it stated that such difference in bargaining power should be addressed under economic regulations. In both cases, the union sought a judicial review of the order. In one of these cases, the Tokyo District Court upheld the order,29 holding that the franchisees are not ‘employees’ under the Labour Union Act with an emphasis on their independence as business entities, while the other case is still pending before the Tokyo District Court. There are many factual differences between these cases and cases where it is disputed whether an individual who provides services in the platform business is a worker in relation to the platformer. Franchisors are not platformers, although they often establish a number of systems, such as transportation, accounting, and advertising, to facilitate franchisees’ businesses. Also, retail sales activities as convenience stores are different from service activities that individuals in 28

29

Seven-Eleven case, 6 February 2019, www.mhlw.go.jp/churoi/meirei_db/mei/m11941.html; Family Mart case, 6 February 2019, www.mhlw.go.jp/churoi/meirei_db/mei/m11942.html. Tokyo District Court, 6 June 2022 (to be published soon).

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a platform business are engaged in. Retail sales activities can be found to be independent more easily than activities for providing services, since the latter lack the element of purchasing goods for retail sale. Still, in determining whether an individual who performs services reliant on a platform is an employee of the platformer, it is necessary to consider whether the individual performs services for the platformer rather than for customers or clients, since such a relationship is a premise of the status of a worker.30 If an individual who provides services lacks independence from the platformer, the individual is regarded as providing services on behalf of the platformer, as shown in Figure 20.2. Finally, even if an individual who uses a platform is not an ‘employee’, it does not foreclose the possibility of legal protection for such individual. If the individual is inferior to the platformer in terms of bargaining power, the Anti-Monopoly Act provides for protection against the abuse of superior power as an unfair trade practice. (iii) Human Resource Service Providers Other than platform businesses, technological innovation can influence various aspects of business activities affecting the employment relationship. One such influence is found in the realm of human resource (HR) management. Although there is little research on this topic in Japan, the recruiting process is one example. Since recruiting is a time-consuming process, more and more companies are beginning to outsource at least some of its components.31 If such outsourcing is limited to internal processes such as document management, there are not many legal issues under labour and employment laws. However, if an employer outsources to contractors activities that include contact with applicants, such as interviewing, a question may arise as to whether the recruiting company is liable for the conduct of such contractors. Under Article 715 of the Civil Code, an employer is liable for its employees’ tortious conduct if such conduct is carried out in the course of implementing the employer’s business. Meanwhile, if the tortious conduct is carried out by an independent contractor, its client is not liable unless such conduct is caused by the negligence of the client (Article 716 of the Civil Code). Thus, in principle, an employer is not liable for the tortious conduct of any contractor to which it outsources its recruiting process activities, unless the conduct of the contractor is caused by the employer’s negligence. Although there appears to be no judicial precedent applying Article 715 of the Civil Code to outsourcing of the recruiting process or other HR activities, the scope of the employer’s liability for the misconduct of contractors under the Civil Code is limited. On the other hand, the scope of relief under labour and employment laws can be a little broader than the Civil Code. For example, Article 121 of the Labour Standards Act provides that if a person who violates this Act is an agent, employee, or ‘other person who acted on behalf of the business proprietor in connection with the subjects that are concerned with workers at the establishment’, the business proprietor is subject to fines for these persons’ violation of the Act. The phrase ‘other member who acted on behalf of the business owner’ is interpreted liberally. For example, the Ministry of Health, Labour and Welfare issued an administrative interpretation that a proprietor can be liable for the conduct of a social insurance attorney who is not an 30

31

If a legislative response is carried out to make such relationship unnecessary, it would be easier to regard a service provider as a worker employed by a platformer. For a view that suggests such interpretation under the existing statutes, see Hamamura, ‘Platform Economy to Rodo Ho Jo No Kadai’, 11. See T. Komiya, ‘Saiyo to Outsourcing [Hiring and Outsourcing]’, Nippon Rodo Kenkyu Zasshi [Japanese Journal of Labour Studies], 567 (2007), 39.

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employee of the proprietor but performs its business on behalf of the proprietor.32 Although this Article is a provision regarding criminal punishment for the violation of the Labour Standards Act, Labour Inspectors often request voluntary correction of violation when they find a case in which criminal liability is likely to arise. Thus, when a contractor violates the Labour Standards Act regarding matters that are outsourced by an employer, there is a likelihood that the employer is in fact required to take corrective actions. Also, an employer’s liability for unfair labour practices under the Labour Union Act has a broader scope than the Civil Code. Although the Act prohibits only the unlawful conduct of the employer, the unlawful conduct of the employer’s agent, even though the agent is not an employee of the employer, can be attributed to the employer if such conduct is carried out on behalf of the employer in performing the agent’s delegated duties. A typical example is a case where an attorney of an employer makes a threat to union activities or remarks in violation of the duty to bargain in good faith in the course of collective bargaining. In such a case, the Labour Relations Commission can order the employer to provide relief for the attorney’s unlawful conduct.33 Based on such understanding, this can also be the case where a contractor to whom an employer outsources its HR activities engages in unlawful conduct under the Labour Union Act.

V POLICY ISSUES AND RESPONSES BY SOCIAL PARTNERS

A Policy Issues: Future Labour Policies and Beyond As stated in the preceding section, some of the new issues arising from technological innovation in the workplace have been discussed under current labour and employment laws in Japan. However, since it is not clear whether the existing legal framework can sufficiently cope with these new issues, policy discussion for the future is necessary. Indeed, policy discussion by the tripartite government council and social partners has begun on some of these issues, such as skill development, flexible workstyle, and protection of independent contractors. On the other hand, policy discussion is still scarce regarding the new business styles such as platform economy and gig economy, probably because the new business styles have not yet developed in Japan. (i) Skill Development and Education In Japan, fear of unemployment as a result of being displaced from a job through technological innovation is relatively weak owing to its population decline and the structure of the employment relationship being based on ‘membership’ rather than ‘job’. However, it is most likely that some industries or jobs will thrive in the future, while others will decline. Although the total balance of supply and demand in the labour market as a whole may remain stable, it is another matter whether each individual can move from declining industries to growing industries. It is often pointed out that training is important to promote the smooth turnover of workforce and prevent unemployment. As stated before, important skills required for jobs that will remain and become more necessary are skills to make decisions based on information that technology provides, and skills to identify problems or goals. Thus, training must be 32 33

Kihatsu [Administrative Circular] No. 169, 26 March 1987. E.g., Fukuoka District Court, 16 May 2019, www.mhlw.go.jp/churoi/meirei_db/han/pdf/h10666.pdf (an employer was held to be liable for its attorney’s bad-faith conduct during collective bargaining sessions).

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designed to obtain not only sufficient literacy in information technology but also a mindset for making decisions and identifying problems. In order to sufficiently qualify workers with such a mindset, training them in a traditional sense may not be enough. Rather, school education to foster creativity before entering the labour market becomes more important. Such training should be planned and implemented in a collaborated manner between labour policy and education policy. Meanwhile, embracing technological innovation does not necessarily mean imposing the burden to obtain skills only on workers. The subject of innovation includes the development of human interface with technology so that ordinary workers can handle advanced technology without difficulty. It would be more cost-effective to make advanced technology more accessible for workers than to train workers to handle advanced technology more easily. Although such development may be left to the strategy of each manufacturing company or, at most, industrial policy, labour policy can contribute to the promotion of such development through providing, for example, economic incentives to develop technology that is more user-friendly for ordinary workers. This suggests the possibility of collaboration between labour policy and industrial policy. (ii) New Regulation of the Flexible Workstyle In Japan, the flexible workstyle has not yet developed sufficiently despite technological innovation. Although Japan’s recent situation involving Covid-19 contributed to the increase in the utilisation of telework, the future of workstyle is yet to be seen. However, in light of the shrinking workforce owing to population decrease, promotion of flexibilisation of workstyle is an important policy issue. One of the reasons for the slow development of the flexible workstyle in Japan may be that the employment relationship is based on ‘membership’ rather than ‘job’, which tends to make it difficult for employers to supervise and evaluate their employees based on specified job descriptions. However, there is also a legal background, including the working time regulation, that makes it difficult for companies to adopt a flexible workstyle. Although Japan’s current Labour Standards Act has a provision on working time regarding work that is conducted outside the workplace and for which it is difficult to calculate working time (Article 38–2), neither this provision itself nor its enforcement regulation or its administrative interpretation states under what circumstances this provision is applicable to flexible work through the use of ICT. Thus, it is necessary to clarify such requirement. It is also necessary to clarify under what circumstances a worker is entitled to worker’s compensation for any accident and disease that the worker incurs in the course of flexible work. In March 2021, the Ministry of Health, Labour and Welfare issued a revised guideline on telework that, to a certain extent, clarified the requirement for application of the special treatment of working time under Article 38–2 of the Labour Standards Act.34 Among other things, the guideline clarified that the difficulty in calculating working time is determined by whether an employee has a right to disconnect from the employer’s network or to stay away from the computer even if the disconnection is not permitted. However, the guideline still does not clarify under what circumstances an employee’s accident or disease is regarded to be job-related. More fundamentally, there is a policy issue pertaining to whether a worker should have the right to make use of a flexible workstyle even when the employer opposes it. Since the styles of 34

Kosei Rodo Sho [Ministry of Health, Labour and Welfare], Telework no Tekisetsuna Donyu oyobi Jisshi no tameno Guideline [Guideline for the Smooth Introduction and Implementation of Telework] (2021), www.mhlw.go.jp/content/ 000759469.pdf.

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work are quite varied, depending on the nature of each job, organisation, and industry, it will be difficult to introduce a comprehensive regulation to compel companies to implement flexible workstyles based on each employee’s choice. However, it is useful to provide an incentive, economic or otherwise, for companies to implement flexible workstyles based on each employee’s needs. Indeed, in March 2020. the Ministry of Health, Labour and Welfare began to assist small enterprises that have implemented systems for flexible work or reduction of working time by providing a ‘subsidy for workstyle reform’ to help with the cost of ICT equipment, training of workers, fees for consultants, and so on. (iii) Protection of Independent Contractors Against the background of the recent increase of independent contractors in Japan, considerable discussion is currently developing regarding the protection of independent contractors. As discussed, there are a number of cases under existing labour and employment statutes that turn on whether an individual is a ‘worker’ or an independent contractor. In recent years, however, the policy discussion has become focussed on whether new legislative and other measures are necessary to protect independent contractors even when they are not workers under the current criteria, and, if so, what the contents of protection for such independent contractors should be.35 Although it is generally agreed that independent contractors should be given more protections, there are, roughly speaking, three policy alternatives regarding how to accomplish this. The first is to expand the definition of ‘worker’ so that more independent contractors can be treated as ‘workers’. The second is to extend part of the protections currently afforded to ‘workers’ to certain independent contractors by creating provisions similar to the special participation system under the Workers’ Compensation Insurance Act. The third is to improve the protections for independent contractors under the economic regulations rather than the labour regulations. In Japan, some statutes for economic regulation, such as the Anti-Monopoly Act, have a provision to regulate ‘unfair business practice’, including prohibiting abuse of superior power by large companies against small companies. In July 2020, the Prime Minister’s Cabinet of Japan adopted the Action Plan for the Growth Policy,36 based on the proposal of the Council on Investment for the Future. The Action Plan states that measures for giving more protections to freelancers should be established. Here, roughly speaking, freelancers are individuals working as independent contractors. The measures proposed in the Action Plan include issuing guidelines for the application of provisions regarding protection of freelancers against the abuse of superior position under the Anti-Monopoly Act. More specifically, the Action Plan proposes the requirement of issuance of documentation clarifying terms and conditions of transaction as well as clarification that unilateral change or violation of contract can constitute abuse of superior position. The Action Plan also proposes legislation to extend the coverage of the Workers’ Compensation Insurance Act to freelancers. In response to the last proposal, the Workers’ Compensation Division of the Labour Policy Council is now preparing to amend the Workers’ Compensation Insurance Act. Furthermore, the Action Plan proposes that the guideline should clarify that if a ‘freelancer’ is in reality a ‘worker’, despite contractual languages, protections under labour and employment laws are applied. Among the 35

36

See R. Yamakawa, ‘New wine in old bottles? Employee/independent contractor distinction under Japanese labor law’, Comparative Labor Law and Policy Journal, 21 (1999), 102. Kakugi Kettei [Determination of Cabinet], Seicho Senryaku Jikkou Keikaku [Action Plan for the Growth Policy] (Tokyo, 2020), 2–5.

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above three alternative policy approaches towards increasing protections for independent contractors, this proposal is a mixture of the second approach, which extends some parts of the protections under labour and employment laws to independent contractors who do not come within the scope of traditional definition of ‘worker’, and the third approach, which focusses on protection under economic regulation. More recently, the current Prime Minister Fumio Kishida established in his Cabinet Office ‘a Headquarter to Create New Capitalism’ in October 2021, to discuss and formulate his economic policy. As a result of its discussion, the Cabinet issued a policy declaration called the Grand Design and Action Plan for a New Form of Capitalism in June 2022.37 This declaration contains a plan for new legislation to enhance the protection of freelancers in the course of business transactions such as payment of renumeration. Based on this declaration, the Cabinet Office recently made a proposal for legislation. This proposal contains provisions that require clients of individual freelancers who do not employ other persons to issue a document that clarifies the contents of the contract, to provide thirty days’ advance notice when cancelling the contract, and to pay the renumeration within sixty days after the completion of the work.38 Although these provisions contain regulations similar to the regulations in the employment contract, this legislative proposal emphasises the weakness of freelancers in business transactions. On 28 April 2023, the Parliament of Japan enacted the Act Regarding the Improvement of the Bargaining of Freelancers, which incorporated this proposal. These policy responses indicate that protection of independent contractors can be achieved through a mixture of protections under labour and employment law and economic law such as the Anti-Monopoly Act. In addition, these responses indicate the possibility of partial, if not comprehensive, extension of protections under labour and employment law, depending on the nature of the measures for protection. B Social Dialogue (i) The Tripartite Council’s Proposal In Japan, collective bargaining and related dialogues between labour unions and employers mainly take place at company or enterprise level. However, large labour unions, particularly national centres and industrial federations, and employers’ associations often participate in tripartite governmental councils that discuss and propose labour policies together with neutral members. One of the most important councils regarding labour and employment matters is the Labour Policy Council established by the Ministry of Health, Labour and Welfare, which has a number of divisions. In September 2019, the Fundamental Policy Division of the Labour Policy Council issued a report on the policy regarding the influences of technological innovation such as development of AI on labour and employment matters.39 While acknowledging the advantages of technological innovations in the workplace, the Council’s Report stresses the importance of joint consultation between labour and management when corporations introduce technological innovation, to 37

38

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Cabinet Office, Grand Design and Action Plan for a New Form of Capitalism: Investing in People, Technology, and Startups (7 June 2022), www.cas.go.jp/jp/seisaku/atarashii_sihonsyugi/pdf/ap2022en.pdf. Cabinet Office, Freelance ni Kakaru Torihiki Tekiseika no Tameno Houseido no Houkousei [Direction of Legislation to Improve Freelance Transaction] (13 September 2022), https://public-comment.e-gov.go.jp/servlet/ PcmFileDownload?seqNo=0000241038. Kosei Rodo Sho [Ministry of Health, Labour and Welfare], Rodo Seisaku Shingikai Rodo Seisaku Kihon Bukai Hokokusho [Report of the Fundamental Policy Division of Labour Policy Council] (Tokyo, 2019), 1–6.

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discuss its influence on such matters as employee working conditions and training plans, to prepare for the implementation of the new technology. The Report also points to several policy issues that may arise from the utilisation of technological development, such as the necessity of protecting workers’ privacy, the responsibility of employers for biases or ethical problems when AI makes determinations on behalf of employers, the need for assistance for workers’ training in order to adapt to technological innovation and to facilitate smooth turnover in the labour market, and the need for measures to assist workers who would face difficulty in the process of such adaptation. (ii) Labour Unions and Employer Organisations Apart from the discussion by the Labour Policy Council, some labour unions and employers’ organisations have expressed their views on the influence of technological innovation in the workplace. The Japanese Trade Union Confederation (JTUC), Japan’s largest national centre, while acknowledging the benefits of technological innovation, expressed concerns in its 2020–21 policy statement about problems such as an increase in ‘vague employment’ in the course of technological development, for which legal protection is inapplicable or it is not clear that it is applicable.40 In addition, there are two large industrial unions (federations) in Japan. The Japanese Electrical Electronic & Information Union expressed in its policy statements that efforts to utilise technological innovation must be based on the ‘Three Guiding Principles of Productivity’, which are: (1) maintenance of employment, (2) cooperation between labor and management, and (3) fair distribution of the fruits of increased productivity.41 Also the Federation of Information and Communication Technology Service Workers of Japan issued a similar policy statement.42 The ‘Three Guiding Principles of Productivity’ were declared in 1955 by the Japan Productivity Centre, a non-profit organisation run mainly by employers and labour unions, to promote productive business activities through cooperation between labour unions and management. Meanwhile, the Japan Business Federation (JBF), the largest employers’ association in Japan, issued a policy report in March 2020 entitled Human Resource Development for Pioneering the Age of Society 5.0.43 The term ‘Society 5.0’ refers to the stage of development of a society that features technological innovation such as AI. Pointing out that technological innovation will change not only business and industries but also society as a whole, the JBF predicts that the required role and skill of individuals in corporations will become different from now, since insight, creativity, and communication skill will be much more important. The JBF concludes that corporations should enhance training programmes for employees to develop these skills. (iii) Remaining Issues Although there is a difference in opinions between management and labour with respect to the emphasis on the necessity of maintaining employment opportunities, which the labour side naturally emphasises, both sides acknowledge the importance and advantages of technological 40 41

42

43

Rengo [JTUC], 2020–2021 Nendo Undo Hoshin [Union Policy for 2020–2021] (Tokyo, 2020), 1. Denki Rengo [Japanese Electrical Electronic & Information Union], Dai7ji Sangyo Seisaku [Seventh Industrial Policy] (Tokyo, 2019), 136. Joho Roren [Federation of Information and Communication Technology Service Workers of Japan], Digital Gijutsu Kakushin eno Taio [Response to Digital Technological Innovation] (2019), http://ictj-report.joho.or.jp/1908-09/sp04 .html. Nippon Keidan Ren [Japan Business Federation], Society 5.0 Jidai wo Kirihiraku Jinzai no Ikusei [Human Resource Development for Pioneering the Age of Society 5.0] (Tokyo, 2020), 13–14.

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innovation and the need to develop the required skills. Also, as the report of the tripartite Labour Policy Council points out, the importance of labour management cooperation through such measures as joint consultation is recognised by both sides. Still, details of new policies are yet to be discussed. For example, as regards training to adapt to technological innovation, it is not yet clear how the development of required skills will be promoted beyond enhancement of literacy for information technology. Also, while the discussion on the protection of independent contractors has been developing, the proposal to expand the public labour insurance system is currently limited to workers’ compensation. Utilisation of the insurance mechanism may be expanded to include the loss of business opportunities for independent contractors beyond ‘unemployment’ in the narrow sense. Furthermore, another policy choice would be to expand a job matching system like the public employment service to independent contractors and their clients. Such a job matching system is intended to promote the function of the ‘labour market’, which is traditionally composed of workers and employers. However, if independent contractors are in a similar position as workers in the labour market, such expansion is worth considering. Indeed, the study group report Future of Workstyle 2035 has made such suggestions.44 Finally, in contrast to the discussion on the protection of independent contractors, policy discussion on how to tackle the problems of the platform and gig economies has not developed, probably because the development of the platform economy is considerably slow in Japan. Policy discussion may well be developed in conjunction with the progress of research into the platform economy.

VI CONCLUSION

In Japan, although discussion on the issues arising from technological innovation in the workplace has begun, there has not been any serious concern about displacement from employment, probably because of the slow development of the implementation of technological innovation in the workplace, the demand for more workforce owing to declining population, and the structure of the employment relationship that emphasises ‘membership’ rather than ‘job’. Meanwhile, the benefits of technological innovation such as flexibilisation of workstyle have not been widely enjoyed by working people in Japan except for specific categories of employee such as professionals. Nevertheless, technological innovation is likely to accelerate the speed of changes in the world of work, such as by increasing the use of atypical employment and the number of independent contractors. In addition, new business styles such as ‘platform business’ are, albeit slowly, beginning to spread in Japan. This is also the case with the development of new businesses regarding HR outsourcing. These developments have brought about new issues under labour and employment laws. Some of these issues can be resolved through the existing legal framework, such as the criteria for distinguishing between an employee and an independent contractor. However, it is beginning to be recognised that wider policy discussion is necessary to tackle problems arising from technical innovation in the workplace without sacrificing its benefits. Regarding some issues, new policies have already been proposed such as partially extending protections afforded to workers to certain independent contractors and more stringent 44

Ministry of Health, Labour and Welfare, Future of Workstyle 2035, Study Group’s Report (Tokyo, 2016), www .mhlw.go.jp/file/06-Seisakujouhou-12600000-Seisakutoukatsukan/0000152704.pdf, 19–24.

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application of economic laws such as the Anti-Monopoly Act. Still, there are a number of policy issues for which more discussion is necessary. In any event, one of the features of policy discussion in Japan is that it is not limited to labour policies in a traditional sense but, rather, includes economic, education, and other policy areas. This suggests that policies to tackle problems and/or to promote the benefits of technological innovation need to be mixed or collaborative in nature. This appears inevitable in light of the broad and deep impacts that technological innovation will cause. On the other hand, it is to be noted that the tripartite government council on labour policy has already emphasised the importance of joint consultation between management and labour in implementing technical innovation in each workplace. This suggests that, since the implementation of technical innovation may create various concerns in the workplace, it is meaningful to make efforts to minimise such concerns and promote understanding of the benefits of technical innovation through cooperation between management and labour.

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21 The Republic of Korea: Old Regulations and New Challenges in the World of Work Keunju Kim and June Namgoong*

I INTRODUCTION The crisis consists precisely in the fact that the old is dying and the new cannot be born: in this interregnum a great variety of morbid phenomena appear.1

The Republic of Korea (Korea) is known to be a country that is dynamic in many ways. At a glance, this may be true in relation to its labour law. In a relatively short span, it has made and revised a number of labour law statutes and case-law in response to political, economic, and social changes. It is, however, not certain that its labour law, aged almost seventy, remains a still adequate regulatory tool to address the changes in, and challenges to, the world of work caused by recent technological developments. This chapter sees the life of Korea’s modern labour law coming to an end, but does not necessarily see the dawn of a new labour law era. Hoping to contribute to finding this new path, this chapter will lead the reader through where we are now and where we are heading at this crossroads.

II THE ARCHETYPE OF LABOUR LAW IN KOREA

Korea’s modern labour law was born with the promulgation and implementation of four framework Acts in 1953, the year when the Korean War Armistice Agreement was signed.2 These were drafted under the influence of the equivalent in Japan set out during the occupation of the American military government after the Second World War.3 Some of the United States’ labour law institutions, such as the National Labor Relations Board (‘labour relations commission’ in Korea), along with their unfair labour practices, were amalgamated into the existing labour law system in Korea, which had already transplanted a continental European-style law and theories of employment contract and collective agreement. The detailed content has since been revised and significantly extended with new instruments introduced over the decades. Nonetheless, the basic skeleton of labour regulations established by the legislation remains largely unchanged to date. Labour law in Korea, legislation and case-law alike, is mandated to respect, protect, and fulfil the fundamental rights enshrined in Articles 32 and 33 of the Constitution. In substantive terms, * 1

2

3

We would like to thank our research assistant, Kisung Kim, for his excellent work including English proofreading. N. Countouris, Defining and Regulating Work Relations for the Future of Work (Geneva: International Labour Office, 2019), 1 (referring to A. Gramsci, Quaderni del Carcere [Prison Notebooks], vol. 1 (Rome: Einaudi, 1975), 311). These include the Trade Union Act, the Trade Dispute Adjustment Act, the Labour Relations Commission Act, and the Labour Standards Act. The first two were in 1997 merged into one with the new title Trade Union and Labour Relations Adjustment Act. Hyungbae Kim, Labour Law, 26th ed. (Seoul: Parkyoung-sa, 2018), at 45 (in Korean).

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Korean labour law was, and generally still is, broken down into law on individual employment relations (‘individual employment law’) and law on collective labour relations (‘collective labour law’). The Labour Standards Act is the core statutory pillar of the former and the Trade Union and Labour Relations Adjustment Act of the latter. With such relations and the market more advanced and complicated over time, the labour law has been called on to carry out additional regulatory functions such as governing job placement services, agency (dispatch) work, and insurance programmes for industrial accident compensation and unemployment. That is, labour law in the broad sense has been steadily expanding its territory to encompass labour market institutions (‘labour market law’) and social insurance schemes that are related to and based on employment (‘social insurance law’). The conventional approach to Korean labour law’s personal scope of application requires the presence of an employment contract – more correctly, a subordinate contract of employment.4 An employment contract shall be deemed to exist where (some of the) relevant indicators are found, even if the formal contract between the parties concerned was intended and drafted to establish a legal relationship other than an employment relationship (primacy of facts).5 Only a party to a contract of subordinate employment, that is, an employee, is entitled to the protections under Korean labour law. The Labour Standards Act introduces the statutory concept of ‘employee’ to provide her/him with a legal floor of rights for the minimum standards of employment. The definition functions as the threshold for application of other labour market laws such as the Employment Security Act as well as other protective employment legislation such as the Minimum Wage Act, the Act on the Guarantee of Employees’ Retirement Benefits, and the Wage Claim Guarantee Act, because these Acts apply mutatis mutandis to employees.6 Until recently, the same held true for social insurance law such as the Employment Insurance Act and the Industrial Accident Compensation Insurance Act. The term ‘employee’ under the Labour Standards Act is defined as ‘a person, regardless of the kind of occupation, who offers labour to business or a workplace for the purpose of earning wages’.7 In two landmark cases, respectively in 1994 and 2006, the Supreme Court of Korea (the Court) further elaborated on the notion and formulated the test by providing multiple factors to be considered when deciding employee status.8 To be specific, the elements offered in the 2006 case include (1) whether the alleged employer decided what work was to be done by the alleged employee; (2) whether the alleged employer’s ‘rules of employment’ or personnel policy applied to the alleged employee;9 (3) whether the alleged employer directed and controlled to a significant degree how the work was to be performed; (4) whether the alleged employer designated when and where the work was to be carried out; (5) whether the alleged employee was entitled to freely choose the work to be undertaken by a substitute; (6) whether the alleged 4

5

6

7 8

9

For details as to the general concept of subordinate employment and contract of employment, see Countouris, Defining and Regulating Work Relations, 2–5. Jonghee Park, ‘The concept of employee under the Labour Standards Act’, Journal of Labour Law, 16 (2004), 121 (in Korean); 대법원 2006.12.7 선고 2004다29736 판결 (Supreme Court Decision, 2004Da29736, 7 December 2006). An important exception to this is the Occupational Health and Safety Act since its personal scope of application started diverging from the Labour Standards Act and thereby the other protective employment legislation (individual employment law) after recent amendments, which goes beyond ‘employee’. Labour Standards Act, Art. 2.1(1). 대법원 1994.12.9. 선고 94다22859 판결 (Supreme Court Decision, 94Da22859, 9 December 1994); 대법원 2006.12.7. 선고 2004다29736 판결 (Supreme Court Decision, 2004Da29736, 7 December 2006). The statutory term ‘rules of employment’ refers to company’s work rules, workplace rules, or staff regulations concerning the matters enumerated in Art. 93 of the Labour Standards Act, for instance, regarding the starting and finishing time of work, recess hours, holidays, leaves, and shifts, and the manner in which to decide and calculate wages, which, per the article, employers employing ten or more employees on a regular basis are obliged to set up.

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employee owned the equipment, raw materials, or tools required for the work; (7) whether the alleged employee made profits or suffered loss from the work at his/her own risk as if it was his/ her own business; (8) whether and to what extent the alleged employee’s labour was provided continuously and exclusively to the alleged employer; (9) whether the remuneration was paid in exchange for the work provided itself; (10) whether a base pay or a fixed wage was paid to the alleged employee; (11) whether wage and salary income tax was deducted as a withholding tax; and (12) whether the alleged employee was registered as the alleged employer’s employee with the social security system. It is worth noting that the 2006 case recalled the reality that employers are normally in a position vis-a`-vis those who provide them with labour where they can unilaterally decide matters relating to factors (10), (11), and (12) in favour of an assertion against establishment of an employment relationship. In this respect, the Court left a caveat that evidence submitted regarding those factors should not readily be used against employee status. While the 2006 case made some distinction between main and ancillary elements,10 no single factor was explicitly declared to be decisive. Henceforth, judges are required to take a holistic approach to the given factors. Nonetheless, overall it is essentially the question of whether and to what extent the alleged employer exercises the right to direct and control how the work is performed, namely element (3), that ultimately determines the case. Perceived as the gateway to employment rights, the employee status test soon began to be tested for fitness with the changing nature of work.

III THE CHANGING NATURE OF WORK

A Economic Background Korea underwent an acute financial crisis resulting from its severe shortage of foreign exchange reserves in November 1997.11 The International Monetary Fund (IMF) bailed Korea out on the condition that Korea moved to devise and implement an IMF-friendly, comprehensive economic restructuring programme focussed on the financial sector.12 As part of that programme, labour law reforms proceeded towards more labour market flexibility, particularly through dialogues and agreement between the social partners and the government at the First-Phase Tripartite Commission (now the Economic, Social and Labor Council [ESLC]).13 The social corporatism laid a political foundation, among others, for legalising (collective) dismissal for managerial reasons and temporary agency work businesses through the amendment and introduction of relevant statutes.14 With this legal and institutional shift from prohibition to regulation, a number of firms sought to be ‘slimmer’ and thus more efficient and competitive by actively spinning off non-core functions to separate entities and outsourcing them. The trend for more flexible employment has only been reinforced since the global financial crisis of 2007–8. 10

11

12

13

14

Sung-tae Kang, ‘Protecting people in special type of employment through labour law: Focusing on the change in case-law on the employee status test’, Quarterly Journal of Labor Policy, 7(3) (2007), 112–16 (in Korean). Kihwan Kim, ‘The 1997–98 Korean financial crisis: Causes, policy response, and lessons’, at the High-Level Seminar on Crisis Prevention in Emerging Markets, organised by the IMF and the Government of Singapore (10–11 July 2006), at 4–6. For the scope of the programme, see, e.g., table 2 in Kunio Saito, ‘Korea’s economic adjustments under the IMFsupported program’, a presentation by Director Regional Office for Asia and the Pacific, IMF, at the Sogan University/Korea Economic Daily Conference (21 January 1998). Cheol Soo Lee, ‘The evolvement of Korean labor law after the IMF bailout’, Seoul Law Journal, 55(1) (March 2014), 210–11. Ibid., 213–14.

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B Emergence of Workers in Non-standard Employment (1): Non-regular Employees Following the tide, Korea has been witnessing a surge in people in non-standard employment. Such people can legally be divided into two groups. One is ‘non-regular employees’ or ‘atypical employees’, which is neither a statutory nor a strictly defined case-law term. But, it is rather a loose concept to collectively refer to employees who are on an employment contract for a fixed term (as opposed to permanent), part-time (as opposed to full-time), and/or with an agency work business or subcontractor (as opposed to direct employment). It is unequivocal that labour legislation applies to them since they are still employees, but some of them do not come under the full umbrella of employment protective statutes. Taking employees on part-time or fixed-term contract as an example, employees whose contractual work hours per week, on an average of four weeks, are fewer than fifteen hours do not retain the statutory rights to a weekly paid holiday and annual paid leave under the Labour Standards Act.15 Nor are they qualified for the statutory right to retirement benefits under the Act on the Guarantee of Employees’ Retirement Benefits, as is also the case for employees whose continuous service period is shorter than a year.16 One can also easily find growth and increased spread in the use of employees in indirect employment (or use of external labour) since 1997 in Korea.17 While directly employed by a temporary work agency or subcontractor, they typically provide work at the workplace of the ‘user company’ or the contractor. The fundamental difference between the two relationships, namely agency work (dispatch) and outsourcing, is which party retains and exerts the right to direct and control the employees concerned in de jure (agency/dispatch work) and de facto (outsourcing) triangular employment relationships. It is thus in relation to the user company in an agency work relationship and the subcontractor in the case of outsourcing where no formal relationship of any sort exists between the employees and the contractor. It is worth noting that the statutory law prohibits dispatch employees from being sent to perform jobs directly related to production in the manufacturing industry.18 It should also be noted that, in Korea, collective bargaining is decentralised by firm and collective agreements are rarely concluded at industrial levels (and rarer in manufacturing sectors), leading to a lack of job-based pay systems that commonly apply across the industry. Against this legal and practical background, manufacturing industries in Korea have been incentivised to use external labour through subcontractors (rather than dispatch through temporary work agencies) as a way of reducing wage cost and securing labour flexibility. While it may be economically rational from a business standpoint, this practice has been criticised from a social perspective. With these two interests colliding, it has been often subject to legal proceedings whether the subcontractor’s employees working in the contractor’s or outsourcing firm’s production facilities are actually used as if they were dispatched employees working in the user company’s workplace. The vital issue that decides legal disputes of this kind is, as noted, which party, the alleged contractor or the alleged subcontractor in question, exercises the right to direct and control the employees concerned. If the court finds that it is the contractor, then the 15 16 17

18

Labour Standards Act, Arts. 55 and 60, respectively. Act on the Guarantee of Employees’ Retirement Benefits, Art. 4(1). See, e.g., Byoung-hoon Lee and Suk-bum Hong, ‘Dispatched labour in South Korea: Regulatory issues and causal analysis’ in Fu Huiyan (ed.), Temporary Agency Work and Globalisation: Beyond Flexibility and Inequality, ch. 6, 127–50 (Farnham: Ashgate, 2015), 127ff; Gwang-pyo Noh, The Reality of Indirect Employment and Policy Suggestions, KLSI Issue Paper 2014–12 (Seoul: Korea Labour & Society Institute, 2014), 3ff (in Korean). Act on the Protection, etc. of Temporary Agency Employees, Art. 5 (Jobs Permitted for Temporary Placement of Employees): (1) Jobs permitted for temporary placement of employees shall be deemed appropriate for that purpose in consideration of professional knowledge, skills or experience or the nature of duties and prescribed by Presidential Decree, except for those directly related to production in the manufacturing industry.

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alleged contractor will legally be deemed the user company in an agency work relationship. Said firm then would highly likely be found to have violated Article 5 and/or other relevant articles of the Act on the Protection, etc. of Temporary Agency Employees. Furthermore, this will most likely enable Article 6–2 to apply, which will obligate the user company (the alleged contractor) to directly employ the dispatched employees (the alleged subcontractor’s employees) who have been employed by the temporary agency business concerned (the alleged subcontractor). Such litigations continue to be brought before courts. This is quite understandable given what is at stake particularly in relation to subcontractors’ employees, such as the huge disparity in pay level, job security and other employment terms and conditions between employees employed by contractors, which are normally large corporations that dominate the supply chain in the manufacturing sector, and subcontractors or vendors, which are typically small or middlesized and significantly dependent on the contractor.19 The 2019 Economically Active Population Survey in Korea indicated that 1.65 million people are working in indirect employment, which amounts to roughly 8 per cent of the total number of employees (see Table 21.1). C Emergence of Workers in Non-standard Employment (2): Dependent Self-Employed The other group of people in non-standard employment are those working as a self-employed or solo contractor. Formally speaking, their work arrangements are in legal nature a contract for service, not a contract of employment (service). They may be autonomous or semi-autonomous in the sense that they are not legally subordinate or subject to direction and control of how the work is to be performed from those who receive their services. In terms of reality, however, they are normally (economically) dependent on the person who receives their services, thereby termed dependent solo self-employed or dependent solo contractors. According to the survey conducted in 2020 by the Korea Labour Institute (KLI), the number of dependent contractors in Korea is presumed to be nearly 2.21 million (see Table 21.1). table 21.1 Workers who are vulnerable because of lack of employment protection: scale of the problem Types of workera

Estimated number (Unit: 1,000 persons)

Employees working fewer than 15 hours a week Employees on a daily contract Employees working for a micro enterprise (1–4 employees) Employees in indirect employment (agency work or outsourcing) Dependent self-employed/contractors Total Actual vulnerable employees/workers (excluding redundancy)*

932 748 3,783 1,655 2,209 9,327 7,275

a

Taken from the 2019 Supplementary Economically Active Population Survey, public data on employment types, KLI data, and so on. * A redundancy rate of 22 per cent was applied to short-time, daily, micro enterprise, and dispatch/in-house contract/ special employment workers. Source: Adapted from Heungjun Jung, Scale of Those Excluded from Social Protection and Alternative Policy Directions, KLI Working Paper 2020–08 (Sejong City: KLI, 2020), 7, table 7.

19

For a general overview on this issue, see, e.g., Kisun Kim, ‘The law and practice of temporary agency employees in Korea’, Journal of Labour Law, Korean Society of Comparative Labour Law, 41 (2017), 1–29 (in Korean).

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In terms of application of labour law, dependent self-employed workers are in a more vulnerable position than non-regular employees. While, albeit with some exceptions, nonregular employees in principle fall within the personal scope of labour law in the broad sense noted earlier (including social insurance law and labour market law), dependent contractors do not. In fact, however, some of them may meet the aforementioned criteria of employee status under the Labour Standards Act as established by the Court (misclassification). And yet reclassifying them as an employee requires a court decision, which is costly and risky. Thus, a growing number of such workers have been being excluded from the confines of protective labour legislation. Policymakers, civil society, and academics alike consider the increasingly common practice of using workers in non-standard employment to be undesirable. For non-regular employees, it very often leads to deterioration of their working terms and conditions, and raises an issue of discrimination in relation to those of ‘regular employees’.20 The widespread use of dependent self-employed seems to be drawing even more concerns recently as one of the most urgent and fundamental challenges to contemporary labour law. The regulatory gap is expanding between the reality in the current world of work and the personal scope of application of the protective legal framework lagging behind. And all this contributes to magnifying the persisting labour market dualities and polarisation.21 In this respect, the phenomenon of ‘the fissured workplace’ is clearly the best snapshot of the current employment practices in Korea.22

IV ‘UBERISATION’ IN KOREA? THE KOREAN CONTEXT

Since the late 2010s, there have been a growing number of people working through digital platforms. Digital platform jobs take on a variety of forms, such as ride-hailing, food delivery, translation, and data labelling, many of which used to be, and some of which are still being, undertaken in the informal economy for ‘cash in hand’. Although the level of ‘choice’ over whether or not to perform work and the flexibility to determine working hours are relatively high, it is not possible to uniformly state whether or not there is a right to determine pricing and performance evaluations. Still, at the risk of over-generalising, digital labour platforms may be defined as using ‘digital technologies to intermediate between individual (labour) suppliers and clients or directly engage workers to provide labour services’.23 The survey conducted by the KLI in 2020 indicated that the number of digital platform workers, perceived in the broad sense, was approximately 1.79 million, accounting for 7.4 per cent of the employed in Korea (including selfemployed).24 Among them, platform workers – defined in a narrow sense as those who provide labour through a digital platform that influences the assignment of work and is capable of 20

21

22

23

24

See, e.g., Soh Yeong Kim, ‘A study of the fixed term labor contract: Special focus on the Nonstandard Workers Protection Act on fixed term employment’, Journal of Legal Studies, Chungnam National University Law Research Institute, 20(1) (2009), 201–29. See, e.g., Hyuk Kwon, ‘Reform of irregular employment legal system in Korea’, Law Review, Pusan National University Institute of Law Studies, 56(2) (2015), 155–80 (in Korean). Eun Jeong Park, ‘Protection for persons in special types of employment based on labour law’, Korean Journal of Industrial Relations, 28(3) (2018), 48 (in Korean). For elaboration on the term ‘fissured workplace’, see D. Weil, The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It (Cambridge, MA: Harvard University Press, 2017). ILO, World Employment and Social Outlook: The Role of Digital Labour Platforms in Transforming the World of Work (Geneva: ILO, 2021), 33 (box 1.1). This refers to European Union, The Platform Economy and Precarious Work, Policy Department for Economic, Scientific and Quality of Life Policies, Directorate-General for International Policies (Brussels: European Parliament, 2020), 1. Jiyeon Chang, The Scale and Features of Platform Workers, KLI Employment and Labor Brief (30 December 2020), 3.

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monitoring the work – account for 220,000 people, which is 0.9 per cent of all employed persons.25 This latter group of platform workers are considered to be in need of social protections because of their precariousness and vulnerability, caused by their footing between firms and the market.26 The vague nature of their work between subordination and autonomy and/or between dependence and independence has been inviting recurring academic discussions and policy debates as to whether to regulate this new type of work and, if so, which employment and social standards to apply.27 Each kind of digital platform work varies in terms of how the work is carried out and what legal relations are formed among the parties to that work arrangement. However, it is noteworthy that local-based, on-demand type platform work in particular, that is, gig work, tends to fall within the latter group. In addition, gig work in Korea is generally distinct, in a legal sense, from its equivalent in other parts of the world. This is because such gig work relations in reality often involve employing entities positioned between the digital platform firm and the platform worker. Such entities, as a middleman, act more like an employer in many aspects of the relationship with the platform worker. This does not mean, however, that such entities formally recognise themselves as the employer. They normally do not sign a contract of employment with their platform workers, although they do often exercise a de facto right to control said workers who have to use an application (app) operated by a digital platform firm. A typical example is food delivery agencies and courier service agencies. Adding the client/ customer side to the equation, a square relationship, rather than a triangular relationship, will likely be established in a gig (on-demand platform work) relationship in Korea. In this legal and factual circumstance, it will be even more daunting to view a digital platform firm as the employer of the platform worker in a given case. Furthermore, exceptional cases aside, the courts would likely find no employment relations at all between any parties therein under the current legislation, the Labour Standards Act in particular, and the above-noted caselaw. The unique setting surrounding gig work in Korea relates, among several things, to its longstanding industry structure and business models in action before ‘the era of digital platform’ arrived. Many of the services that are now provided dominantly by platform workers through digital platforms were originally offered by ‘conventional workers’, more likely dependent contractors, through their agencies or ‘analogue platforms’. It is in this context that working through digital labour platforms is emerging as a conundrum to labour law that compounds the issues of indirect employment (or use of external labour) and dependent contractors in Korea.

V INITIAL RESPONSES

A Social Insurance Dimension The initial response in labour law to this ‘Uberisation’ was to seek to approach it within the existing legal framework through an expansive, flexible interpretation of the text (purposive 25 26 27

Ibid., 7. Ibid. For a view in favour of adopting an intermediate category in labour law legislation to address this issue, see, e.g., Ji Soon Park, ‘The development of a shared economy and the challenges of labour and social security laws’, Future Growth Studies, 5(1) (2019), 125–36 (in Korean). To approach this issue by adapting and expanding the existing concept of ‘employee’ under the Labour Standards Act, see Ohseong Kwon, ‘A study on the legal status of platform workers as employees under the Labour Standard Act’, Labour Law Forum, 32 (2021), 1–23 (in Korean); and Youngju Lee, ‘A critical examination of a third employment category for on-demand work in Korea’, Labour Law Forum, 32 (2021), 25–57 (in Korean).

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approach). Such an attempt was first observed in the field of social insurance law, more specifically the Industrial Accident Compensation Insurance Act (Industrial Accident Act). This was because the Industrial Accident Act reserved a conceptual tool for its application to workers who are not an ‘employee’. It is the category of ‘persons in special types of employment’ (PSTE), the statutory terminology for dependent contractors, which the Labour Standards Act and others do not recognise. In the mid-2000s, a consensus was forged that certain social security nets, namely the industrial injury insurance scheme at the minimum, should encompass (at least some) non-employee workers. Hence, the Industrial Accident Act as revised in 2007 introduced the novel notion of PSTE and applied it to those working in four kinds of job/ trade. The scope of application has since been increased to fourteen kinds and further expansion is planned. Let us look into the definition in detail: PSTE refers to those who ‘engage in jobs prescribed by Presidential Decree,28 among the persons who are not subject to the Labour Standards Act, etc., even though they offer labour services similar to that of employees regardless of the type of contract, and therefore need protection from occupational accidents as they also meet the [two] requirements’.29 So what are the two requirements? The first is that ‘[t]hey mainly provide one line of business with labour services necessary for the operation thereof on a routine basis, and receive payment for such services and live on such pay’. The second is that ‘[t]hey do not use other persons to provide such labour services’. While PSTE are not ‘employees’ within the realm of the Labour Standards Act, from the perspective of the Industrial Accident Act they are deemed, and treated, as such, with some exceptions including the need of their contribution. Overall, while relevant only to matters of occupational accidents in Korean law, the concept of PSTE seems similar to the notion of ‘dependent contractor’ in the International Classification of Status in Employment 2018 or ‘limb (b) worker’ under the Employment Rights Acts 1996 in the United Kingdom. This intermediate concept has proved useful in tackling the ‘platform phenomenon’. In 2018, there were two landmark cases decided by the Supreme Court of Korea regarding food delivery couriers’ eligibility to receive insurance benefits under the Industrial Accident Act.30 In general, the work of said couriers is digitally mediated through an app provided and operated by a socalled app company. A distinct feature of these cases was the presence of a localised small delivery firm acting like an agency for app companies. Typically, such agencies run a business, often exclusively, in a certain region and install the app in restaurants for use by their couriers. A common primary issue of the two cases was whether the food delivery courier in each case met the conditions of PSTE. More specifically in 2016du49372, the key issue was whether, firstly, the courier fell within the notion of ‘employee’ within the confines of the Labour Standards Act and, if not, then, secondly, whether the courier fell under the notion of PSTE and, more specifically, which subcategory of PSTE. The Court held that the courier concerned was not 28

29 30

Art. 125 of the Enforcement Decree of the Industrial Accident Compensation Insurance Act enumerates nine kinds of job or trade for the purpose of defining PSTE: (1) insurance solicitors; (2) owner-drivers of concrete mixer trucks; (3) learning-aid tutors; (4) golf caddies who assist with golf games at a golf course; (5) door-to-door couriers subcategorized under the Korean Standard Classification of Occupations and engaged in collection or delivery affairs in courier services (referring to services delivering parcels after collecting and transporting them); (6) door-to-door couriers sub-categorized under the Korean Standard Classification of Occupations and engaged in delivery affairs entrusted from mainly one quick service provider according to the standards prescribed by the Minister of Employment and Labour; (7) loan solicitors; (8) solicitors of credit card holders; and (9) persons engaging in a designated driving service entrusted by mostly one designated driver in accordance with criteria set by the Minister of Employment and Labour. For full details of this provision, see https://bit.ly/3PQJJ0T. Industrial Accident Compensation Insurance Act, Art. 125.1. Supreme Court Decisions 2016du49372 and 2017du74719, 26 April 2018.

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an employee in that sense because the reality, let alone the form, of the relationship between the courier and the agency company (and not the app companies per se) did not satisfy the test established in 2006 by the Court, as noted earlier.31 To reach this conclusion, the Court shed light on the following facts: (1) the riders (including the injured worker in question) were free to accept the work available on the app; (2) they were not subject to any discipline/penalties for not undertaking delivery work; (3) the app was not used with a Global Positioning System (GPS) function and thus their location and performance were not monitored; (4) they did not assume any responsibility for a delayed delivery; (5) there were no particular working times and workplaces designated by the firm; (6) they were free to work for someone else, provided that it did not affect the work for the firm in question; (7) they were free to have someone else work for them; and (8) they were paid not in salary but in commission fees. The Court then addressed the second issue of PSTE, focussing on whether the courier concerned fell under the sixth type of PSTE, that is, ‘door-to-door couriers sub-categorized under the Korean Standard Classification of Occupations and engaged in delivery affairs entrusted from mainly one quick service provider according to the standards prescribed by the Minister of Employment and Labour’.32 On this issue, the lower court found, more on a textual basis, that the courier in this case fell under ‘9223 Food Deliverers’ sub-categorised under the Korean Standards Classification of Occupations and thereby was not PSTE. In reversing this ruling, the Court took a more purposive approach and ruled that, given its nature, the work in question fell not under the subcategory of ‘9223 Food Deliverers’ but under that of ‘9222 Door to Door Deliverers’ and that this adjustment needed be addressed in similar cases before the Court.33 Accordingly, the Court overturned the decision made by the lower court and ordered another review of the case in this light and application of the aforementioned adjustment. B Collective Context The Trade Union and Labour Relations Adjustment Act (Trade Union Act), the backbone of collective labour law, establishes the notion of ‘worker’ as an agent who shall enjoy rights to association, to collective bargaining, and to collective action. It is worth noting that the Korean term for these two concepts of ‘employee’ and ‘worker’ is identical, namely 근로자(勤勞者) albeit they have slightly different statutory definitions.34 Recently, however, this difference in the definitions began to be taken seriously and the two terms have been interpreted differently.35 The milestone was marked by the Supreme Court’s ruling on 15 June 2018 in which it provided a new set of criteria for ‘worker’ under the Trade Union Act,36 diverging from that for ‘employee’ under the Labour Standards Act. Compared to the factors considered for employee status, the focus of a ‘worker’ test in the context of the Trade Union Act appears to centre far more on the 31 32 33

34

35

36

Supreme Court Decision 2004da29736, 7 December 2006. Enforcement Decree of the Industrial Accident Compensation Insurance Act, Art. 125.6. While not explicit on this, in the view of the authors, the Supreme Court appeared to consider that the ‘9223 Food Deliverers’ clause was originally intended to cover traditional food deliverers employed by restaurant owners, for example Chinese restaurants workers who are often directed to provide other works than delivery. While the Labour Standards Act defines ‘employee’ as ‘a person, regardless of the kind of occupation, who offers labor to business or a workplace for the purpose of earning wages’, the statutory concept of ‘worker’ under the Trade Union Act refers to ‘any person who lives on wages, a salary, or any other income equivalent thereto, regardless of the person’s occupation’. For this reason, the authors decide to use different terms in English, that is, ‘employee’ for individual employment law and ‘worker’ for collective labour law in Korea to avoid confusion. Supreme Court Decision 2014du12598, 16 June 2018.

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economic dependence of an alleged ‘worker’ to the alleged employer and less on the aspect of subordination as regards the right to control and direct. To be specific, the criteria include: (1) whether a worker’s source of income is mainly dependent upon a specific employer; (2) whether an employer unilaterally decides the terms of a contract, including wage, that it concludes with a worker who provides the necessary labour; (3) whether a worker gains market access by way of providing the essential labour to an employer’s business; (4) whether the legal relationship between the worker and an employer is of a substantially continuous and exclusive nature; (5) whether there exists a certain degree of supervisory/managerial relationship between an employer and a worker; and (6) whether the income, such as wage or salary, that a worker receives from his/her employer is a consideration for provision of labour.37 It is reasonably accepted that the above decision has laid the legal foundation for non-standard employment and platform workers to be considered ‘workers’ and for their organisations to be deemed trade unions. This view has been confirmed by a series of subsequent lower court rulings that upheld the worker status of parcel service couriers and chauffeurs who use digital labour platforms for their work.38 Owing to the concepts of PSTE and ‘worker’ under the Trade Union Act, particularly as recently interpreted by the courts, Korean labour law can be said to adopt a ‘modified binary divide’.39 At one extreme, there is subordinate and dependent employment, of ‘employees’, under the Labour Standards Act, while autonomous and independent selfemployment is at the other extreme. Some intermediate groups such as PSTE and ‘worker’ have been placed between them.

VI QUO VADIS?

A Expanding the Personal Scope of Social Insurance Schemes and the Obligations of Platform Operators While it is true that the intermediate concepts, with the courts’ purposive approach, may absorb some of the ‘shock’ of Uberisation, it is neither adequate nor sustainable. This is fundamentally because a worker will be considered PSTE in the context of the Industrial Accident Act only when he or she mainly provides one line of business with his/her labour services necessary for the operation thereof (the ‘mainly’ requirement). However, one of the very characteristics of working through digital labour platforms is that technologies enable a worker to freely work for multiple end-clients and further through multiple platforms. In this regard, the ‘mainly’ requirement is highly likely to be a stumbling block for many platform workers to fall within the notion of PSTE. The two Supreme Court cases regarding the occupational injuries of riders mentioned earlier were able to bypass this hurdle since the riders were found to be PSTE vis-a`-vis the local agencies, not the digital labour platforms. Although such ‘middlemen’ are still commonly present in many gig economies, many other platform services are also currently in operation

37

38

39

Seoung-Jae Yu, ‘The worker status of workbook tutors under the Trade Union Act’, Labour Law Monthly, 327 (August 2018), 138–43 (in Korean). See, e.g., Seoul Administrative Court Decisions, 2018Guhap50895, etc. and 2018Guhap62867, 24 September 2020 (cases regarding parcel service couriers and their unions). For a comment on this series of cases, see, e.g., Ohseong Kwon, ‘The decision in favour of the worker status of parcel service couriers under the Trade Union Act’, Labour Law Monthly, 344 (January 2020), 58–61 (in Korean). For the term ‘modified binary divide’, see N. Countouris and V. De Stefano, New Trade Union Strategies for New Forms of Employment (Brussels: European Trade Union Institute (ETUI), 2019), 19.

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without such agencies. Therefore, recently there have been calls for institutional reforms to enlarge the personal scope of social insurance schemes40 – focussing on industrial accident compensation insurance and employment insurance in particular. A first step towards institutional reform has already been taken in social insurance law. Examples are the recently amended Employment Insurance Act and the Industrial Accident Compensation Insurance Act. The key changes include the Employment Insurance Act introducing the concept of ‘persons providing labour’, which entered into force on 1 July 2021, and the Industrial Accident Compensation Insurance Act replacing PSTE with the concept of ‘persons providing labour’, which took effect on 1 July 2023. The new concept has fewer qualifying components than PSTE without, above all, the ‘mainly’ requirement. To be concrete, Article 77–6(1) defines a person providing labour as a person, not an employee, who is engaged in the types of occupation prescribed by Presidential Decree (hereinafter referred to as ‘persons providing labour’) from among those who enter into a contract under which he or she provides labour in person without using a third party for other person’s business and receives certain remuneration from the business owner or person provided with labour (hereinafter referred to as ‘labour-providing contract’) as well as to an employing unit that enters into a labour-providing contract with such person.

Therefore, it would be fair to say that platform workers as well as traditional dependent contractors/self-employed would likely be considered ‘persons providing labour’ in this context. Later, the Industrial Accident Act was also amended to follow this path of broadening the intermediate category by finally abandoning the controversial concept of PSTE and replacing it with the concept of ‘persons providing labour’ as under the Employment Insurance Act. In addition to removing the ‘mainly’ requirement, the revised Employment Insurance Act and the Industrial Accident Act have also introduced more specific obligations and responsibilities borne by employing agencies and platform operators particularly in terms of platform workers’ data and information. For example, Article 77–7 of the Employment Insurance Act (and Article 91–21 of the Industrial Accident Act similarly) provides that where a business owner collects and manages data and information related to the worker and/or himself/herself/itself, and signs a platform use contract with a platform operator who records and processes such data and information in the form of electronic information (hereinafter referred to as a ‘labour provisions platform’), the platform operator shall report the beneficiary status of insurance eligibility of the worker.

The Article further ensures that, subject to the Minister’s request, the platform operator shall provide the following data or information necessary for the use of the platform and confirmation of insurance relations in order to efficiently handle insurance affairs related to platform workers: (1) the start or end date of the platform use contract; (2) data or information prescribed by Presidential Decree, such as the name and address of the workplace, as matters related to the insurance relations of the business owner; and (3) data or information prescribed by Presidential Decree, such as the worker’s name, job type, and remuneration, as matters related to the worker’s insurance eligibility. In this case, the platform operator who has received the request shall comply unless there is a justifiable reason not to.

40

In the Republic of Korea, the term ‘social insurance schemes’ is an umbrella term covering four major schemes: national pension, national health insurance, industrial accident compensation insurance, and employment insurance.

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B How Social Partners and Trade Unions Are Responding Recently in Korea an increasing number of digital platform workers have been organising trade unions and some of them have been seeking to collectively bargain with platform companies or local-based agency firms that directly hire the platform workers. Two prominent trade unions have surfaced in this industry. One is the Rider Union and the other is the Korean Federation of Service Workers’ Union (KFSU). The KFSU is much bigger than the Rider Union and affiliated with one of the two national confederations of trade unions, the Korean Confederation of Trade Unions (KCTU). It is worth noting that on 23 April 2020, 배민라이더스 (Baemin Riders, one of the biggest platform business players in Korea) has begun a collective bargaining procedure with the KFSU, the trade union that has been determined to also represent the Rider Union pursuant to the procedure under Article 29–2 of the Trade Union Act. On 22 October 2020, they concluded a collective agreement. And yet it is also the case that many alleged platform employers still continue to deny their status as the formal employer because of the presence of the local agencies concerned, and refuse to cooperate and participate in the collective bargaining procedure. Accordingly, unless there is a law, whether statutory or case-law, that can address challenges such as the joint-employment doctrine in the United States, considering platform workers as ‘workers’ under the Trade Union Act is not sufficient in and of itself. Other than collective bargaining between trade unions and platform businesses, there have been many efforts to promote social dialogue, whether institutionalised or not, to address any negative issues resulting from the emerging digital platform economy and to promote working terms and conditions for those working in that economy. The ESLC, a presidential advisory body that was established in January 1998, has been providing the primary forum for such a social dialogue where the relevant stakeholders (representatives of the workers and the employers and the government) have gathered and had discourses. On 23 May 2020, following a long dialogue, the Committee on the Digital Transformation and Future of Work, one of multiple committees dealing with issues regarding digital platforms in the Council, announced a code of conduct; although it is not legally binding, it is expected that platform companies as well as other parties to the economy will respect and comply with it. The code of conduct is mainly to formulate guidelines for fair terms of contract between workers and platform companies such as those on formation, payment method, fees, tax, non-discrimination, performance assessment programmes, and dispute settlement, but it does not necessarily address the highly sensitive issue of the employment status of platform workers.41 C The First Individual Legislation Solely Targeted at Platform Workers On 18 March 2021, a Bill was tabled at the National Assembly, titled Bill for Act on the Protection and Support of Platform Workers. The stated purpose of the Bill is ‘to protect the basic rights and interests of platform workers and to establish fair contractual relationships, thereby improving their socioeconomic status and contributing to the sound development of the online platform industry’.42 A quick observation of the objective and the thirty-six provisions for achieving that goal tells that the Bill is intended to fill some of the conspicuous regulatory crevices rather than to be a ‘game-changer’. In other words, the Bill seeks to secure a minimum level of fairness in platform work relations, regardless of whether or not the relation is an employment relation. It keeps a careful distance from the issue of legal status in labour law of parties in platform work 41 42

Economic, Social and Labor Council, Press Release (26 May 2020), https://bit.ly/3JK23EX. Bill for Act on the protection and support of platform workers, Art. 1.

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relations, that is, who is an employee to whom (employer). The Bill makes this ‘neutrality’ and its ‘subsidiarity’ nature clear in an introductory article regarding its relation to other Acts. Article 3 provides that, if a platform worker falls under the Labour Standards Act, the Trade Union Act, or any other labour law legislation, then the applicable laws take precedence over this Act (Bill) and the same is the case for competition law statutes (neutrality). At the same time, however, the Article states that if the application of this Act (Bill) is more advantageous to platform workers relative to the aforementioned Acts, this Act (Bill) will be applied (conditional subsidiarity). The neutrality of the Bill to labour law is also spotted in the terms that it employs. That is, it embraces and uses the (rather impartial) social security legal terminologies that are in the Employment Insurance Act, tailoring them to work relations in respect of digital labour platforms. To be specific, firstly, the Bill deems a ‘platform worker’ ‘a person who mainly provides his or her own labour brokered or mediated through the online platform and receives remuneration, etc. in return, without using another person to provide said labour, regardless of the name or type of the contract’.43 This definition is quite similar and equivalent to ‘persons providing labour’ in the Employment Insurance Act. Secondly, the Bill clarifies a ‘platformusing business owner’ as ‘a person who receives labour from a platform worker and runs a business through it’.44 This term is equivalent to ‘business owners’ or ‘recipients of labour’ in the Employment Insurance Act and probably refers to local-based agencies, employing entities, or ‘middlemen’ in practice. And, lastly, a ‘platform operator’ is defined as a (legal) ‘person who uses an online platform to mediate the labour provision of platform workers’, like a digital labour platform firm in reality.45 It is noteworthy, however, that the Bill recognises the principle of primacy of facts in its own version. The Bill ensures that ‘if the platform operator substantially determines the method of providing labour or remuneration for platform workers, or for other reasons prescribed by Presidential Decree, the platform operator will be deemed as a platformusing business owner in the application of Chapter 3’ and will thus have to assume the obligations and responsibilities of a platform-using business owner.46 Subsequent to these general provisions, the Bill specifies the obligations and responsibilities of platform operators and platform-using business owners mostly in regard to their relations with platform workers. Chapter 2, titled ‘Platform-Using Contract and Platform Operator’s Duties’ (Articles 5 to 12), can be summarised as follows. Platform operators must fairly conclude the online platform use contract and provide said contract in writing on an equal footing with the platform worker. If that contract is altered in any way, the details of the alteration and the reason(s) for it must be disclosed ten days before the change of said contract, and fifteen days before any lay-offs/ terminations. Again, the content, reason, and timing shall be provided in writing to the platform workers.47 Platform operators must protect the personal information of platform workers and strive to resolve disputes in a timely manner related to platform workers providing labour.48 When a platform worker requests information, the platform operator must provide it ‘except in cases deemed likely to significantly harm legitimate interests upon disclosure such as matters related to management and business secrets’.49 While seemingly indisputable, as are most of the obligations related to procedural fairness on the part of platform operators, a fierce legal debate is envisaged as to the scope of platform operators’ information-disclosing obligation. This is expected because said 43 44 45 46 47 48 49

Ibid., Art. 2(2). Ibid., Art. 2(4). Ibid., Art. 2(3). Ibid., Art. 4. Ibid., Arts. 5–6. Ibid., Art. 7. Ibid., Art. 8.

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legal issue is deeply entangled with other, crucial legal and/or ethical issues such as the use of artificial intelligence-based ‘algorithmic management’ in general and the test of subordination or control in particular.50 The Bill allocates the highest number of provisions for the protection of platform workers in their relation with platform-using business owners. Platform-using business owners shoulder a similar set of procedural obligations to those borne by platform operators. Specifically, platform-using business owners must also fairly conclude a labour provision contract in an equal position with the platform worker, and provide the contract in writing to the platform worker.51 If they intend to change the payment standard and so on, the platform worker must be notified in writing at least ten days in advance.52 When platform-using business owners intend to terminate a contract, the details, reason(s), and timing thereof must be provided in writing to the platform worker at least fifteen days in advance.53 The chapter goes a step further to touch upon platform-using business owners’ procedural/substantive obligations. For example, platformusing business owners must properly determine the remuneration in consideration of the expenses required for labour provision by the platform worker.54 Should damage occur owing to the malicious intent or negligence of the platform-using business owner, responsibility should not be unfairly imposed on platform workers.55 The Bill also provides a list of platform workers’ basic human rights that are often at risk of being infringed owing to their unequal and vulnerable contractual position with the platformusing business owners. In this light, the Bill does not allow platform-using business owners to discriminate against platform workers. Not only that, but actions that fall outside the purview of the exercise of legitimate rights pursuant to this Act (Bill), for example verbal abuse; assault; sexual misconduct/harassment; adverse treatment for pregnancy, childbirth, childrearing, and so on, are strictly prohibited. The safety and health of platform workers, as well as their personal information and privacy, encompass other concerns that the Bill aims to advocate.56 As noted already, the Bill does not take a stand on the issue of the legal status under labour law of platform workers. However, once such a worker is determined to be covered by social insurance, the Bill mandates that the platform-using business owner must fulfil the obligations stipulated in the relevant laws and regulations.57 Platform-using business owners also have to support platform workers’ vocational competency development, and endeavour to take appropriate measures, such as granting leave, such that they can participate in relevant vocational training.58 The Bill also outlines the responsibilities of the government. For example, the Minister of Employment and Labour must establish a basic plan for platform workers within the range of five years and conduct an actual working conditions survey within the time frame of roughly every three years59. Furthermore, the government must develop and disseminate standard contracts, and it can support platform operators’ mutual aid projects, conduct training for 50

51 52 53 54 55 56 57 58 59

For an overview of the discourse on this, see, e.g., A. J. Wood, Algorithmic Management: Consequences for Work Organisation and Working Conditions (Seville: European Commission, 2021), JRC124874. Bill for Act on the protection and support of platform workers, Arts. 13 and 14. Ibid., Art. 17(2). Ibid., Art. 18. Ibid., Art. 17(1). Ibid., Art. 16. Ibid., Arts. 22 and 25. Ibid., Art. 26. Ibid., Art. 27. Ibid., Arts. 29 and 30.

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vocational skills development necessary for platform workers, and support expenses related to the application of social insurance for platform workers.60 The Minister may request platform operators and platform-using business owners to instruct or cooperate in matters necessary for the enforcement of this Act.61 Also, the Minister retains the power to impose a fine of not more than KRW 5 million on platform operators who violate some of the main clauses of this Act (Bill).62 D ‘Beyond Employment’ and Relevant Debate It may be fair to assess that the course of responses of the labour law in Korea to technological development in general and Uberisation in particular has been moderate thus far. The strategy taken was not intended to fundamentally reform the legal framework of labour law built on the institution of the (subordinate) employment contract and its key concepts of employee and employer. Rather, it sought mainly to partially and gradually expand the personal scope of each (group of) labour law legislation and case-law, and treat the newly included as an exception. In connection with this, it is noteworthy that there has long been an argument in Korea for a genuine ternary system such as maintaining the ‘employee’ status and adopting an intermediate category blended in every part of labour law, that is, including individual employment law, for example the Labour Standards Act. What has been achieved so far is at best a reinforced and modified binary divide that is effective in regard to only social insurance and collective labour laws. If passed in its current form, the Bill for Act on the Protection and Support of Platform Workers will certainly be welcome and long overdue progress. It appears, however, that no attempt so far, including the Bill, is audacious enough for us to address the technological changes and regulatory challenges to the world of work that we will be facing in the years to come. Against this background, more radical views, albeit considered ‘ideas’ at this stage, are being discussed such as a proposal for abandoning the institution of the subordinate employment contract. It is then argued to replace it with the concept of a person-providing-labour (or simply a worker) focussing on the presence of economic dependence, not of personal subordination (a more-inclusive binary system). Corresponding to such debates at a conceptual level, more practical and technology-related policy proposals are also being examined. An example of such ideas is to transform the current employment-based social insurance model into an income-based one. Such a model is no longer technologically unfeasible because the authorities are capable of tracing and recording most of the transactions and incomes of a worker paid by (one of) his/her employer(s) without much delay in time. This technological development may allow for a system where multiple employers are to be charged an insurance fee proportional to the income of their worker or personproviding-labour. This also means that it is no longer necessary to identify and decide the (primary) employer of a worker and keep, for instance, the ‘mainly’ requirement at least for the purpose of managing the social insurance schemes. While discussed as a remote idea at the moment, many see this as a move in the right direction.

60 61 62

Ibid., Arts. 31 and 32. Ibid., Art. 34. Ibid., Art. 36.

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22 Technological Disruption and Labour Law: Between Utopia and Dystopia Marc De Vos

The collection offered in this book is a kaleidoscopic exercise in contrast. Contrast between the promises and pitfalls of technological innovation that often reach a degree of hype in the public discourse, on the one hand, and the speed and breadth of law reform, on the other. Between the varying legal traditions of regions and countries in dealing, through labour and employment law, with what has been a historical constant of modernity: adjusting and responding to technological change. Between regimes more favourable to embracing technological innovation through evolving labour organisation and/or regulation, and regimes more favourable to restricting technology by old or new labour organisation and regulation. Between countries where the pace of legal progress is set primarily through courts and cases in a typically incremental, organic, and occasionally transformational fashion, and countries where the statute book sets the tone in a typically categorical fashion. Notwithstanding such predictable and at times profound differences, the varying chapters in this volume do show a degree of commonality and indeed convergence as a global and rising tide of technological innovation sweeps across our world. Common themes emerge. The first and most prominent theme is the impact of the platform or gig economy on the age-old distinction between employees and the self-employed. Adjusting to the twenty-first century what is essentially a legal architecture from the early twentieth century through the prism of technology-driven and algorithmically organised forms of work is an issue in every country documented in this collection. Many countries are grappling with this issue against the backdrop of a long-term trend towards atypical work, often combined with an erosion of centralised collective bargaining, in their respective labour markets. From this longer-term perspective, platform work, emerging as it has through the very visible ‘move fast and break things’ practices of some of its corporate avant-garde, has achieved a level of political, policy, and legal urgency beyond its current economic and labour market significance. In all of the countries represented in this collection, the emergence of platform work has in its first phase been addressed as another episode in the art of contract qualification and disqualification: another frontier in a decades-long evolution that is updating and interpreting the paradigmatic distinction between employees and self-employed. This phase is marked almost everywhere with gradually emerging and occasionally seminal case-law that, in the absence of statutory intervention, is incrementally moving towards a greater emphasis on economic dependence or independence, rather than on formal legal independence, in distinguishing subordinate workers from independent contractors. This shared trend does not necessarily lead to a shared outcome across the case-law, but it has increasingly put a degree of worker rights and protections onto the contractual architecture of platform work. This trend is further deepened by the slower emergence of statutory law. 366 https://doi.org/10.1017/9781108878647.022 Published online by Cambridge University Press

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While some countries were early adopters of statutory innovation to address the technological innovation of platform work – notably France and Italy – the recent European Union (EU) proposal to improve the working conditions of people working through digital labour platforms is likely to accelerate statutory development in the near future. The proposal echoes pioneering national legislation in designing a bundle of rights targeted at a subcategory of economically active people. If this is the way of the future, it seems unlikely that the advent of platform work will reset the traditional distinction between employees and self-employed. Instead, what is then likely to emerge is a separate category and another layer of differentiation within the overall labour market and economy, and within an otherwise unchanged legal architecture. This is progress, compared to the limbo and the fluidity of the status of platform work under a workers versus self-employed dichotomy. However, if one shares the desire for a more comprehensive, inclusive, and transversal modernisation of work-based protections and rights, as advocated in the introductory chapter of this volume (Chapter 1), such an outcome is suboptimal at best. It remains to be seen whether a de facto ‘third status’ for platform work will have spillover effects on the broader distinction between subordinate and independent work into the future. The dramatic rise in remote work triggered by the Covid-19 pandemic is another recurring theme. As with platform work, we witness the paradoxical impact of a new technology that enables more autonomy and flexibility while also providing more opportunity for monitoring and surveillance. As with platform work, pandemic-induced remote work rose against the backdrop of pre-existing trends and issues, in this case around telework and working time. In terms of legal developments, across the countries referenced in this book the pandemic first and foremost witnessed a degree of laissez-faire towards remote work, obviously under the stark and pressing requirements of social distancing. At the time of writing, only a few of the countries represented in this collection had tentatively embarked upon a trajectory of addressing legal concerns triggered by what many expect to become a new normal of endemic remote work: disconnection, privacy, well-being, office costs, insurances, and work-related risks. But it is widely acknowledged by the chapter authors in this volume that issues of working time and broader concerns around privacy, human rights, and human dignity are integral to the labour challenge presented by new technologies. Several express the hope, shared by this author and promoted by the International Labour Organization (ILO), that the very design of new technology could increasingly integrate and accommodate these concerns up front, thus avoiding the difficult and slow process of litigation or law reform. This brings us to a final recurring theme in this volume: the role of unions, social partners, and collective bargaining in negotiating the labour bandwidth of new technologies, thereby managing technological disruption by consensus. The picture that emerges here is more nuanced and indeed more hopeful than one of labour unions powerlessly lamenting the rise of digital Taylorism and the algorithmic Panopticon. Notwithstanding an overall context of declining union density and de-collectivisation, unions have not only protested and lobbied politically as platform companies tested the limits of labour standards; they have also succeeded in meeting technological innovation with innovation of their own. Several chapters mention the rise of digital unions that, like the technological innovations they seek to engage, cross the traditional boundaries of work categories, business sectors, and indeed countries. New unions using digital platforms to steer digital platform work is a powerful example of how technological innovation is a coin with two sides and can indeed help to empower and emancipate workers. What emerges from this collection, in the end, is a picture of technological disruption that is neither utopian nor dystopian. The sudden and global advent of platform work did not envelope humanity in an idyllic sharing economy, but neither did it swamp labour markets and reduce

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masses of workers to digital bondage. The rise of new technology, and of artificial intelligence in particular, is not reducing humanity to useless idleness (yet), but it does represent significant challenges of human–technology interaction. Always and everywhere, technological innovation ripples across human existence to blur the distinctions and categories of old. Always and everywhere, the law plays a slow and incremental catch-up with technological innovations. That said, the new phase of generative AI that stormed into everyday life after the completion of the country chapters in this book is remarkable for its early momentum towards immediate political regulation and voluntary industry self-regulation.1 This is a dramatic shift compared to the libertarian attitudes that dominated the rise of the Internet a generation ago, and has apparently been triggered by deep concerns among some cognoscenti about the potential threats posed by laissez-faire approaches towards AI. However, it is still too soon to tell whether we have entered a new interplay between technological and legal innovation. The odds against the law matching the technology in speed are stark, if the analyses offered by this book are to serve as lessons. If technological innovation is to be consciously constrained in real time or even up front, we need the legal innovation that helps legal concerns enter into the very development phase of new technology: a proto-legal framework of guardrails, open-source access for public control, industry charters, and so on, all chased and championed by interest groups and public action. This may become the new normal soon, but it will never yield legal certainty and a level playing field until the law becomes formal and enforceable. Legal progress, in the end, is needed, however slow and sometimes haphazard it turns out to be, and it does lead to real adjustments, as this book also documents. Over time, perhaps even a new balance and synergy may emerge, and the continuously evolving relationship among technology, work, and workers could become one of mutual partnership rather than of disruption followed by accommodation and restriction.

1

See, e.g., the proposed EU AI Act (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A52021PC0206) and the National AI Advisory Commission in the United States (www.ai.gov/naiac/).

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