In France, initiatives relating to the gig economy are generally supported by its pro-entrepreneurial government. As the Minister of Labour considered the employment status of gig workers "a grey area in law", he has sought to make changes in order to clarify the legal position.


Initially, the French government intended to introduce a special status for certain gig economy workers through the draft bill "Loi pour la liberté de choix de son avenir professionnel". This draft bill allowed platforms to adopt a "charter" detailing its social obligations in relation to gig workers. But the article was blocked by the French Constitutional Court on 4 September 2018 because it was adopted using a procedure that was in breach of the Constitution.

On 26 November 2018, the French government tried a second time to introduce a special status, through the draft law "Loi d'orientation des mobilités". The charter would not, by itself, create a link of subordination (i.e. an employment agreement) between the platform and the gig workers. It would protect platforms against the risk of reclassification.

Setting out obligations in a charter is intended to provide greater transparency on working conditions. Platforms would have the obligation to inform gig workers before each engagement of the distance covered and the minimum price guaranteed after deduction of the commission levied. The draft law would also introduce the right for gig workers to refuse an engagement, chose their own schedule and disconnect during their working time without penalty. Finally, platforms would be required to publish on their websites indicators related to working time and earned income by gig workers based on the previous calendar year's data.

The draft law is still currently under discussion before the French National Assembly.

Case law:

On 28 November 2018, the French Civil Supreme Court ruled, for the first time, on the nature of the contract between a delivery person and a digital platform (Take Eat Easy) and reclassified this contract as an employment agreement. In order to be classified as an employee a certain level of subordination is required. When assessing the level of subordination, the court relied on two criteria:

the digital application had a geolocation system enabling the platform to track the position of the rider and
the bonus / malus system used by the platform was equivalent to a power of sanction.

Following this decision, on 10 January 2019, the Paris Court of Appeal overturned a lower court decision and ruled that a contract between Uber and one of its drivers was an employment agreement. The Paris Court of Appeal first demonstrated the Uber driver was not independent and then established the existence of a subordination link with the platform.

The court considered that the Uber driver could not be considered a self-employed worker because he was not free to (i) determine the conditions for providing the transport service, (ii) create his own customer base; and (iii) set the price of the rides.

To assess the level of subordination and whether this was sufficient to establish an employment agreement, the court relied on various criteria:

the driver was required to follow the route given by the GPS instructions of the digital application, subject to penalty if he did not, and required to accept the fares determined through the geolocation system;
the driver was required to wait 10 minutes for the user to arrive at the meeting place as well as comply with Uber's behavioural guidelines regarding its relationship with customers; and
the driver was subject to the order cancellation policy and a rating system that could lead to both the suspension or deactivation of his account.

Uber stated its intention to lodge an appeal with the French Supreme Court. Further decisions on this matter are expected.


Currently, some French Deliveroo gig riders are on strike to protest against their working conditions. As a result, it is quite possible that the French government will create an intermediary status between self-employment and employment in order to deal with this issue, notably through the draft law "Loi d'orientation des mobilités" which is currently being discussed at the Assembly. The case law surrounding gig workers is evolving, but the recent cases show that French courts are considering similar factors to those of the courts in Netherlands, Germany and Spain.


Whilst Germany does not currently intend to make any legislative changes, it does provide a greater level of certainty. A company can apply to the German tax authorities and the social security carrier to confirm whether they should be withholding wage tax and/or paying social security costs on payments made to an individual. This means the only area of uncertainty is if individuals bring claims for employment rights.

There are a number of different tests that apply to define employment status, inter alia,

1. the authority to set guidelines on the nature of the activities and their performance,
2. certainty regarding time and place of work, and
3. individual dependency.

However, the interpretation of the term "employee" can differ for German tax, employment and social security law purposes. Neither the German Social nor Fiscal Courts are bound by the decisions of the Labour Court and so, similar to the UK, different regulators can take different approaches for tax and employment purposes.

Whilst companies may have more certainty in Germany, the level of risk if they get it wrong is greater. If companies do not withhold wage tax and pay social security costs when they should, they can face criminal charges from the German tax authorities and social security authorities.

The Netherlands

Similar to other countries, it is not always clear whether a worker is an employee or a contractor. The company engaging the individual (i.e. the principal) should assess, together with the worker, whether the worker is a real contractor or in fact a regular employee. This depends on the answers to the following questions:

1. Does the contractor have a personal obligation to do the work? This is the case if he has to do the work himself. He may therefore not be replaced by someone else without consulting the principal first.
2. Does the contractor receive wages? This is the case if the principal pays the contractor more than just a fee for costs that he incurs.
3. Is there a relationship of authority between the principal and the contractor? Such a relationship exists if the principal decides how the contractor will execute the work, i.e. if he has to follow the principal's directions and instructions.

If the answer to all these questions is yes, then the contractor is in fact a regular employee. If the answer to one or more of the questions is no, the contractor is not a regular employee. In the latter case, you still need to consider whether the contractor has a so-called deemed employment. This may inter alia be the case if the contractor belongs to one of the following groups:

(Partners of) shareholders with a so-called substantial shareholding (>5% of any class of shares); Equated persons (everyone who works as a non-entrepreneur for at least 2 days per week for the same client);
Constructors of work and their assistants; Pupils and trainees;
Agents and subagents; Co-working children;
Artists and professional athletes; Sex workers who work for an operator;
Crew of fishing vessels (share fishermen); Home workers and their helpers;
Managers of cooperatives with employee self-management; Top athletes with an A status under NOC*NSF rules;
Executive directors of listed companies with a one-tier board, and all directors of listed companies with a two-tier board (for agreements entered into on or after 1 January 2013); Contractors who work through an intermediary for a customer of the intermediary.

Risks of a management agreement

Based on the above, the qualification of a management agreement is important in determining the Dutch wage tax and social security risks: is the management agreement an employment contract or assignment agreement? As stated above, an employment contract exists if (1) the personal obligation exists to perform work, (2) the obligation exists to pay wages for the work done and (3) there is a relationship of authority.

In practice, this can lead to a lot of discussion. Relevant is what parties intended when they entered into the management agreement and the way in which the agreement has subsequently been implemented. Important aspects are, for example, whether the person in question has received payment during illness, has been given the opportunity to take holidays, whether he works exclusively for the company or whether he can also perform work for other employers, whether VAT was paid and whether he has to report to someone within the company.

Construction with management BV can be requalified

In a management agreement, the director will usually contract via his management BV. The Dutch tax authorities can consider that the agreement qualifies as a (deemed) employment for wage tax and social security purposes. In that case, wage tax and social security premiums should have been withheld and premiums for employee insurance had to be paid during the term of the contract. This can still result in high costs to the company, including fines, penalties and interest. The risk that a management agreement is qualified by the tax authorities as an employment, may be dealt with in the following ways:

1. The director and the company can utilise the so-called "model agreements" provided by the Dutch tax authorities1, or alternatively submit the existing management agreement (or a newly drafted management agreement) to the tax authorities for approval. This provides certainty.
2. The director and the company can jointly submit a request to the tax authorities to apply the so-called "paid-on wages scheme" ("doorbetaald loonregeling"). In that case, the company does not have to withhold wage tax. The scheme has a number of conditions:
a. The director should have an employment relationship with both the management BV and the company.
b. The management BV is established in The Netherlands and the director lives in The Netherlands (or is in any case subject to Dutch wage tax if he lives abroad).
c. The company pays the management fee directly to the management BV. The management BV pays a "common wages" ("gebruikelijk loon", i.e. on average approximately 60% -70% of the management fee, and with a legal minimum of €45,000) to the director. The management BV is responsible for the wage tax.
d. The company does not provide benefits to the director without letting the management BV know in advance.

Please note that even though the paid-on wages scheme continues to apply, the commissioning company will still have to pay employee insurance premiums to the tax authorities (under the assumption of an employment relationship). Also, if an employee has a substantial interest (>5% of any class of shares) in both the company and the management BV, and works for both companies, the paid-on wages scheme can be applied without first asking the Dutch tax authorities' approval.

Deregulation of Labour Relations Act (Wet DBA)

The Dutch government is presently working on new legislation and regulations, which will replace the current Deregulation of Labour Relations Act (Wet DBA). Until then, the enforcement of the Wet DBA is suspended. This means that where a principal hires a contractor and the Dutch tax authorities subsequently find that the individual is in fact a regular employee, the principal will have no obligation to rectify the position and will receive no supplementary assessments of wage tax and social security premiums until enactment of the new legislation.

New legislation was initially expected to be introduced as of 1 January 2020, but recently the Dutch state secretary of Finance announced an extension of the enforcement suspension until 1 January 2021. We understand that, in principle, no fines will be imposed for this until then, either.

The Dutch tax authorities do however enforce the law in case of malicious intent (i.e. a (deemed) employment, obvious false self-employment and intentional false self-employment). Fines and penalties may still be imposed in such cases. As it has been difficult for the Dutch tax authorities to prove malicious intent (based on the criteria above), the recent announcement postponing the new law also mentioned that the Dutch tax authorities enforcement procedure will be strengthened as from 1 January 2020. From that moment on, the tax authorities can also enforce when clients do not (or insufficiently) follow instructions from the tax authorities within a reasonable period of time. In addition, the tax authorities will increase their audit capacity with regard to the Wet DBA. More inspectors will be deployed in the third quarter of 2019 and from 1 January 2020, the control capacity will be further increased.


The gig economy in Spain has faced a number of collective protests by delivery riders working for various platforms that claimed recognition of their employee status and employment rights.

Actions have been taken to order companies to reclassify delivery riders as ordinary employees and register them as such with the Social Security authorities, imposing corresponding administrative sanctions and requesting payment of unpaid Social Security along with a corresponding surcharges for the last 4 years, which are not barred by statute of limitation.

With the change of government, the Labour Inspection has intensified its control. The new government has proposed establishing a plan to tighten Labour Inspection control of gig economy platforms in order to prevent the rise in the gig economy resulting in a gradual detriment of employment rights and a misuse and abuse of self-employed status.

A number of debates have been held on a doctrinal level, regarding how to classify the services rendered by people who work via digital platforms as well as their employment status. It is likely that a new service category will be introduced to bring more clarity to this issue.

There have also been some Court decisions stating that the riders/deliverers must be considered as ordinary employees (e.g. Deliveroo riders) while others have concluded the contrary (e.g. Glovo deliverers have been considered independent contractors/self-employed workers). In conclusion, the misclassification risk must be analyzed on a case by case basis since the circumstances may be different.

The UK

The UK has similar tests for employment law and tax purposes for determining whether an individual is an employee or a contractor. However, these tests are applied by different bodies, which means that they can come to different decisions on the same facts. Further, there are calls for more certainty but this is likely to take time and the tests will not necessarily be aligned any time soon.

Employment Cases

Gig economy workers in the UK may be classified as employees, workers or self-employed, depending on the nature of their engagement. However, the elements that differentiate these categories are very fact specific. Recently there have been a number of cases that have received wide public attention where persons, treated as self-employed, were later reclassified as workers for employment law purposes. These cases may have a significant impact on the individual company, but provide limited clarity for other companies due to the fact specific nature of the decisions.

A determination of worker status by an employment tribunal does not have any significance for tax and social security purposes, because tax withholding is required only if the individual is an employee. To date, HMRC has not claimed that an individual is an employee, where an employment tribunal has only found the individual to be a worker (and rejected a claim for employment status).

One example of the similar test being applied differently relates to art and history experts, working as educators for the National Gallery. The National Gallery taxed these individuals as employees but the employment tribunal found that they were acting as workers when performing individual assignments and were not employees. The fact that payments to them were subject to deductions for income tax and National Insurance by the Gallery's payroll, was not considered crucial or decisive when considering their status for employment purposes.

Major changes to the taxation of personal service companies (under the "IR35" legislation)

HMRC is currently focussing on individuals that contract through intermediaries (called 'personal service companies' or PSCs). HMRC is introducing new rules under the "IR35" legislation that will apply from April 2020 that shift the burden up the contractual chain with the aim of increasing compliance.

Under the current rules, where an individual would be an employee if engaged directly (i.e. ignoring the PSC), the PSC is responsible for withholding and social security obligations. As of 6 April 2020, the test will remain the same (i.e. would there be a hypothetical employment situation if the PSC were ignored?), but where the test is met, the entity paying the fees to the intermediary (the fee payer) will have the withholding and social security obligations.

Under the new rules, the client will be required to determine whether the test is met and pass this determination (along with its reasons) down the contractual chain as well as to the worker directly. If this determination is challenged by the worker or the fee payer, the client has 45 days to review its decision and decide whether it wishes to amend its decision. If it maintains its original decision, the client must also give reasons as to why it considers the original decision to be correct.

The fee payer (which may or may not be the client) is the party usually liable for the withholding and social security obligations, but this liability can shift to different parties. For example, if the status determination is not passed on or if the fee payer is an overseas entity.

These new rules are limited to the tax impact. It does not impact the employment status of the individual. Companies that use PSCs or have PSCs in their contractual chain should be reviewing their processes in order to be ready by April. Click here to read more about it.