Recent Developments in the Future of Work and the Future of Labour Law on a European Labour Law Level

While Europe is still concerned with the new case law of the Court of Justice of the European Union (CJEU) and its potential legal consequences (please see our last week’s newsletter on labour law, issue 17/2019), we will expand on the European labour law and its future again this week. The Members of the European Parliament (MEPs) adopted new rules with regard to minimum rights for workers with on-demand, voucher-based or platform jobs, like Uber or Deliveroo in Strasbourg on 16 April 2019. The purpose of these rules is to improve worker’s rights in the so-called gig economy. The following article will take a closer look at the proposed rules.

Background

Ever since the “Social Summit for Fair Jobs and Growth” on 17 November 2017 in Goteborg, the European Union has increasingly concentrated on modifying labour law to take account of changes on the labour market. The digitization of labour and the economy as well as the demographic changes rendered the labour market in Europe considerably more flexible. New atypical employment contracts made it possible to introduce new business models and types of employment, especially in the course of the past two years. Above all, the gig economy has gained particular relevance in these past two years.

Briefly summarised, it may be interpreted as meaning - in the context pertaining to labour law - the provision of services through digital platforms. In terms of labour law, it is mainly on-demand platforms such as Uber and Deliveroo or crowdworking platforms such as Clickworker and Upwork (please find here an article on this topic; available in German only) that are of particular interest in this context. In these cases, on the one hand, the question arises in which category these so-called gig workers (freelancers/ workers) should be classified in terms of labour law. A question, however, to which there is no single answer based on the heterogeneity of the platform operators. On the other hand, the working conditions of gig workers, who provide their services at short notice and in an extremely flexible manner, have been subject to criticism time and time again. According to the European Parliament’s rapporteur Enrique Calvet Chambon, the purpose of these rules is that “all workers who have been in limbo will now be granted minimum rights thanks to this directive, and the European Court of Justice rulings” (see press release of the plenary session of the EU Parliament, EMPL, 16-04-2019, 12:04).

After the European Parliament adopted these rules on 16 April 2019, they now need to be approved by the Council of the European Union. Thereafter, the EU Member States will be given a period of three years to integrate these rules into national law.

What are the most significant changes introduced by these rules?

Scope of the rules

The scope of the rules only includes workers, whereby the Member States may exclude such workers therefrom who work less than 8 hours in one month. With respect to personal scope, the proposed rules refer to the concept of worker as defined by settled case law of the CJEU. Thus, the rules will apply to “a person who, for a certain period of time, performs services for and under the direction of another person in return for which he receives remuneration” (see judgment of the CJEU of 3 July 1986, case 66/85). As a result, the personal scope of the proposed rules for crowdworkers may, therefore, be unsuccessful because of the work status (please also see this article; available in German only).

Increased transparency

The rules provide that “all workers need to be informed from day one as a general principle, and no later than seven days where justified, of the essential aspects of their employment contract”. This includes “a description of duties, a starting date, the duration, remuneration, standard working day or reference hours for those with unpredictable work schedules” (see press release of the plenary session of the EU Parliament, EMPL, 16-04-2019, 12:04).

Better protection for new forms of employment

 Workers with on-demand contracts or similar forms of employment should benefit from a minimum level of predictability such as predetermined reference hours and reference days. They should also be able to refuse, without consequences, an assignment outside predetermined hours or be compensated if the assignment was not cancelled in time.

 The employer should not prohibit, penalise or hinder workers from taking jobs with other companies if this falls outside the work schedule established with that employer (see press release of the plenary session of the EU Parliament, EMPL, 16-04-2019, 12:04).

New rules for probationary period and training

Probationary periods will be no longer than six months or proportionate to the expected duration of the contract in the case of fixed-term employment. A renewed contract for the same function will not result in a new probationary period. Finally, the employer will provide mandatory training, which will count as working time, free of charge. When possible, such training should be completed within working hours (see press release of the plenary session of the EU Parliament, EMPL, 16-04- 2019, 12:04).

Outlook

Although it remains to be seen whether the Council of the European Union will approve the proposed rules without making any further modifications. For Germany, however, an approval may result in the necessity to modify the German Documentation Requirements Act (Nachweisgesetz, NachwG) as regards employers’ notification obligations as well as the German Part-Time and Fixed-Term Employment Act (Teilzeit- und Befristungsgesetz, TzBfG) as regards the minimum requirements for working conditions. One central problem of the gig economy – (social) security of freelance gig workers – can, however, not be solved by these rules. In this respect, it remains to be seen whether the German Federal Government is still going to put into practice what it put on paper in the coalition agreement in 2018. This agreement stated as follows: “To improve the social protection of self-employed we would like to introduce a founder-friendly, structured obligation to retirement provision for all self-employed who do not already have any other mandatory insurance (e.g., in a professional pension fund scheme). In general, self-employed should have the option to choose between the social security pension insurance scheme (gesetzliche Rentenversicherung) and - as an opt-out solution - other suitable types of pension schemes that are fully protected against insolvency.” (see coalition agreement of 12 March 2018 of the German Federal Government, p. 93, margin no. 4290)