Clarifying work in the platform economy
“Legislation which reacts sluggishly to the digitalisation of services and the revolution of work may at worst force a segment of the workforce outside fair terms of employment,” says Suvi Vilches, PAM legal counsel. Photo: Eeva Anundi
One of PAM’s goals for the upcoming parliamentary elections is to incorporate the presumption of an employer-employee relationship into the Employment Contracts Act. This means that an platform offering work would be considered to be an employer with the associated obligations.
Platform work is spreading in the service industry, and it is likely that new forms of working and commissioning work will continue to emerge.
“Legislation which reacts sluggishly to the digitalisation of services and the revolution of work may at worst force a segment of the workforce outside fair terms of employment,” says Suvi Vilches, PAM legal counsel.
Many companies operating in the platform economy are trying to market the idea that they are not employers and that their employees are independent contractors. This way, the companies seek to shirk the obligations of an employer.
Many platforms determine the salary for the job in advance, and the only choice left to the employee is whether to accept the job or not. In many cases, the employees are expected to pay for the statutory insurance for self-employed people, social security fees, occupational accident insurance as well as work uniforms and tools.
If, for example, the salary for a cleaning job has been set at €15 per hour, the employee will be left with very little after deducting all of these costs. This means that the people doing the work do not enjoy the independence or potential for building personal wealth that are associated with true entrepreneurship.
“The current Employment Contracts Act is unambiguous on this point: a person who is not working independently is not an entrepreneur. Also under the platform economy, a person is considered to be in an employment relationship if they perform their duties to benefit the employer, under the employer’s direction and supervision, and receive remuneration, as is stated in the Employment Contracts Act,” Vilches explains.
”The current Employment Contracts Act is unambiguous on this point: a person who is not working independently is not an entrepreneur.”
To clarify the situation, and to avoid lengthy legal proceedings, PAM has proposed that the presumption of an employer-employee relationship be incorporated into the Employment Contracts Act. According to the presumption, the party commissioning the work would be considered the employer. The burden of proof that the arrangement does not constitute an employment relationship would be on the employer.
If the presumption would also be applied to new forms of work, laws drafted to protect employees would also cover people working under new types of arrangements. The main documents protecting employees include the Employment Contracts Act, the Working Hours Act, the Occupational Safety and Health Act as well as the Workers’ Compensation Act.
PAM is also advocating for additional resources and stricter obligations for labour protection authorities to monitor what constitutes an employment relationship. In addition, the Labour Council should be given the authority to issue binding statements, instead of recommendations, on whether the criteria of an employment relationship are met. This would mean that such binding statements could be issued relatively quickly.
If low customer prices are coupled with a lack of employer obligations, competition in the field will become significantly distorted, and businesses who do attend to their employer obligations will suffer, says Vilches.
PAM hopes the public understands that the goal of regulating the platform economy is not to disadvantage consumers, but to fix the current situation which is not sustainable for individuals or society in the long run.