In the last few years, the European Commission has initiated a policymaking process aimed at regulating some aspects of the digital economy. Part of this reform agenda is the partial redefinition of the scope of certain labour rights. The main objective of the Commission is to promote a level playing field so as to ensure that the expansion of the digital economy in the Union takes place without altering competitiveness within the internal market. Nonetheless, these initiatives could have interesting implications in terms of informing the regulatory debate on the future of labour rights and the redefinition of their scope.
This short contribution provides a reflection on how current policymaking developments expose the limits of the prevalent labour law paradigm which differentiates between subordinate workers (who have access to labour rights) and autonomous workers (who have no, or only marginal, access to protections related to their working conditions).
The launch of the EU institutional debate
The launch by the European Commission in June 2020 of an open stakeholder consultation on the adoption of a digital service package has given, indirectly and perhaps inadvertently, more substance to the normative debate on the scope of labour rights at EU level. This policy initiative was conceived with the aim of establishing new rules to deepen the single market for digital services while providing appropriate standards of fairness for commercial competition as well as security for online users. Among the areas addressed by the Commission, there was a section on ‘the situation of self-employed workers providing services through platforms’, with questions on whether such workers could be considered vulnerable or dependent on the platform and on their ability to negotiate remuneration and working conditions collectively. Among the responses, many came from individuals offering services through platforms representing a plurality of sectors including food delivery, home maintenance, ride-hailing, software development, translation, art and design, healthcare consulting and training.
Interestingly, but not surprisingly, it emerged that most of the critical issues encountered by respondents were related to the scale of the imbalance in bargaining power between the platforms and the self-employed workers, who provide services through them. The inability to negotiate remuneration and other terms and conditions collectively and the risk of violating competition law were mentioned in particular among the causes of the degradation of the working conditions of individuals offering online and offline services.
Monopsonist labour markets and the imbalance of bargaining power
Despite the enrichment of the normative debate accorded by policy developments around the Digital Services Act, it is important to emphasise that the impact on working conditions of this excessive imbalance of power does not only concern workers providing services through digital platforms. Indeed, these represent the tip of the iceberg as the issue is far more ramified, having implications for a wide range of (offline) self-employed workers, among them those who work in the creative and performing arts sector.
Undeniably, the emergence of digital commercial platforms and the expansion of anti-competitive practices has amplified the disequilibrium in the power dynamics between market actors. Digital platforms are often global players with a disruptive business model, sometimes obtained through the use of low-paid self-employed workers and the offer of extremely low fees that are unattainable for their many local competitors who are thus pushed out of the market. Moreover, the platform’s network effect increases the concentration of market power which is further consolidated by technological innovation and the ability to exploit data.
The advent of online business platforms has thus further unleashed the emergence of monopsonist or oligopsonist labour markets, characterised by a strong imbalance of bargaining power between (self-employed) workers and the businesses they contract with. This occurs when, in a given market, the purchasing power of labour is concentrated in a few corporate players who can therefore alter and dictate the rules of the game. In these situations, the labour market is not competitive, being dominated by employers who are able to exert downward pressure on wage setting and working conditions.
In their potential to curb this disruptive effect, labour rights can play a decisive role. Establishing a minimum floor of labour standards would indeed facilitate a reduction in the disequilibrium in bargaining and economic power distribution, thus contributing to improving the fairness of the overall service and of labour markets.
The proposal for a directive on platform work
One of the initiatives taken by the Commission to address the impact of the digital economy on the internal market (both for services and labour) is the proposal for a directive on platform workers. Under this directive, the EU would introduce a presumption of employment for platform workers and give a number of residual rights to those working in situations in which they are managed by algorithms.
Certainly, the adoption of this measure will facilitate bringing platform workers within the category of ‘subordinate workers’ with the effect of providing them access to adequate labour protection. On the other hand, however, the reach of the proposed directive is limited. Only those workers who can prove that the platform exercises control over the performance of their work are presumed to have an employment relationship. From the same estimates used by the Commission in the explanatory memorandum of the proposed directive, it appears that, of the 28 million people currently working through digital platforms, only between 1.72 and 4.1 million workers will be able to claim employment status and be brought within the scope of labour rights. All other platform workers remain exposed to the downward pressure of their employers – as do all those self-employed who work offline in situations of anti-competitive labour markets.
Overall, this legislative initiative still reflects the traditional dichotomy between subordinate and autonomous workers and, therefore, cannot be considered particularly decisive in restoring fairness in markets characterised by excessive imbalances in bargaining and economic power.
The Commission Guidelines on Competition Law and Collective Bargaining
With a view to mitigating the vulnerable position of (self-employed) workers vis-à-vis the powerful contractors to which they supply their labour, it is interesting to turn to a separate initiative taken by the European Commission in parallel to the proposed directive. This concerns the redefinition of the relationship between competition law and collective bargaining for the self-employed.
As mentioned, the incompatibility between competition law and collective bargaining for the self-employed is among the obstacles that prevent a curbing of the degradation of working conditions, both in the online and offline worlds.
The issue is that Article 101(1) TFEU prohibits anti-competitive agreements between undertakings, including price-fixing agreements. Since self-employed workers are generally considered ‘undertakings’ under EU law, the prohibition under Article 101(1) TFEU formally also covers their attempts to negotiate their working conditions and remuneration collectively.
In recent years, the Court of Justice has addressed this matter through an expansive interpretation of the concept of ‘worker’ as opposed to ‘undertaking’, both in the FNV Kunsten case (C-413/13) and in the Yodel order (C-692/19). Despite greater interpretative flexibility with respect to those concepts, EU case law still reflects the traditional dichotomy in which the applicable regime depends on the existence of a classically conceived situation of subordination to the employer.
Following a round of consultations held in February 2021 in the context of what is referred to in EU jargon as an ‘inception impact assessment’, the European Commission finally decided to follow other national competition authorities (e.g. in Portugal and in the Netherlands) and submit a proposal for Guidelines on the application of EU competition law to collective agreements concerning the working conditions of the self-employed. As declared by the Commission, the intention is to ‘ensure that competition law does not stand in the way of collective agreements to improve the working conditions of certain self-employed workers, who may have little influence on their working conditions’ (own italics). These workers are initially identified in the Guidelines as the ‘solo self-employed’, meaning those persons ‘who rely primarily on their own personal labour for the provision of the service concerned’. This is a rather broad category in the face of which the Commission then enters into more technical definitions that could potentially reduce the scope of the initiative even further.
The Guidelines indeed explain that only the solo self-employed who fall into two types of situation are exempted from the application of competition law. The first is self-employed workers who are in a comparable situation to employees. These include economically dependent self-employed workers; those working side-by-side with employees; and self-employed workers performing services through digital platforms. Secondly, and rather interestingly, the Guidelines indicate that competition law will not be enforced in the case of solo self-employed workers who are in a weak bargaining position vis-à-vis their counterparts and who are unable to have a significant influence over their working conditions.
Several critical issues are present in the Guidelines, including the attempt to reduce the scope of solo self-employed workers to those falling into these two identified situations. However, two interesting elements can be identified.
The first is that the Commission has recognised the crucial role of collective bargaining (and thus, indirectly, of labour rights) in limiting the imbalance of power within the service and the labour market to which the solo self-employed are, in principle, exposed. In doing so, the Commission is challenging, most likely inadvertently, the traditional dichotomy between subordinate employees and the self-employed.
The second element is that, in what seems to be an attempt to reduce the range of solo self-employed workers who are covered by the Guidelines, the Commission has drawn attention to situations embodying an excessive imbalance of power in which the worker has no possibility of influencing the conditions under which the work is performed. In other words, these are situations in which the worker is in a condition of imposed acquiescence; acquiescence to working conditions that he/she has little or no possibility to negotiate.
A new paradigm? Exploring the concept of imposed acquiescence
In the Guidelines, the Commission refers to situations of imposed acquiescence as a sort of residual clause to qualify those solo self-employed that, in its institutional assessment, are sufficiently vulnerable as to warrant exclusion from the application of competition law.
On closer inspection, however, this concept holds very interesting regulatory potential. If properly developed and valorised in future normative discussions on the scope of labour rights, it could constitute an alternative and more adequate paradigm than the classic dichotomy based on subordination and autonomy that has, so far, justified the difference in regime between self-employed and employed workers. But how should we recognise situations of imposed acquiescence in practice?
In the Guidelines, the Commission suggests two circumstances: where the counterparty represents an entire sector or industry; and where it has an aggregate turnover of more than 2 million euros and employs more than ten people. These situations are, however, somewhat reductive. Rather, it seems better to consider two more inclusive indicators:
- When the work is performed in the presence of algorithmic management, which is symptomatic of a situation in which the work is fully integrated within the contracting company with no margin to influence working conditions.
- When the self-employed worker does not define the tariff at which the service he/she provides is offered to the final consumer; or when the marginal revenue is substantially lower than that which he/she would have received under competitive market conditions. These too are signs of a contractual relationship characterised by a unilateral imposition of terms and conditions by the stronger party to the contract.
In conclusion, the paradigm of imposed acquiescence has the advantage of being directly anchored to the situation of the substantial imbalance in bargaining power between the contracting parties. Moving towards such a model would address the shortcomings of the current scope of labour rights based on the subordination paradigm. Furthermore, it would also allow the promotion of fairer and more decent working conditions for all those who provide their labour from a position of vulnerability.