No more easy riders: Uber clashes with EC over employee-rights plan

By Eric Johansson

Any Christmas cheer that may have been building up at Uber head office probably came to an abrupt end this week, after the European Commission proposed new rules which would give the company’s gig-worker riders more employee benefits.

Analysts have repeatedly noted how vulnerable platform-based delivery companies are to changes in labour laws. So it’s hardly surprising that delivery platforms operating in Europe have already launched a full frontal assault against the proposed legislation.

The draft proposal seeks to ensure that people working through digital labour platforms are granted the legal employment status that corresponds to their actual work arrangements by providing a list of criteria to determine whether the platform is an employer or not.

If the situation meets those criteria, then the people working for the platform would automatically be reclassified as workers. That, in turn, would mean they’d receive rights to benefits like minimum wage, collective bargaining, working time and health protection, paid leave, improved protection against work accidents, unemployment and sickness benefits, and contributory old-age pensions.

“We must make the most of the job-creating potential of digital platforms,” said Nicolas Schmit, commissioner for jobs and social rights. “But we should also make sure that they are quality jobs, that don’t promote precariousness, so people working through them have security and can plan for their future.

“Technological progress must be fair and inclusive, which is why the proposal also addresses transparency and oversight of platforms’ algorithms,” he added.

Uber unhappy with the European Commission

Unsurprisingly, the delivery platforms didn’t welcome the proposals. Companies like Uber and Deliveroo have a long history of opposing new rules that would grant their riders employment status, instead preferring to designate them as independent contractors or something along those lines.

Uber was one of the delivery companies that fought tooth and nail to introduce Proposition 22 in California, which would keep gig economy workers from being classified as employees.

Uber also lost a UK Supreme Court case in February, which forced it to reclassify its minicab drivers in Britain as employees. Other similar legal battles are being fought around the world.

“The gig economy has been shaping work in the absence of traditional forms of trade unionism, like collective bargaining,” researchers wrote in a a recent GlobalData thematic research report on the Future of Work.

“In addition, regulatory structures around the world were not written with phone-based apps and platform work in mind. This has hindered gig workers’ ability to improve their conditions and wages.”

The main reason delivery companies are opposed to changing the rules is because it would add extra labour costs. Uber is already facing pressure in the States from rising labour costs, according to GlobalData’s Technology Intelligence Centre SWOT analysis of Uber.

“Increasing manpower costs could increase the company’s operating costs and hamper its profits,” researchers wrote in the analysis. “The tight labour markets, government-mandated increases in minimum wages and a higher proportion of full-time employees are increasing labour costs.”

Tellingly, Uber only scored a one for regulation in GlobalData’s Thematic Research Ecommerce Sector Scorecard Q1 2021, highlighting the company’s weakness against new rules, especially new labour laws.

Thus it was hardly shocking that Uber quickly spoke out against the draft proposals from the European Commission.

“[We] are concerned the Commission’s proposal would have the opposite effect – putting thousands of jobs at risk, crippling small businesses in the wake of the pandemic and damaging vital services that consumers across Europe rely on,” an Uber spokesperson told Reuters.

Delivery Platforms Europe – a lobby group counting companies like Deliveroo, Bolt, Delivery Hero, and Uber Eats among its members – voiced similar concerns.

“We’re concerned about the impact this proposal could have on riders, restaurants and the wider EU economy,” Delivery Platforms Europe said in a statement.

Citing a recent study by Copenhagen Economics, Delivery Platforms Europe warned that the proposed EU-wide reclassification “could lead to up to 250,000 people deciding to stop doing delivery work as they would no longer have the flexibility they seek.”

The group also claimed that a recent study had shown that “flexibility was the number one reason” why couriers decided to join the different platforms.

Market experts Verdict has spoken with are sceptical about Uber and the other delivery companies’ predictions of doom and gloom.

“I don’t think the new rules, if approved and implemented, will deal a blow to the gig economy, as some of these platforms have warned,” Laura Petrone, principal analyst in the thematic research team at GlobalData, told Verdict. “Gig economy companies have the resources but also the time to adapt, as it will take time for the new legislation to be agreed upon and implemented.”

Mixed response

However, not all delivery companies have opposed the new rules, at least not officially. German grocery-delivery startup Flink, which has just completed a $750m funding round at a $2.85bn valuation, told Verdict it didn’t expect the proposed employee reclassification to affect it.

“All Flink riders and hub workers are permanent, fully employed employees in all our markets,” Boris Radke, spokesperson at Flink, said. “We never used freelance-models or other employment models. We believe that our Flink riders are a huge part of our success story so far.”

Jitse Groen, CEO at Just Eat, similarly welcomed the proposals.

“We hope that the Commission’s proposal will create clarity and a level playing field that ensures that companies across Europe are held to the same standards, so that all platform workers are treated with the dignity they deserve,” Groen told Reuters.

Labour unions were pleased, having promoted such initiatives for years.

“This proposal tackles abuse and exploitation of a large group of workers,” Petea Bolster, of Dutch labour union FNV, told Reuters. “We see this proposal as a great step forwards. Platform workers deserve security about their income and work, protection from sickness and to have a say over their working hours. Provisions such as pay to be on call, sick pay, time off, vacation pay and pensions must apply to them too.”

Petrone added that while numerous fights have been fought over employment rights in the gig economy, the results have been inconsistent due to a lack of legal standards.

“The draft is therefore a step forward in giving legal certainty around gig workers’ rights,” she said. “However, it remains to be seen whether it will be watered down by the member states in further discussions.”