Calling all platform companies - avoid a straitjacket scenario and take control now!

Modern employer authority

The social storm surrounding platform companies turned into a legal whirlwind this year. Although not all platform workers want to work as an employee, judges in the Netherlands and abroad have ruled that platform workers are not in fact self-employed, but are actually employees. The driving effect of algorithms, to which workers are subjected to, is crucial. This means that platform related workers are categorised as working for a ‘modern employer authority', which indicates the necessity for an employment contract. Appeals are still ongoing, but the trend is clear: the 'free ride' is over. And the status of platform workers is increasing.

New legislation

This isn’t only the result of court decisions. Politicians also pay a lot of attention to the gig economy. The European Commission aims to improve the working conditions of platform workers. They consider that there is an employment agreement between the platform and the platform worker if at least two of the following criteria are met:

1. Determining the amount of the remuneration or attaching a maximum to it;

2. Imposing rules on the platform worker regarding appearance, behaviour towards the customer or execution of the work;

3. Supervising the execution of the work or checking its quality;

4. Restricting the freedom of the platform worker in the organisation of his/her work, also by means of sanctions, for example, working hours or periods of absence, the acceptance or non-acceptance of jobs and the use of replacements;

5. Restricting the possibility of building up a client base or performing work for third parties.

In addition, the directive introduces more transparency in the use of algorithms.

The proposed Directive to improve the working conditions of platform workers is being discussed by the European Parliament and the Council of the European Union. Once adopted, Member States will have two years to transpose the Directive into national legislation. It is evident that these developments will turn the business models of platform companies upside down. At the same time, court rulings and political decisions are removing the dormant uncertainty for platform companies. They can benefit from this by anticipating and taking measures in a timely manner.

Avoiding a straitjacket scenario

Platform entrepreneurs would do well to clarify to what extent their systems and algorithms influence the work on their platforms. Check whether an employee has sufficient freedom and autonomy to really be called 'self-employed'. If this isn’t the case, then it’s important to take and maintain control over the way in which employment conditions are shaped. Remember that a traditional collective contract was designed in the old economy for companies with completely different business models – a limitation you should avoid when being an innovative platform company. But it’s the fate that awaits companies which don’t, or insufficiently, anticipate changes.

Improve employee quality and loyalty

See this development as a business opportunity. Companies that succeed in creating frameworks and employment conditions on their own terms, not only reduce the risk of legal wrangling, but above all, improve the quality and loyalty of their employees. In this tight labour market, employment with a progressive platform company offers serious preference compared to the competition. In addition, investors are increasingly placing more value on ESG issues. Companies that are actively committed to the well-being of their staff have an advantage.

Four tips to take control

The gig economy has shaken up the traditional economy. Now the gig economy itself is being shaken up. In this modern, digital society, the demand for flexible delivery of goods and services will only increase. Both emerging and more established platform companies now have the opportunity to further differentiate themselves in this market. So take control before someone else does it for you. The following four tips can help you anticipate new legislation and stay ahead of the job market:

✔ Think about your business model and strategic workforce planning

✔ Consult with your works council about your employee offering

✔ Decide on your terms of employment and your Employee Value Proposition

✔ Adjust your hiring strategy