BRUSSELS—The European Commission announced draft rules on Thursday to give many workers such as couriers for online platform companies including Uber and Deliveroo employee benefits, a move which labour unions say is overdue but some companies argue will lead to job losses.
The proposal, a global first that needs to be thrashed out with EU countries and lawmakers before it can become law, marks the latest attempt by the European Union to regulate tech companies and ensure a level playing field between online and traditional firms.
“No one is trying to kill, stop or hinder the development of the platform economy,” Jobs and Social Rights Commissioner Nicholas Schmit said at a press conference introducing the proposals.
However, the rules are needed to ensure that new business models uphold labour laws and social standards, he said.
The EU executive said the draft rules could apply to up to 5.5 million workers out of the 28 million working at online platform companies across the 27-country bloc.
Internet firms that set pay and standards of conduct for their couriers will have to classify them as employees entitled to a minimum wage, paid holidays and pension rights, according to the draft rules.
Online food ordering and delivery companies, which are generally loss-making in an industry seen as ripe for consolidation, have fought court cases around Europe and the U.S. to have deliverers classified as self-employed contractors, rather than employees—with mixed results.
Reactions varied, with CEO Jitse Groen of Europe’s largest food delivery company Just Eat Takeaway.com saying he “welcomed” the proposed EU rules.
However, “Delivery Platforms Europe,” a lobby group that includes Uber, Deliveroo, Glovo and Delivery Hero, said in a statement that what part-time drivers want most is flexibility on their working hours and the rules as proposed would lead to job losses.
Petra Bolster of Dutch labour union FNV, which won lawsuits against Deliveroo and Uber over employment, noted that proposal includes a list of five tests to help determine when couriers are self-employed.
“That’s naive because platforms will use that as a toolkit to get around the criteria and get away with everything,” she said. “It is their entire profit model to avoid costs of employment.”
Under the EU proposal, companies will be considered employers if they supervise the performance of workers through electronic means, restrict their ability to choose their working hours or tasks, and prevent them from working for third parties.
Crucially, the proposal shifts the burden of proof onto companies when a dispute arises as to whether a worker is a self-employed contractor or an employee.
Giles Thorne, an analyst for Jefferies, said that the EU proposal will not destroy online ordering and delivery models, which are here to stay.
He said the EU move is best seen as an intervention to give more power to couriers, who have the weakest position in the chain between restaurants, the software platforms and consumers.
Couriers “are going to get a bit more of the economics and the platform, the restaurant and the consumer are going to get a bit less,” he said.
A similar intervention in the U.S. during the COVID-19 pandemic capped the commission fees Uber, DoorDash and Grubhub could charge restaurants, already suffering from loss of business, for orders.
For consumers, the long term result of European protections for workers will likely be a small increase in either prices or delivery fees.
But “I would bet my bottom dollar that people keep ordering bento boxes online,” Thorne said.
By Foo Yun Chee and Toby Sterling