The world of employment law: Casual, on-call and freelance workers
09 March 2021
Questions of employment status continue to preoccupy courts and legislators, as new technology and new ways of working pose a challenge to traditional definitions of employee and contractor. Cases on this issue are being brought around the world, many of which revolve around taxi and delivery drivers engaged through digital platforms.
Last October, the European Commission adopted its Work Programme for 2021 which includes a legislative initiative on improving the working conditions of platform workers, as part of its ambition to create a Europe “fit for a digital age”.
In the EU, the ECJ heard its first “gig” economy worker status claim in the Yodel case, referred from the UK. A parcel courier argued that he was a “worker” for the purposes of the EU Working Time Directive and so entitled to paid holiday. The ECJ, giving its version of a summary judgment, emphatically rejected the contention, ruling that it was for the national court to make a final decision about worker status. There was no breach of EU law and the courier appeared to have been correctly classified as self-employed.
In France, however, the Cour de Cassation (Supreme Court) ruled that Uber drivers were in a relationship of subordination and should properly be classified as employees rather than self-employed contractors. This is not the first such decision in France, with the Supreme Court having reached the same conclusion in 2018 in relation to workers engaged by the online platform Take Eat Easy. The status of online platform workers in France has still not been clarified by legislation, so a case-by-case analysis remains necessary. A report on “Regulating digital work platforms” was delivered on 2 December 2020 to the French prime minister containing some recommendations for regulating the use of digital work platforms, notably through the use of “umbrella companies” or cooperatives.
Meanwhile in the UK, a crucial Supreme Court ruling on the employment status of Uber drivers was announced last month.
Other UK developments on worker rights included an extension of the right to written statements of employment particulars to those with worker status, not just employees, from April 2020. The UK is also expected to legislate in 2021 to provide workers on variable hours contracts with a right to request a more stable and predictable contract after 26 weeks.
Online food delivery was a specific focus for employment law developments in Italy. The Supreme Court confirmed that delivery riders for Foodora are self-employed contractors not employees, but are still entitled to employee-type protections under Italian legislation because of the nature of the relationship. A Palermo tribunal reclassified a delivery rider as an employee (and reinstated him), and in Bologna a booking system was deemed to be potentially discriminatory. Meanwhile, the first collective agreement for self-employed riders was signed.
The Federal Labour Court in Germany ruled that gig economy workers (or “crowdworkers” as they are sometimes known there) may be employees if they are treated in a similar way to them. Another decision of the Court strengthened freelancer rights to information under the Transparency in Remuneration Act. It ruled that freelancers are included within the Act’s definition of an employee where they are financially dependent on one client, meaning they can request information about the salary levels of colleagues.
The Supreme Court in the Netherlands ruled that a contracting party’s intention no longer plays a role in determining whether a contract qualifies as an employment contract, provided other relevant legal criteria have been met. From 1 January 2020, new legislation was passed that entitles zero-hours (and similar) workers to a fixed number of working hours after 12 months’ service. The law requires employers to make a written offer of a fixed volume of work equal to the average number of hours worked in the previous 12 months.
In Belgium, the new coalition government has announced a review of the current rules on how to distinguish between employees and the self-employed.
Poland introduced a new obligation to register task-specific contracts with the Social Security Agency (“ZUS”). The government wants to monitor such contracts because social security contributions do not have to be paid on them.
Leaving Europe and looking across the pond to the US, theDepartment of Labor issued a proposed rule last October to help determine when a worker is an employee or an independent contractor under the Fair Labour Standards Act (FLSA). The rule aims to clarify the long-standing “economic reality test”, which determines when individuals should be classified as employees and therefore entitled to minimum wage and overtime pay under the FLSA. The new rule is set to come into effect in March 2021. Earlier in 2020, the Department published a rule clarifying the definition of “joint employer” under the FLSA. This provides guidance on the circumstances in which, where an employee performs work that benefits another person as well as the employer, that person will be considered a joint employer.
At last year’s Managing an International Workforce conference, we said that California had passed legislation codifying the “ABC test” from the Californian Supreme Court’s Dynamex decision, but that the legislation (AB 5) had immediately been challenged and its fate was unclear. The ABC test determined when independent contractors would be regarded as employees. A new California law, (AB 2257), enacted on 4 September 2020, modified AB 5 and is intended to limit its sizeable impact on several professions and industries by specifically excluding them from analysis under the ABC test. Later in 2020, Uber and Lyft strongly supported California Proposition 22, (a ballot initiative) which declared app-based drivers to be independent contractors rather than employees. It granted certain “engaged time” protections for the drivers, such as healthcare subsidies and accident and accidental death insurance. California Proposition 22 was duly passed in the November election with the support of 58% of voters.
In Pennsylvania, the Supreme Court has narrowed the independent contractor test for the purposes of state unemployment compensation law. The upshot is that unless workers are actually performing services for other entities or are holding themselves out as being willing to do so, they will not be properly classifiable as independent contractors.
Canada has seen several “gig economy” cases and more are expected. The Supreme Court of Canada released a much-anticipated decision concerning UberEATs drivers, in which it ruled that a mandatory arbitration clause requiring Uber drivers to arbitrate disputes in the Netherlands was unconscionable and so unenforceable. This decision allows employee status disputes to be resolved in Ontario Courts, creating a possibility that Uber drivers could be deemed employees under the Ontario Employment Standard Act. The ruling also opens the door for a proposed $400 million class action lawsuit against Uber.
The Ontario Labour Relations Board decided that Foodora’s food delivery couriers are dependent contractors and can unionise. And the Ontario Court of Appeal ruled that previous service as a “dependent contractor” may count when calculating notice of termination for a contractor turned employee.
In November 2020, the President of Mexico laid an initiative before parliament to reform federal law to ban labour subcontracting, protect workers’ rights and prevent tax evasion. It has yet to be passed.
New Zealand decided to extend basic employment rights to dependent contractors. And since June 2020, employees in a “triangular employment relationship” can bring personal grievances against the person who controls their work, as well as their employer.
In Japan there are new rules requiring temporary agency workers to be paid on a par with regular employees of the end-user.
New rules came into force in May 2020 in the United Arab Emirates allowing Abu Dhabi Global Market companies to engage new categories of workers, including secondees, outsourced individuals, interns and temporary freelancers. Individuals can now obtain freelance licences in Abu Dhabi for one of 48 business activities while working either full-time or part-time for their employer, subject to the employer giving its consent. This is also available to non-residents based outside of the UAE.
Although much of the UK’s employment law derives from the EU, Brexit will have limited implications for it in the immediate term under the terms of the agreement on the future UK-EU relationship concluded on 24 December 2020. However, there is some scope for the UK to amend its laws under the terms of the agreement, and ongoing uncertainty about the future status of key employment decisions of the European Court of Justice (ECJ).