Should platform-based workers be classified as self-employed or employees?
The following quote from Lukas Biewald, founder of the Figure Eight platform, describes the employment model of the sharing economy with chilling accuracy:
“Before the internet, it would be really difficult to find someone, sit them down for ten minutes and get them to work for you, and then fire them after those ten minutes. But with technology you can actually find them, pay them the tiny amount of money, and then get rid of them after you don't need them anymore."
The new forms of work on digital platforms use workers like objects that provide a never-ending flow of work. This is conveyed by the illustration and the headline "Workers on tap" which appeared on the cover of the January 2015 edition of The Economist.
Biewald's words are also interesting because they highlight the importance of technology – internet, computer applications and algorithms – in developing the business model of these platforms. They reveal how technology is used to erode job security.
Workers on platforms are monitored more closely than workers in traditional companies
The most important legal and social conflict related with platform-based work is the employment status of the workers. Should they be classified as self-employed or employees?
A priori, work on platforms would not appear to fall into the category of working for an employer, since in some respects these workers resemble the self-employed:
- They use their own infrastructure.
- They cover the costs of the activity.
- The remuneration they receive is directly proportional to the number of services they perform.
- They are free to decide how many hours they connect (and, above all, whether or not they connect to the platform).
These new elements of flexibility distance them from salaried employment.
On top of this, the platforms have created a sophisticated rhetoric and narrative that only adds to the confusion.
The workers are referred to as riders; rather than work, they offer gigs or services and the customers are peers or equals. The platforms are literally cashing in on this legal confusion.
However, if we analyse the characteristics of platform-based work more closely, we will see that there are other, in my view, more important elements which suggest that workers on platforms are more like salaried workers.
There are elements which suggest that workers on platforms are more like salaried workers
Forms of algorithmic management and control
First of all, the platforms use what are coming to be known as forms of algorithmic management and control.
Although the platforms argue that the workers are free to choose whether or not they connect to the platform and whether they accept or even reject services, the truth is they use indirect but equally effective forms of management and control, such as:
- The implementation of economic incentives and price discrimination systems, whereby they pay more money to those workers who spend more time connected to the platform or who connect during periods when demand is highest.
- Assigning more tasks or higher-quality tasks to the workers who connect the most, those who perform the most services and those who refuse the least number of services.
- Establishment of a kind of ranking or pecking order among the workers based on their individual ratings, assigning more tasks or higher-quality tasks to workers with the highest ratings.
- Some platforms employ strategies that lack transparency, such as not providing complete information about the service until it has been accepted. Although the worker is allowed to refuse the service, this refusal is penalised.
At all events, it would be a mistake to think that these forms of management and control are more subtle. Quite the opposite! Workers on platforms are monitored more closely than workers in traditional companies.
We should bear in mind that thanks to the geolocation system integrated in the app, the platform will know the worker's location at all times, the route they have selected, the interval between receipt and acceptance of a service, the time they spend in the restaurant, and so on.
And all this information is processed and integrated into sophisticated algorithms to determine the assignment of tasks, remuneration and even disconnection from the platform.
These forms of management and control may be indirect, but they are very effective, because they create a strong incentive for workers to adapt their behaviour to the parameters or metrics valued by the platform, in order that they may maintain a certain ranking and receive a minimum remuneration.
This system is particularly important for those people who use the platform as their sole or principal source of income.
These forms of algorithmic management are effective because they succeed in reconciling the interests of the workers in terms of the time they spend working with the interests of the platform.
Infrastructure, costs and risks involved in the work
Secondly, it is worth looking at the infrastructure essential to the service. Although platform-based workers do indeed use their own means, they do not own the means of production.
The infrastructure that is really essential for providing the service is the computer application and the algorithm. Therefore, it is the platform, not the workers, that owns the means of production.
Although platform-based workers use their own means, they do not own the means of production
It is also the platform that bears the costs and the risks of the activity, such as the costs of design, maintenance and operation of the platform, the computer application and the algorithm, as well as the costs of publicising and expanding the service.
Lack of decision-making power
Finally, the third argument for not classifying platform workers as self-employed workers is that it is impossible for them to make an impact on their "supposed" business.
It is the platform that makes the economic, managerial and strategic decisions relating to the service: it sets out the conditions of the service, the prices, rates and promotions, establishes business contacts with companies, determines which areas to work in, develops the marketing and brand strategy, etc.
Apart from deciding on the number of hours they want to connect to the platform, the workers cannot have an impact on any fundamental aspect of the business.
Legal conflict: self-employed workers or employees?
From my point of view, it is clear that platform-based workers should be classified as employees. However, the status of these workers has created considerable legal conflict nationally, across Europe and worldwide.
- There are cases of sentences and/or administrative decisions both in favour of and against the nature of the employment relationship between workers and platforms in Australia, Brazil, France, Italy, the United Kingdom and the United States.
- We also find contradictory stances within the same country: while the Labour Inspectorate and sentences in Barcelona, Valencia, Madrid and Oviedo have ruled that these workers are employees, according to two sentences in Madrid and another in Gijón their status continues to be that of self-employed workers.
It is not true that the platforms act as mere intermediaries that do no more than provide the connection between demand and supply of a service
In the light of this judicial dilemma, how can this conflict be solved?
Irrespective of whether the solution lies in legislative reform or through recourse to the Supreme Court, in my opinion importance must be attached to the technology and the market as elements that play a vital part in shaping the employment relationship. In other words:
- It is essential to view the role of the algorithm as an element of subordination. The use of algorithms like those used by these platforms, which assign tasks or expel workers from the platform to suit their interests, must be seen as a clear method of managing, organising and monitoring the workers.
Although, formally, platform-based workers have a certain degree of freedom in deciding how long they work, it cannot be denied that the algorithm serves as a very effective means of giving out orders and instructions and of monitoring workers’ activity.
- This technology must also be identified as the real production infrastructure; it is essential and central to the development of the activity that consists in offering services through a computer application.
In this respect, it is not true that the platforms act as mere intermediaries that do no more than provide the connection between demand and supply of a service. In the way that they operate, the platforms offer the underlying service.
- And finally, it is important to re-evaluate what is referred to as non-involvement in the market. In other words, when evaluating whether or not an employment relationship exists, it is important to pinpoint who makes the business, economic and strategic decisions, such as establishing prices, rates, promotions, selection of geographic areas, potential customers, marketing strategy and brand management.
This is relevant, insofar as we cannot classify these workers as genuinely self-employed if they are unable to take decisions on essential aspects of their supposed business.
Digital platforms are here to stay, but if they are to be beneficial for everyone, we have to ensure that they comply with employment regulations
4 alternatives for protecting the employment rights of platform workers
In view of this situation, we must ask ourselves whether it is possible to harmoniously reconcile platforms and rights. Social and political debate on platform-based work has essentially proffered four alternatives:
- The first proposes the creation of a third status halfway between the self-employed worker and the employee, as seen in the United Kingdom.
This would be the "independent worker," i.e. an employee who works within a company, but who has the freedom to decide how many hours they work. The idea here is to grant these workers some minimum rights, such as the right to equality and non-discrimination, the prevention of occupational risks and collective bargaining.
- The second option is to create a special employment relationship for platform workers. In other words, they would be recognised as salaried workers, and a special legal framework would be created whereby the company could continue to apply this business model, but within an employment relationship. For example, a contract of 0 hours would be recognised.
- The third alternative, often described as Utopian, unrealistic or closing the stable door when the horse has already bolted, is to insist that they are salaried workers and therefore demand that the platforms apply the current employment regulations to them.
- Finally, the fourth option is to create cooperatives managed by the workers themselves, something that is beginning to happen both within Spain and further afield. Indeed, once the necessary technology for offering services via mobile applications has been developed, platforms like Uber, Deliveroo or Glovo that take a cut of the income generated by the workers will become obsolete.
In my opinion, the last two of the four options are valid. Either the workers should organise themselves in cooperatives or there should be a binding employment relationship between the platform and the worker.
It is not true that employment regulations have become obsolete. Our definition of an employee tallies with the characteristics of the work on digital platforms, and therefore it is reasonable to insist that an employment relationship exists.
Creating specific regulations for work on platforms is, from my point of view, not the correct path to take, because it would mean adapting the employment regulations to a particular business model based, no less, on evading these employment regulations.
Digital platforms are here to stay, but if they are to be beneficial for everyone, we have to ensure that they comply with employment regulations.
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