The Gig Economy in the EU and the UK: PwC Report 2021
The growth of the gig economy has resulted in significant changes to the labour market in Europe over recent years. It’s a fast moving area with courts seeking to catch up on new ways of working and new legislation is being proposed at an EU and country level. The PwC employment law network has issued a report which highlights the key developments across 10 European countries (including the UK), and provides an overview of how workers in the gig economy are currently being classified.
What are the headlines and common themes coming out of the report?
- The UK is the only country to have the intermediate “worker” category between employees and the self-employed giving an entitlement to, for example, the national minimum wage and paid holiday. Workers do not benefit from full employment rights (such as the right not to be unfairly dismissed and redundancy pay). There is no tax withholding obligation for this category.
- In all the countries referred to in the report, when determining employee status, the courts will look beyond the label given to the relationship between the parties in a written contract. They will instead consider the substance and reality of the working arrangements. A combination of factors will be looked at.
- The common determining factor for status across the countries is the control exerted over the individual by the engaging organisation. A genuinely self-employed individual will typically be free to organise their time, activity and workload.
- Other common determining factors in most countries that point to an individual being self-employed include the level of financial risk borne by the individual; providing their own equipment; the degree to which the individual is integrated into the engaging organisation; and having other clients. However, different emphasis is given to the range of determining factors across the countries. So when an organisation is looking at introducing a “one size fits all” self-employment model across Europe, it will be very challenging to ensure that this is fit for purpose in all countries.
- New domestic legislation is also being proposed in some countries. For example, the Spanish government has announced new legislation (coming into effect in August 2021) under which platform workers will be recategorised as employees with corresponding rights. The Italian Government has issued a new act aimed at guaranteeing a minimum level of protection for gig economy workers hired under self-employment contracts and bringing their position closer to that of employees.
On top of this, in February 2021 the European Commission opened a consultation on the rights of those who work in the gig economy through digital platforms. It will focus on “the need and direction of possible EU action to improve the working conditions in platform work”. The following areas are highlighted for possible improvement: the employment status of gig workers; working conditions; access to collective representation and bargaining; companies’ use of algorithmic management; and training and professional opportunities.
What are the messages for organisations with non-employed workers across the EU and UK?
The question of employment status is by no means resolved for many of the EU member states (and the UK) and will continue to depend upon the specific facts. Misclassifying individuals as self-employed can result in very significant financial liabilities, for example, backdated holiday pay and tax obligations.
Also, change to the legal framework behind employment status is likely. Those changes will give more protection to vulnerable workers but the impact is likely to be felt for the engagement of contingent workers in all sectors.
If you would like a copy of the report, and explore how our specialist teams can help develop compliant and practical solutions for building an international contingent workforce, please contact us.
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