Business

EU Negotiators Back Deal to Reclassify Gig Workers as Employees, Impacting Ride Hailing and Food Delivery Apps

European Union negotiators have supported a groundbreaking deal that could reclassify millions of people working for ride-hailing and food-delivery apps as employees, potentially costing the industry billions of euros annually. The provisional agreement, announced on Wednesday, requires platforms to grant full employee status to approximately 5.5 million workers who meet at least two out of five specified conditions indicating an employment relationship.

The five conditions include limits on worker pay, performance supervision, control of task distribution, control over working conditions and hours, and rules around appearance and conduct, including restrictions on the freedom to organize. The deal represents a significant shift in labor regulations for the gig economy and could impact major players such as Uber Technologies Inc. and Deliveroo Plc.

The status of delivery couriers and drivers using these apps has been a contentious issue globally. While platforms argue that they provide flexibility and the freedom of self-employment, labor activists have raised concerns about inadequate worker protections.

Elisabetta Gualmini, the lead author in the EU parliament, described the agreement as “revolutionary” and the first legislative framework for digital platform workers. She emphasized the improvement of rights for workers and the promotion of fair competition for platforms.

As part of the deal, platforms will be required to inform workers when they are being monitored or managed by algorithms, addressing concerns about transparency and the use of personal data. The processing of certain types of personal data, including private conversations and information that could be used to infer race, political opinions, migration, or health status, will be restricted.

While an Uber spokesperson expressed support for efforts to improve working conditions and protect platform workers, the company also hoped for legal clarity as the final text emerges.

The European Commission had proposed similar rules in 2021 to provide gig workers with stronger employment-related protections such as sick pay and eligibility for unemployment benefits. The estimated cost to the industry would have been €4.5 billion ($4.9 billion) per year based on the number of eligible workers at the time.

However, concerns persist that stricter employment rules could lead delivery platforms to scale back their operations. A comparable law in Spain two years ago prompted Deliveroo to exit the country, and other food-delivery apps also reduced their operations.

The provisional agreement announced on Wednesday is subject to endorsement and adoption by the European Council and Parliament. Member states will then have two years to incorporate the rules into their national legislation.

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