Sector regulation (Driving force)

The research project ‘Future scenarios of platform work’ explores the economic, labour market and societal impacts of two types of platform work – platform-determined routine work and worker-initiated moderately skilled platform work – by 2030. The project identified eight key driving forces deemed to substantially influence the development of these two types of platform work. These driving forces and associated hypotheses were used to derive potential platform work scenarios, and, from these, pointers were developed on what policy could do to make a desirable future happen and to avoid an undesirable one. This is the definition of one of the eight key driving forces identified.

 

Sector regulation refers to legislation and policies that determine market access and how business is conducted. 

Relevant aspects, accordingly, include:

  • requirements that need to be met before one is allowed to operate in the market, such as authorisations, licensing obligations, certificates of qualification, proof of endowment with minimum levels of capital or physical assets, registration with business organisations, evidence of meeting minimum standards related to the occupation or sector, and provision of health or liability insurance 
  • requirements that need to be met to continue with the market activity, such as proof of maintenance of relevant equipment, payment of taxes and social contributions, and meeting minimum quality standards for the products or services provided

    EU law establishes that such requirements are justified and proportionate, take the specificities of the business model into account and do not favour specific business models over others (European Commission, 2016).

    For on-location platform-determined routine work, sector regulation related to transport (both passenger transport and transport of goods) is particularly relevant. For on-location worker-initiated moderately skilled work, a wider sectoral scope needs to be considered, for example, construction (such as plumbers, electricians and assemblers), gardening, cleaning and care.
     

    Trends

    EU law requires that service providers should not be required to obtain authorisation for market access unless the authorisation is non-discriminatory, necessary to attain a clearly identified public interest objective and proportionate to achieve this interest (European Commission, 2016). Where service providers are required to obtain authorisations, the conditions to obtain them need to be clear, proportionate and objective, and authorisations are generally to be granted for an unlimited period of time. Related procedures must be clear, transparent and not unduly complicated, lengthy or costly. Absolute bans or quantitative restrictions should be imposed only as a last resort and only where no less restrictive requirements to attain public interest objectives can be used. Recently, the European Commission emphasised more flexible regulation of services markets as this could increase productivity, ease the market entry of new players, reduce the end-user price and increase the portfolio of service offers (European Commission, 2015).

    In general, as long as platforms provide services for remuneration at a distance by electronic means and at the individual request of a service recipient, they provide information society services and cannot be subjected to specific sectoral requirements. However, for the time being, it has to be established on a case-by-case basis whether platforms offer services in addition to information society services, which makes them subject to sector-specific regulation (European Commission, 2016). Criteria considered in this regard include the level of control and influence the platform exerts over the worker (such as over the price or contractual terms and conditions), ownership of key assets and whether the platform incurs costs and assumes risks related to the service provision.

    The Services in the Internal Market Directive (2006/123/EC) obliges Member States to review existing legislation to ensure it is necessary, justified and proportionate against new market developments. Against this background, a few national legislators have implemented changes related to platform work. The known examples mainly refer to the transport sector, hence are more relevant for the platform-determined type. 

    Some Member States regulate the sector more generally and only indirectly affect platform work. In 2017, Estonia and Lithuania, for example, created a legal framework for ride-sharing (whether or not facilitated through an online platform). In Estonia, this specifies that if the ride is ordered, there is no need for a taximeter, and price limits set by local governments for taxi services do not apply if the price is displayed before the passenger enters the car. In Lithuania, it requires individuals who want to provide passenger transport to register a declaration that they meet insurance, roadworthiness and tax payment requirements. 

    Other examples of sector regulations specifically address platform work or exclusively target individual platforms. In Portugal, the Electronic Platforms for Passenger Transport Services Law (Lei no. 45/2018) establishes that individual workers cannot have a direct relationship with Uber but have to join an existing business that has a contract with the platform or to establish their own business to contract with the platform. In Slovenia, an amendment to the Road Transport Act was proposed in 2018, defining the conditions for the entry of Uber into the national market.

    In this context, court rulings referring to individual platforms are relevant. Proceedings in Germany, Italy and Spain, for example, have been investigating whether UberPop or UberBlack should be subject to transport sector regulation, notably against the background of potential unfair competitive advantage due to cost savings compared to traditional taxi providers.

    From a different perspective, and more widely applicable than a specific sector or type of platform work, discussions are emerging whether or not platforms should be regarded as recruitment agencies, labour intermediaries, payrolling agencies or temporary work agencies and hence subject to relevant sector-specific regulations.

    The unclear sector allocation of platforms at present has important consequences for a substantial array of aspects of work, including earning levels and collective bargaining.
     

    Hypotheses

    The project applied a foresight methodology to derive possible future scenarios. As part of this, at least two realistic and mutually exclusive hypotheses were drafted for each of the key drivers to depict their potential future development.

    Three hypotheses were identified for this driver. 

    1. General sector regulation also applies to platform work

    A general sector regulation does not specifically consider platform work but clarifies that any task facilitated through platforms that compares to the sector activity is subject to the same regulations as regards market access, certification and standards. The platform and platform workers need to have the required authorisations, certificates and so forth as any businesses and their workers in the traditional economy have.

    2. Specific sector regulation for platforms: ‘matching services’

    A sector regulation exists that specifically addresses platform work as an online approach to matching supply and demand for paid work. This regulation can either be for a new, distinctive type of economic activity or included in the definition of temporary agency work. Under this hypothesis, platforms and platform workers need to have the required authorisations, certificates and so forth as the specific regulation prescribes.

    3. Unclear which sector regulation applies

    There is a lack of clarity about which sector regulations apply to platforms (for example, IT as opposed to transport for the platform-determined type, IT as opposed to construction for the worker-initiated type). This lack of clarity leads to an ‘as is’ situation, with national courts deciding on a case-by-case basis when conflicts arise.

    Information sources

    • European Commission (2015), Communication on the Annual Growth Survey 2016: Strengthening the recover and fostering convergence, COM(2015) 690 final, Brussels.
    • European Commission (2016), Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: A European agenda for the collaborative economy, COM(2016) 356 final, Brussels.
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