EU-level: European Commission outlines its vision for a collaborative economy

According to the European Commission’s ‘Communication on a European agenda for a collaborative economy’, collaborative platforms have the potential to create new jobs, boost flexible working arrangements and result in new sources of income. While employers believe offers new opportunities, unions are concerned that micro enterprises and SMEs could be excluded from social and employment law.

Introduction

The ‘Communication on a European agenda for a collaborative economy’ issued by the European Commission on 2 June 2016 defines the collaborative economy (PDF) as:

business models where activities are facilitated by collaborative platforms that create an open marketplace for the temporary usage of goods or services often provided by private individuals.

According to this approach, three categories of actors are involved:

  • service providers who share assets, resources, time and/or skills — these can be private individuals offering services on an occasional basis or service providers acting in their professional capacity;
  • users of these services;
  • intermediaries who connect — via an online platform — providers with users and who facilitate transactions between them.

Collaborative economy transactions generally do not involve a change of ownership and can be carried out for profit or not-for-profit.

Collaborative economy in a nutshell

The Communication states that collaborative platforms can:

  • create new jobs;
  • boost flexible working arrangements;
  • result in new sources of income.

The collaborative economy has, the Commission believes, the potential to generate income beyond traditional linear employment relationships and to enable individuals to work more flexibly. However, it also notes that more flexible working arrangements ‘may not be as regular or stable as traditional employment relations’ and that this may ‘create uncertainty as to applicable rights and the level of social protection’. This is because working arrangements in the context of the collaborative economy are often based on individual tasks performed on an ad hoc basis rather than in a pre-defined environment and time frame.

Defining the employment relationship

In general, the Commission notes that the boundaries between self-employed people and workers are becoming increasingly blurred and that the incidence of atypical forms of work is increasing; the Commission is also currently consulting on the need to ensure increased labour market participation, fair working conditions and suitable social protection, under the recent European Pillar of Social Rights initiative).

The Communication therefore provides some guidance on how the traditional distinction between the self-employed and workers applies in the context of the collaborative economy. In particular, it states that European law guaranteeing rights to workers is applicable only to individuals who are in an employment relationship; that is, those considered to be workers. It gives the following EU definition of ‘worker’ as provided by the Court of Justice of the European Union:

the essential feature of an employment relationship is that for a certain period of time a person performs services for and under the direction of another person in return for which he receives remuneration.

On this basis, the Communication states that the existence of an employment relationship in the context of a collaborative platform has to be established on a case-by-case basis by looking at:

  • the existence of a subordination link – the service provider must act under the direction of the collaborative platform, which determines the choice of the activity, remuneration and working conditions;
  • the nature of work – the provider of the underlying service must pursue an activity of economic value that is effective and genuine;
  • the presence of remuneration – this is used to distinguish a volunteer from a worker.

Where the service provider does not receive any remuneration or receives merely a compensation of costs incurred for their activities, the remuneration criterion would not be met.

Guidance for Member States

The Commission emphasises that this Communication provides guidance to Member States to help them when deciding on the employment status of individuals providing services through collaborative platforms. It calls on Member States to:

  • assess the adequacy of their national employment legislation;
  • consider the different needs of workers and self-employed people in the digital world as well as the innovative nature of collaborative business models;
  • provide guidance on the applicability of their national employment rules in light of labour patterns in the collaborative economy.

Fair working conditions for all

The Communication concludes by stating that collaborative economy business models can bring significant benefits and that Europe should be open to embracing these new opportunities. While the EU should proactively support the innovation, competitiveness and growth opportunities offered by this, the Commission believes that it is important to ensure fair working conditions and suitable and sustainable consumer and social protection, and that the public and businesses should be aware of the rules and obligations applying to them.

Response of the social partners

EU-level social partners have not yet issued any formal reactions to the Communication. However, they have released statements in response to an earlier Commission Communication, issued in October 2015, on its strategy for the single market (PDF), which includes information on the collaborative economy.

On the trade union side, the European Trade Union Confederation (ETUC) adopted a position paper in December 2015, saying that it would challenge any attempt to exempt micro enterprises and small and medium-sized enterprises (SMEs) from social and employment law.

On the employer side, BusinessEurope stated in a position paper issued in January 2016 that it firmly believes that the collaborative economy:

  • could offer new opportunities for innovative business models;
  • can enable businesses to provide services in an innovative way;
  • can foster entrepreneurship through the establishment of partnerships between big corporations and start-ups;
  • can lead to the adoption of flexible forms of employment (especially for women, young people or people outside the traditional job market) that would not otherwise exist.

However, it also believes that these new business models could undermine the level playing field between new and tradition business models providing similar services under a different regulatory framework and should therefore be carefully monitored. In the area of employment, social security and health and safety, in particular, BusinessEurope believes that a consistent European approach is needed. Furthermore, Member States need to consider, on a case-by-case basis, who is an employee and who is not, and to make sure that freelancers have access to social security safety nets.

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