The European Parliament and the European Council are focusing on enhancing the regulatory framework of the ‘gig economy’ by proposing a new directive to improve the working conditions for people deploying professional activities through digital platforms.
In a super-digitalised era when AI and other smart technologies are developing at an extremely fast rate, people are using digital platforms and smart devices in an increasingly natural fashion, and it can even be argued that these are a way of living, and not just working or entertainment tools.
Since the speed of legislative developments has not kept pace, the EU thinks now is the right time to develop a clearer legislative framework that would put the rights of ‘digital workers’ in the spotlight.
We all saw how, during the pandemic and post-pandemic years, there was a high expansion of digital platforms usage in a multitude of economic sectors (e.g., shopping, ride-sharing, delivery services, and many others), which led to new business and working opportunities, and gig workers and freelancers being attracted to undertake activities. Several factors have probably led individuals to choose such ways of working since multiple benefits are associated with it; e.g., greater flexibility of working hours, more independency, and fewer subordination rules than in a classic employment relationship; bigger and faster earnings; and ease of use of digital platforms.
Nevertheless, the large expansion of this new way of working has also created, directly or indirectly, confusion about the status of digital workers and, at least from a tax point of view, this structure has raised, and still raises, many controversies (for instance, there is a lack of clarity and a debate regarding the (in)dependency status of these gig individuals, a situation that has repercussions on how the incomes are taxed).
Proposed measures and scope
The European Parliament’s initiative aims to establish, first and foremost, a legal framework to ensure fair working conditions for workers on digital platforms, proposing base principles such as:
Defining the concept of a platform worker – to clarify whether platform workers should be classified as employees or self-employed;
Working conditions and the right to fair pay – the directive would define working time for workers on platforms and implement a fair pay system;
Access to social protection – workers on platforms will have access to social protection schemes regardless of whether they are classified as employed or self-employed; and
Right of collective bargaining – the proposal aims to strengthen the right of workers on platforms to form or join trade unions.
It is estimated that 9 out of 10 active platforms in the EU classify digital workers as self-employed. At the same time, it is estimated that up to 5.5 million people working through digital platforms could be at risk of being misclassified in terms of their employment status, and, therefore, not be able to benefit from the rights and protection to which they would be entitled as dependent workers.
This directive, if implemented, will impact more than 28 million people in the EU who conduct activities via digital platforms, for whom it will be an important and necessary step from a social justice standpoint, especially as the number of digital interactions is constantly increasing, with an expected 43 million digital workers in 2025.
If this proposal for a directive comes to fruition, it could represent a major paradigm shift for the digital economy; at the same time, the European and, by implication (but especially), the national legislative framework should enhance fairness for workers and establish clearer provisions and rules that should also be easier to understand, interpret, and implement for all stakeholders.
Implementation in Romania and likely impact
Similar to any European directive, once adopted, the member states (including the Romanian authorities) would have to transpose it into national law within two years. Inevitably, in Romania this will lead to a new public dialogue on this sensitive topic between the main actors involved (i.e., state authorities/institutions, the business environment, digital workers, even the public opinion, etc.).
The effective implementation of such a directive will require close cooperation between the relevant authorities/institutions in Romania, and a strong commitment by digital platforms to comply with the new rules and principles. If properly managed and implemented, such a directive should have a positive impact on the working conditions for platform workers in Romania (which is currently, more or less, in a grey area).
As a first step, the authorities will need to thoroughly review and adapt the existing legal framework to align it with the requirements of the envisaged directive (e.g., from tax, labour law, health and safety, and social protection law perspectives). Thus, the implementation of the directive should come with a number of practical benefits for gig workers; e.g., to increase safety and social protection, to improve the labour conditions and tax rules/principles, and to increase the transparency and predictability of the relationship with the platforms).
As in other countries, we can no longer say that it is just a trend; the usage of digital platforms has also become a way of living for Romanians. Looking at the current and past Romanian tax area, in which the reclassification of self-employed income into a dependent one has been a well-known subject for years, a legislative repositioning should bring benefits to a domain filled by misunderstandings and non-compliance. As such, a streamlined legislative framework should result in better tax compliance, reporting, and, more importantly, tax collection.
On the other hand, this may not be the most desired legislative update for the Romanian business environment, since it may have a significant impact on the local business structures and local profits, given that stricter regulation could make the industry less attractive. However, considering that the directive is still in the proposal phase and that local implementation would take around two years after the envisaged adoption, local business owners should have enough time to adapt their business model to the new requirements.
