- Belgian legal framework is sufficient but outdated for the new phenomenon of the gig economy
- Most countries, including Belgium, only offer a self-employed status or an employment contract for workers in the gig economy.
- Only three countries (UK, Spain and Italy) offer the status of economically dependent self-employed, combing basic social protection with more flexibility
- In all countries, a correct classification is necessary to avoid payroll taxes adjustments (regularisation) or even penal sanctions.
Brussels, 3 June 2020 - While many people have the ability to work from home, gig workers have kept the economy running during the Covid-19 lockdown. Today, these workers are more vulnerable than ever due to a lack of social protection and a cohesive legislative framework across different countries. One year after PwC Legal’s first in-depth study, it appears almost no legislative progress has been made. Of the countries that did act, almost all invested in upgrading the social rights of gig workers in order to provide them a similar social status to employees.
The gig economy has been the subject of much controversy, especially in relation to the social status of the workers involved. Often, they will be engaged hired as self-employed workers, which meets their needs in terms of autonomy and flexibility. On the other hand, they long for the social security benefits employees enjoy. Current legislation usually doesn’t offer a legal framework providing both aspects to workers, which results in legal uncertainty for all parties involved.
In Belgium, most companies that can be situated in the gig economy indeed consider their workers as self employed. From an employment law perspective, self-employed workers are much less protected than employees. Provisions on working time and resting periods, minimum (paid) holidays and public holidays, minimum salary, health and safety requirements, protection of pregnant workers, loan of manpower, etc. do not exist for self-employed workers. The PwC Legal report concludes that the current Belgian legal framework is, although sufficient, outdated for the new phenomenon of the gig economy.
Investigating the situation in 10 European countries, this new PwC Legal study demonstrates that most countries only provide the possibility of either a self-employed status or an employment contract for workers in the gig economy. Only three of the countries involved (UK, Spain and Italy) have a third option, an intermediate status if you will, of economically dependent self-employed, which provides basic social protection with more flexibility.
The given classification is crucial for all parties involved. The social security rights and obligations for employees and self-employed differ hugely. In general we can conclude that the social security scheme for employees is far more extensive than the one for self employed: e.g. pension accrual, disability allowances in the case of sickness/accidents, unemployment benefits, paid holiday, etc.
From an employment law perspective, we can conclude that the employment of employees is heavily regulated, in contrast to the employment of self-employed workers.
When the wrong classification is given, payroll taxes adjustments (regularisation) or even penal sanctions might be imposed. Indeed, the contractual relationship may be reclassified into an employment relationship or a self-employed worker status. The sanctions differ on a national level, but in general a reclassification hits the hiring company harder than the worker.
The fact that national authorities are clinging on to this classic dichotomy, results in a patchwork of different regulatory actions, some supporting, but most restraining the gig economy, which is adding to the ambiguity. The discussion therefore remains very much alive, testimony to which is the numerous case law and several new legislative initiatives that were introduced over the past year.
Remarkably, only two out of ten surveyed countries have taken a legislative initiative to provide a fitting legal framework for the gig economy workers. In Italy, for example, gig workers will soon have written contracts, a minimum hourly wage (no payment per job) and benefit from labour accident insurance. Also the UK is following by proposing new legislation to strengthen gig workers’ social protection. A new single enforcement body was created for certain rights such as holiday pay and minimum wages. In the Netherlands the goal is to introduce new legislation by 2021, which would introduce minimum hourly wages for gig workers. A special committee made recommendations to the government to make all platform providers employers.
New ways of working, new uncertainties
The success of these companies clearly shows that there was a demand for innovation, but new business models also require a specific legislative framework and that is not the case for the time being, the study shows. Whether it is a driver from Uber, a courier from Deliveroo or a handy harry from Listminut, flexibility and autonomy is the essence of every business model, for the worker but also for the consumer. This fast, customer-oriented digital approach proves to be a success formula, but it does involve quite a few risks. Enabled by technological evolutions, new ways of working such as the gig economy will continue to gain ground in the years to come. The study concludes that if international companies are to invest in the local economy, legislative clarity is needed.
Pascale Moreau, Partner at PwC Legal: “There’s no single status that accommodates the needs of the gig economy. The proof of this is that in the majority of the countries we examined, there are court cases that question the status of workers in the gig economy. We should dare to completely rethink the labour law framework to find a balance between social protection and the needs of the current economy. Legal certainty, transparency and flexibility ought to be the cornerstones of a new labour law. The goal of this exercise is to find an appropriate legal framework without needlessly complicating our labour law any further.”
You can find the full report via this link.
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