The (in)voluntary employee versus the (in)voluntary self-employed: the story continues …

21 Jan 2019

Employee or independent contractor? The legal status of staff members of so-called platform companies keeps requesting public attention.

Hylda Wiarda

What is the status of these members of staff, both with regard to civil matters and tax-related matters? In connection to civil matters it is important to ascertain whether or not these staff members are governed by Dutch employment law and may as such invoke, amongst others, the applicable dismissal protection, the continued payment of wages during illness and – where applicable – the applicability of a CLA. The tax-related relevance concerns the issue whether or not remunerations paid out to these staff members must be subject to deduction of wage tax and deduction of other social contributions.

To these platform companies, such as Uber and Deliveroo for example, the answer to that question is evident: the riders and drivers respectively are independent contractors; not employees. Both in the political debate and in society the opinions are clearly divided. And the legislator is also struggling to find an answer. The fact that there is no unambiguous answer to this question was once again made clear in two separate judgments rendered by the District Court of Amsterdam [, and] that ruled that the riders of Deliveroo can in fact lay claim to the existence of an employment contract and the fact that they are therefore subject to the CLA Professional Road Transport. A ruling that is in direct opposition to that of another ruling by that same District Court of Amsterdam of July 2018 which read that the Deliveroo rider Sytze Ferweda [], was in fact to be considered an independent contractor and not an employee.

What makes this question so hard to answer? This is mainly caused by the fact that the answer to that question depends on the existence of a relationship of authority. If it exists, an employment agreement is in principle in place. In the assessment of the existence of such a relationship of authority all circumstances of the case must be taken into account and weighed. For the average employer this already generates discussion. But for platform companies such as Uber and Deliveroo, the available work is divided among the riders and drivers by an app based on an algorithm. In the case of Deliveroo it has explicitly been agreed upon with the riders that they themselves may decide on whether they are available for work, that they may refuse a delivery at any point in time (even shortly before delivery is due), that they may, if they have already booked a period (to work) decide not to go to work, and all that without any consequences whatsoever. And they may at all times arrange for replacement by a third party in connection to the execution of the work. Is it even possible that such a set of circumstances would result in a relationship of authority?

On paper at least, Deliveroo’s influence on the manner in which the deliverer executes his activities is almost non-existent, thereby leading to the appearance that any form of authority relationship is also non-existent. According to the recent ruling by the District Court in Amsterdam, however, this is a mere illusion and a rider is in practice not at all at liberty to schedule his own activities. Since riders get paid per delivery, it is essential for a rider to make as many deliveries as possible in order to earn a substantial amount of income. Thus, a rider cannot actually afford to refuse deliveries as easily as that. Nor can riders spontaneously decide to log on in the app and run deliveries, because they would run the risk that sufficient other riders are already working at that time, and that that specific period has therefore already been filled. It may well be possible to book a certain period, but if a riders subsequently decides not to work that period after all, this may come back to haunt him by way of the algorithm awarding him fewer deliveries. Moreover, riders that consistently show up at the booked times are granted priority when logging on for the more lucrative periods to work.

Whereas the ruling by the District Court in the matter of Sytze Ferwerda has mainly been based on the personal circumstances of that case, the recent judgment is much more based on the situation of riders in general. Although we believe the January verdicts to be correct, it remains to be seen if the majority of riders would desire the employee status or not: the trade union FNV seems to think so, Deliveroo thinks this is not the case and has also for that reason communicated to intend to appeal. We will just have to await the ruling by the Court of Appeal on the matter.

What both rulings do agree on is that it is up to the legislator to provide suitable legislation on the shortest term possible. Would the time be right for a separate, legally regulated agreement, drafted specifically for individuals working on the basis of such platforms? In our opinion, the answer is a resounding yes: platformisation is an unstoppable development and the present employment contract law would appear to be an ill-fitting off-the-rack black suit.