New EU rules will transform gig work across Europe, forcing digital platforms to grant proper employment rights and lift the veil on algorithmic decisions.
Key takeaways
- The EU Platform Workers Directive presumes platform workers are employees, targeting widespread misclassification across the gig economy.
- It requires transparency in algorithmic management and mandates human oversight of key automated decisions.
- It bans the use of sensitive personal data in surveillance and expands data rights beyond GDPR for all platform work.
Shutterstock.com/Gorodenkoff
The EU Platform Workers Directive introduces the presumption of employment for platform workers and establishes the first EU rules to regulate algorithmic management in the workplace.
Member states have until 2 December 2026 to transpose the directive, which was adopted in October 2024. The extent of the changes will vary: some EU countries already have employment presumptions in place, while others will have to implement entirely new legal frameworks.
What is platform work?
Platform work, commonly known as the gig economy, is defined by the EU as work organised through a digital labour platform, where individuals perform tasks for a third party in exchange for payment. This includes workers typically characterised as freelancers, self-employed, or independent contractors.
The directive distinguishes between ‘platform workers’ (employees) and ‘persons performing platform work’ (employees and non-employees), though some data processing restrictions will apply to all.
The gig economy is a rapidly growing market. There were 28 million people working for digital platforms in the EU in 2022. That figure is projected to reach 43 million by 2025.
The directive aims to address ambiguous employment classifications – an estimated 5.5 million people are wrongly classified as performing platform work – and deliver improved working conditions.
The new standards will impact all digital platforms with EU operations, from ride-hailing and food delivery services to freelance marketplaces and task-based platforms, regardless of where these companies are based.
The EU isn’t alone in rethinking gig work rules. Similar shifts are underway globally, for example, in APAC, lawmakers are responding to calls for stronger worker protections.
Lexology PRO explores the scale of the changes for employers.
A fundamentally changed employment relationship
The directive fundamentally changes the relationship between digital labour platforms in scope and people performing platform work. Member states must establish a legal presumption that platform workers are employees when there is evidence of "control and direction" by the platform.
Employers can rebut this presumption but, crucially, the burden of proof will shift to them. It means they must prove that no legitimate employment relationship exists.
The directive aims to stop companies from misclassifying platform workers as self-employed to avoid providing sick leave, pensions, and other employee protections.
As employees, platform workers will gain collective bargaining rights and be able to join trade unions or similar organisations.
If platform workers attempt to enforce their rights, employers must protect them from adverse actions, such as reduced assigned tasks, unfair ratings, algorithmic downgrading, pay reductions and dismissal.
More human oversight of algorithmic management
Many platform workers – 10-20% of those sampled in Spain and Germany, according to a 2023 Joint Research Centre study – are subject to digital monitoring and algorithmic management. This commonly plays out with the automated allocation of work.
Under the Platform Workers Directive, employers must inform workers when automated monitoring and decision-making systems are used, how these systems are used to make decisions, and the impact on workers' day-to-day lives.
Digital platforms will be banned from using automated systems alone for major employee decisions. Companies will need to ensure there is adequate human oversight. The new rules also give workers the right to challenge harmful algorithmic decisions, with employers required to respond promptly and prohibited from retaliating.
Enhanced data protection rights
Employers will be forbidden from deploying automated surveillance or decision-making systems to process certain types of personal information about platform workers. This includes their emotional states, private communications, trade union involvement, or sensitive data related to race, political beliefs, religion, health status, or biometric identifiers that risk discrimination.
EU laws like the GDPR already protect personal data – but this directive goes further by addressing unique challenges raised by platform work and expands existing rules to apply to all persons performing platform work.
How can digital platforms prepare?
Businesses using a platform-based model should start making modifications well in advance. Some elements of the directive – like overhauling sophisticated data gathering and algorithmic management infrastructure – typically require substantial preparation time.
Review worker classification
Businesses can begin by reviewing work practices and examining how they classify and manage their gig workers.
High-profile court cases have found Uber, Deliveroo, and Glovo liable for worker misclassification, with Glovo fined €79 million by Spain, highlighting the financial risks for businesses that get this wrong.
Employers should scrutinise contracts to ensure clear definitions of the working relationship between workers and the company. It will be essential to keep records and documentation for tasks, signed agreements and invoices to support classification decisions.
Examine current algorithm processes
Digital platforms are encouraged to examine existing algorithmic systems ahead of the deadline to identify and correct potential issues. Employers must assess the impact of algorithmic decision-making at least every two years, with specific attention to risks affecting workers’ health and safety. Conducting risk assessments now will give platforms time to implement appropriate mitigating measures and reduce risk before enforcement begins.
Ensure effective human supervision of AI systems
Pre-empt forthcoming obligations for algorithmic oversight by maintaining human supervision of automated systems. Those entrusted with monitoring and evaluating these systems must have the appropriate skills, training and authority to do so effectively.
Invest early in equipping qualified staff and HR teams with the tools and resources needed to assess AI decisions, identify biases and provide clear, well-informed explanations for decisions. Preparing the right people now will help safeguard fairness and support compliance as rules tighten.
Update data compliance policies
Businesses should implement clear and enforceable data processing policies in line with the directive. Existing data policies should be reviewed and updated where necessary to reduce liability and ensure ongoing compliance. Training staff on new data processing rules is essential to embed compliance across the organisation.
To protect sensitive personal data collected by monitoring systems, companies must establish robust security measures, including strict access controls, encryption, and pseudonymisation where appropriate.
Improve communication channels both ways
Develop clear communication channels to ensure workers are informed about how algorithmic management systems function. Internal policy documents should outline when, where, and why employee monitoring takes place, as well as how the data is used – and must be readily accessible.
Companies should create a clear process for workers to challenge decisions and file complaints about employment status, algorithmic decisions or data use.