[co-author: Elliott Lauder]
On April 24, 2024, the European Parliament adopted the final text of two new directives, namely:
- the Platform Work Directive, aimed at improving working conditions and protection of personal data for those engaged in “platform work”; and
- the Corporate Sustainability and Due Diligence Directive, which will introduce environmental due diligence for large companies.
In this article, we summarize the key points of these directives and consider how they will impact employers in the UK and Ireland.
The Platform Work Directive
The aims of this directive are to be achieved by introducing a rebuttable presumption of employment status and by regulating the use of algorithmic management tools in platform work for the first time in the EU.
Presumption of Employment Status
There will be a presumption of an employment relationship between the person performing the work and the digital labour platform where facts indicating “control” and “direction” (as defined by national law, collective agreements, and EU case law) are present.
Whilst this presumption will be rebuttable, the digital labour platform bears the burden of proving the relationship is not an employment relationship and the presumption will not automatically apply to proceedings concerning tax, criminal, or social security matters.
Currently, many platform workers are classified as self-employed, both by the platforms and, in some cases, by national courts. That classification may not be tenable when the new rules come into effect, though at present both the Member State implementation and interpretation of the key tests are uncertain.
Data Protection
Several limitations on processing of personal data will be introduced and apply to all platform workers, both employed and self-employed:
- Personal data cannot be collected where the worker is not offering or performing work.
- Biometric data is not to be used to identify a platform worker by comparing it to biometric data of other workers.
- Digital labour platforms will be flatly prohibited from processing certain types of personal data, including data relating to the emotional or psychological state of the worker, private conversations, or data used to predict the exercise of fundamental rights.
- Digital labour platforms will also be prevented from processing data used to infer certain characteristics such as race, political opinions, religious beliefs, health data, or sexual orientation.
Automated Monitoring and Decision-Making Systems
New rules will require digital labour platforms to inform all platform workers (whether employed or self-employed) of the use of such systems, and all types of decisions that are supported or taken by automated means.
Workers must be informed of the categories of data and main parameters being considered by automated decision-making, the relative importance of these parameters, and how their personal data and actions influence these decisions.
There will also be an obligation to ensure effective human oversight of these automated systems and any decisions to restrict, suspend or terminate the contractual relationship or account of the worker must be taken by a human being.
The Corporate Sustainability and Due Diligence Directive (CSDDD)
The CSDDD requires corporations to incorporate necessary due diligence into their policies, ensure contractual assurances from business relations, integrate sustainable investments into their practices, and adopt a transition plan to make their business model compatible with the Paris Agreement (to limit global warming to 1.5°C/2.7°F).
Details of the exact reporting requirements are expected to be delivered by each Member State as part of the transposition process and then made available to the relevant companies.
Failure to comply with the directive could result in fines of up to 5% of annual net worldwide turnover, “naming and shaming,” and the impositions of penalties to compensate victims of a breach.
Looking ahead
These obligations will be introduced incrementally based on headcount and turnover and will apply:
- From 2027, companies with over 5,000 employees and a worldwide turnover of more than €1.5 billion;
- From 2028, companies with over 3,000 employees and a worldwide turnover of more than €900 million;
- From 2029:
a. companies with over 1,000 employees and a worldwide turnover of more than €450 million; and
b. companies with franchising or licensing agreements in the EU with a worldwide turnover of more than €80 million, if at least €22.5 million of that was generated by royalties; and
c. non-EU companies, parent companies and companies with franchising or licensing agreements in the EU reaching the same turnover threshold as in 3(b).
Impact of both directives on companies in Ireland and the UK
Once the directives are formally adopted by the Council, they will be published in the Official Journal of the EU. Member States (including Ireland) will have two years from this date to transpose their provisions into national law. As such, Ireland will soon have to transpose the provisions of both directives into national law.
Digital labour platforms operating in Ireland (or elsewhere in the EU) should begin reviewing their operations in light of these new rules by considering whether their workers are likely to be presumed to be employees, reviewing their data processing activities, and by reviewing the operation of any automated monitoring and decision-making systems.
Irish companies falling within the scope of the CSDDD should begin familiarizing themselves with their obligations and prepare to comply with the relevant rules.
Companies in Ireland and the UK that fall within the scope of 3(c), or who have operations in the EU, should familiarize themselves with the CSDDD rules and the potential impact on their reporting obligations.