Out-Law News 4 min. read

Guidance to help self-employed people navigate competition law issued

New guidance from the European Commission should make it legally safer for people who are self-employed to cooperate with one another with a view to collectively negotiating better pay and other working conditions, a competition law expert has said.

Competition law experts Alan Davis and Tadeusz Gielas of Pinsent Masons were commenting after the Commission published new guidelines relevant to people who are self-employed who may wish to work with other individuals in a similar position to negotiate collective agreements with employers.

The new guidelines (20-page / 617KB PDF) reflect the fact that people who are self-employed are considered “undertakings” under EU competition law, meaning that they are at risk of breaching Article 101 of the Treaty on the Functioning of the EU (TFEU) if they enter into anti-competitive agreements with other undertakings.

The Commission has now confirmed that individuals who are ‘solo self-employed’ and in a position “comparable to workers” can work together prior to negotiating and concluding collective agreements with employers to discuss and negotiate matters such as remuneration, rewards and bonuses, working time and working patterns, holiday and other leave entitlements and other working conditions.

The guidelines confirm the position under EU case law that collective agreements regarding the working conditions of solo self-employed people who are in a situation “comparable to that of workers” fall outside the scope of Article 101 TFEU.

The Commission has said there are three categories of solo self-employed people that are considered “comparable to workers”.

The first is ‘economically dependent’ solo self-employed people. People who fall into this category provide their services exclusively or predominantly to one counterparty – i.e. they depend on one counterparty for at least 50% of their work-related income; calculated over a period of less than a year, a year or two years.

The second is solo self-employed people working “side-by-side” with workers. People who fall into this category perform the same or similar tasks ‘side-by-side’ with workers for the same counterparty. They also “provide their services under the direction of their counterparty and do not bear the commercial risks of the counterparty’s activity or enjoy sufficient independence as regards the performance of the economic activity concerned”, the Commission said.

Solo self-employed people providing their services to or through a “digital labour platform” are also considered to be in a position “comparable to workers”. Digital labour platforms are internet-based companies that intermediate and organise the work provided by workers or self-employed people to third-party clients. The work can either be provided in a specific physical location “on location” – for example for food delivery, such as Deliveroo, or for ride-hailing, such as Uber – or online, for example data encoding or translation services.

The Commission said: “Solo self-employed persons may be dependent on digital platforms, especially for the purpose of reaching customers, and may often face ‘take it or leave it’ work offers, with little or no scope to negotiate their working conditions, including their remuneration. Digital labour platforms are usually able to unilaterally impose the terms and conditions of the relationship, without previously informing or consulting solo self-employed persons.”

The Commission set out proposals for improving working conditions in relation to digital platform work late last year. This included draft guidelines – now finalised – and a proposal for a platform work directive.

The concept of a ‘digital labour platform’ has the same definition in the new guidelines and the proposed directive, although the two instruments have different perspectives. Unlike the guidelines, the proposed directive covers only people working through digital labour platforms and aims to ensure they will benefit from a presumption of employment relationship if certain criteria are fulfilled. If their employment relationship is confirmed by national authorities or courts, in applying the proposed directive, their collective agreements would then fall outside EU competition law – as is the case for all employees.

Even if self-employed people are not in a position “comparable to workers” they stand to benefit from the guidelines if they are nevertheless in an imbalanced negotiating position. In that scenario, the Commission has made clear that it “will not intervene” against collective agreements relating to working conditions between solo self-employed persons and their counterparties.

The Commission said that an imbalance in bargaining power will be presumed in cases where solo self-employed persons negotiate or conclude collective agreements with trade associations representing an industry or sector. An imbalance will also be presumed where they are negotiating or concluding collective agreements with employers whose aggregate annual turnover and/or annual balance sheet total exceeds €2 million or whose staff headcount is equal to or more than 10 persons.

The Commission also said it would not intervene against collective agreements relating to working conditions that involve categories of solo self-employed persons where policymakers have already addressed an imbalance in bargaining power in national or EU law.

People who are “false” self-employed will benefit from the guidelines until they are successfully reclassified as “workers” by a national authority or court. “False” self-employed people are individuals that should properly be considered “workers” and enjoy all the rights attached to their worker status, including the right to bargain collectively. The issue of “false” self-employment can especially arise in digital labour platforms, which the proposed directive aims to address.

Alan Davis of Pinsent Masons said the development of the new guidelines highlights a growing focus on the intersection between competition law and employment law, and increasing scrutiny by competition authorities, across Europe and beyond. He cited growing European scrutiny of non-compete clauses in employment contracts and non-poach agreements between competing businesses as an example.

Tadeusz Gielas of Pinsent Masons said: “The guidelines help ensure that solo self-employed people working in online or offline industries across the EU are better able to take steps to collectively improve their working conditions while remaining competition law compliant. They are also a response to the rapidly developing EU digital labour market – the growth of which was hastened by the Covid-19 pandemic.”

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