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Regulation changes could significantly increase prices of services provided by apps

LAWRegulation changes could significantly increase prices of services provided by apps

Planned changes to regulations for digital platforms operating in the delivery and transit industries could drastically increase labor costs and consequently lead to an increase in service prices, argue experts from the DLA Piper law firm. The European Parliament and the EU Council last week agreed on the text of the directive on work through online platforms. The regulation will cover popular Polish digital platforms like, Glovo, Wolt, Uber, Bolt, jush! and Lisek.

The proposed directive on improving working conditions through online platforms aims to change the situation of suppliers and drivers who run sole proprietorships but provide services through digital platforms. The goal is to abolish false self-employment and give these individuals employee rights. It is predicted that by 2025, 43 million people in the European Union will be working for digital platforms, compared to 28 million in 2021.

The most significant change introduced by the directive is the presumption of an employment relationship between digital platforms and subcontractors when two out of six criteria are met. These include requiring the service provider working for the platform to perform the job in a certain way, the ability to continually supervise or verify results through the digital platform, and the imposition of working hours or service execution periods.

“Considering how digital platforms currently operate on the Polish market, many of their subcontractors will meet the above conditions,” says Hubert Hajduczenia, Senior Associate in the labor law practice at DLA Piper. “The only question is how the Polish legislator will approach the implementation of the directive. We are talking about extreme scenarios: the directive may change little, but we may also be dealing with a kind of revolution in the employment system for people providing services through platforms.”

If the platform will only be obligated to prove during any court proceedings that a working relationship in the sense of Polish law does not exist, then the significance of the directive in practice may prove to be minimal. DLA Piper experts believe practical aspects will decide this. Establishing a working relationship will require initiating court proceedings by the person providing the services or the State Labor Inspection (PIP) and waiting for the court’s decision. Currently, such determinations take Warsaw courts an average of about two years.

“Firstly, few people decide to sue for the establishment of work relations with a platform, and the directive will likely not change this,” adds Hubert Hajduczenia. “Secondly, considering the current level of turnover of employment through digital platforms and the fact that many people providing these services are foreigners, even fewer people will want to wait until the end of the process.”

However, if following the implementation of the directive, PIP gains additional rights, including the right to establish a working relationship by decision, the changes will be significant. In this scenario, the platform would have the right to appeal the PIP decision. If the assumption prevails that until the appeal decision is resolved by the court, the parties are bound by an employment contract, people employed by the platforms will immediately receive all employee rights, including, for example, a minimum wage guarantee, statutory working hours, overtime rights, paid vacation leave, and finally, job protection.

“In such a situation, we may face a drastic increase in employment costs,” says Agnieszka Lechman-Filipiak, managing partner in the labor law practice at the Warsaw office of DLA Piper. “This, in turn, may lead to an increase in the prices of services offered by the platforms. This could mean that some platforms will have to make drastic decisions, including withdrawing from the Polish market.”

According to DLA Piper lawyers, the legislator will have to find a solution between guaranteeing real protection to individuals providing services through digital platforms, and further market and technology development. Meanwhile, digital platforms will need to review and likely change the rules of cooperation with service providers. However, reducing the control of digital platforms over service providers may result in both a decrease in the quality of the services provided and a negative impact on their safety.

The directive may minimally affect the business partners of digital platforms and change the rules of cooperation with them. However, it will not significantly affect other individuals employed under B2B contracts.

Among other changes introduced by the directive, the limiting of the role of intermediaries and the introduction of human control over decisions made by new technologies, including AI algorithms, are noteworthy.

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