Collective bargaining and the "self-employed"

Despite the clear benefits of digitalisation, including in respect of enhanced employment opportunities, the European Commission (Commission) has concerns that the increasing number of individuals deriving work through digital platforms might be unable to secure favourable pay or work conditions due to an alleged lack of bargaining power. Such concerns are seen to be particularly acute in relation to individuals working as the customer (delivery) interface via digital platform services (many of whom are "solo self-employed" – i.e., self-employed without employees). However, the Commission believes there are also issues for certain self-employed activities beyond the platform economy – for example, where individuals have entered into commercial service contracts (under which terms and conditions of work may not, the Commission believes, be as secure as they would be for an "employed" individual). 

As such, the Commission wants reassurance that the self-employed (including "gig economy" workers who are often self-employed) can protect their interests by taking part in collective engagement with employers in a manner formally recognised as compatible with competition law requirements. 

The legal backdrop 

Under existing EU competition rules (and indeed the laws of many jurisdictions globally), self-employed workers who come together in order to negotiate better pay or working conditions could find themselves in breach of competition law. This is because self-employed workers are classed as "undertakings" under competition law and, therefore, any collective efforts on issues such as pay could be viewed as cartel-like behaviour.

Therefore, the possibilities for self-employed workers to organise and collectively engage (through unions or other associations) is limited, unlike the situation for their "employee" counterparts who can organise largely without fear of breaching applicable rules. Indeed, it has long been recognised that competition rules should not impede collective activity aimed at protecting workers. To this end, one of the limited exceptions in terms of agreements being caught (by the prohibition on restrictive agreements) is where they are entered into within the framework of collective bargaining between employers and employees (and are intended to improve employment and working conditions). Where this is demonstrated to be the case, they will be excluded from the scope of Article 101(1) TFEU – a principle otherwise known as the "Albany exception".

However, EU case law (and application of the resulting rules) remains less clear for the "self-employed" – again owing to the fact that such individuals are, legally speaking, "undertakings" meaning that any collective arrangements they pursue may fall foul of the prohibition on restrictive agreements.

The position of the self-employed was arguably not resolved by a 2014 Court of Justice ruling on national reference from the Netherlands (Case C-413/13 FNV Kunsten). The ruling noted that a provision of a collective employment agreement – concluded by an employees' organisation in the name, and on behalf, of true (rather than "false") self-employed services providers who are its members – does not constitute the result of a collective negotiation between employers and employees and therefore cannot be excluded (by reason of its nature) from the scope of Article 101(1) TFEU. This was considered to be the case as, although they perform the same activities as employees, these service providers (in the case in question, substitute musicians) are, in principle, "undertakings" (to the extent they offer their services for remuneration on a given market and perform their activities as independent economic operators in relation to their principal).

Thus the question remains for the Commission – how can this rapidly expanding class of worker (who are not, at least formally, "employees") benefit from collective engagement with employers whilst having certainty regarding compliance with the competition rules? A number of countries have already taken steps to address this issue. For example, the Dutch competition authority amended its guidance in 2019 to clarify that gig economy workers can collectively negotiate under certain circumstances without breaching competition law. The Australian competition authority has also proposed an exemption for self-employed workers and small businesses.

Commission initiative

The Commission's preliminary view (informed by input received as part of its public consultation on the "Digital Services Act Package" – section V of the consultation on "Self-employed individuals and platforms") appears to be that the legal certainty enjoyed by "employed" workers (who benefit from collective bargaining without risk of violating the competition rules) should be formally extended to the self-employed.

To this end, the Impact Assessment describes the Commission’s initiative as "ensuring EU competition law does not stand in the way of initiatives to improve working conditions through collective agreements for solo self-employed where they choose to conclude such agreements, while guaranteeing that consumers and SMEs continue to benefit from competitive prices and innovative business models, including in the digital economy". In particular, the initiative seeks to achieve this objective by providing legal certainty about the applicability of the competition rules to collective bargaining activities engaged in by self-employed workers in order that these workers can determine "without complex legal or economic analyses" whether such collective arrangements are problematic.

The Impact Assessment details four different policy options being considered in term of the scope of the initiative (and which may ultimately be implemented via a Council Regulation or a Commission Communication). These are as follows:

• Option 1: all solo self-employed providing their own labour through digital labour platforms (i.e., only individuals providing their own labour through platforms would have access to collective bargaining).
• Option 2: all solo self-employed providing their own labour through digital labour platforms or to professional customers of a certain "minimum size" (i.e., broader than Option 1 so as to cover traditional professions in the "off-line economy" subject to such individuals not being covered by other specific competition law provisions included in sectoral instruments) – for the purpose of determining the minimum size of the counterparty, the use of the definition/thresholds of small- and medium-sized enterprises could be considered.
• Option 3: all solo self-employed providing their own labour through digital platforms or to professional customers of any size with the exception of regulated (and liberal) professions (additional consideration would need to be given in the absence of a generally applicable EU definition of regulated/liberal professions).
• Option 4: all solo self-employed providing their own labour through digital labour platforms or to professional customers of any size (i.e., the widest option in scope and involving no restriction as regards the size of the counterparties in the collective bargaining/agreement and permitting counterparties also to bargain collectively (ensuring that small businesses could maintain enough countervailing bargaining power against solo self-employed negotiating jointly).

The Commission has made it clear that, amongst other things, the initiative would only apply to collective bargaining for the purposes of improving working conditions, including wages. Any negotiations or agreements (collective or otherwise) between self-employed actors in relation to, for example, prices charged to end-customers would not be covered by this initiative and, as such, could in principle still be considered a serious breach of competition law.

Furthermore, the envisaged measures would not introduce any obligation for parties to enter into collective negotiations or to conclude any collective agreements – again, the initiative would simply clarify that "EU competition law would not stand in the way of such agreements where the parties concerned chose to enter into them".

What's next?

The Commission's deadline for initial feedback is 3 February, after which it will conduct an open public consultation (anticipated for spring 2021). Thereafter it is anticipated that the measures will be implemented through a Council Regulation or Commission Communication in the second quarter of 2022.

Interested parties are therefore well advised to consider the impact of proposed changes on their business and to interact actively with this ongoing review – in particular, as part of the more detailed public consultation when launched later this year.

Authored by Matt Giles and Zoe Bartlett.