Can you have the cake and (eat) deliver it too?

Blogs November 16, 2020

Business Legal Agreements
Employment law

Lately we have seen the discussion on employment vs. entrepreneurship surge in the Nordics, other parts of Europe as well as in i.e. sunny California. In the eye of the storm of this discussion is especially food delivery and taxi services and, in many ways, we’re looking at this question differently than before. There is a very strong will to find an “either-or” answer to solve the question once and for all. We have seen freelancers in many industries before.

In many cases it has been a question of creative industries and/or people with perhaps a higher education, e.g. journalists. With new platform services, the possibility of finding work is made available for more people and not all have realized what they have taken on and what kind of a relationship they are in. The word we have now been using is “gig-workers”.

As the latest Spanish High Court ruled food delivery couriers to be employees, Finnish Labor Council issued opinions that Foodora and Wolt couriers are to be considered employees and in California there was a vote on changing the law to exempt these drivers as independent contractors, entrepreneurs, in contrast to now being considered employees. The Finnish PM Marin’s Government Program includes also a plan to clarify the concept of an employment contract in the Employment Contracts Act to prevent employment from arising under the guise of other contractual relationships. A need that is being debated and affected likely by the evolving praxis.

So, what’s the fuss about? In platform industry we see (nowadays mainly) digital platforms connecting service providers and manufacturers to customers. On the platform, eg. service providers might connect with others to provide an additional service or product, which is then marketed and made available to customers by the platform, e.g. Amazon and yes, also the ones we hear most about in relation to this relationship question such as Foodora, Lyft, Uber. As digital solutions have made it easier for these players to find others, it has been possible to hop on and start providing services even as an individual without thinking more of a business plan or what it entails. We have legislation in place to protect individuals selling their work efforts – as employees. At least in Finland there is no mandatory obligation to register your entrepreneurship, but you are allowed to have a business on your own just like that without it being an employment. Another and clearer option, is to either start a business with registration and everything it brings or find an employer.

What is the difference then? From the individual’s perspective, there is more freedom and responsibility in being your own boss. Taking as an example the Finnish definition of an employment, it is to fulfill four conditions: The employment relationship is based on the employment contract in which the employee undertakes the obligation to personally do work for the employer under the employer’s direction and supervision in return for salary or some other renumeration. In the recent cases evaluating the nature of the relationship, emphasis has been on the right to supervise and direct work and in more detail on the possibility to do so. We have many cases where this may be a difficult task even outside platforms and digital solutions. This question is something employment lawyers have been tackling for a long time. Digital solutions give all sorts of possibilities to follow us all, so this is quite something. It cannot be denied that in many cases the work may look and feel quite similar regardless of the nature of the relationship. All cases should be evaluated case by case and changing something in an app might tip the scale so developers and legal counsels should look at development together, but this is another story. The parties responsibilities are very different though and that’s why it matters to make this assessment, well, in any business. In some cases, the pros are cons and cons are pros so make sure that you know what you want – both you as the one seeking work force and you as an individual. See further here in Virtual Lawyer.

I have been working with different platform solutions for over a decade and work frequently with businesses to find solutions as they are starting the business and developing it. Both employment and subcontracting have its place in finding suitable person/doer for a job. A responsible business makes sure that both parties are on the same page and understands the nature of the relationship. I’m happy we are seeing companies as well as entrepreneurs/ freelancers working together with authorities and e.g. pension funds to raise awareness. However, in the light of recent court and council praxis, it seems, that we might be moving towards what will become a precondition for many relationships and an obligation in practice to register the entrepreneurship to make sure and emphasize the parties’ wanted status of the relationship. What this is, is a highly political question, as it affects e.g. how we see the individual in relation to social benefits. It remains to be seen what happens next as the votes were casted for the exempt and change in California early this morning. Will we see the case closed in Europe as well with the court and council cases or a wider political discussion escalating? What is sure is that in one relationship at a time you can be only one thing and the relationship comes with warts and all. So, you can’t have the cake and eat it too.