Policy Responses to New Forms of Work

Chapter 3. Worker classification

Worker classification fundamentally determines a worker’s access to rights, benefits and protections. Employees are generally entitled to the minimum wage (either set in collective agreements or mandated at the national or regional level), overtime pay, holidays, sickness and accident insurance, unemployment benefits, protection against unfair dismissal and discrimination, as well as access to training programmes, freedom of association and the right to collective bargaining. In many countries, self-employed workers (including independent contractors) are not entitled to the same suite of benefits because of the entrepreneurial risk – i.e. in return for potentially high rewards, there is a greater element of risk that does not need to be insured against by society. However, in return, they may pay lower social security contributions, be able to claim business-related costs and benefit from tax incentives aimed at encouraging innovation and entrepreneurship.

As a result of the differences in entitlements, non-wage labour costs are often higher for standard employees than self-employed contractors from a firm’s perspective. At times, this differential may be large enough to shift employer-employee preferences in favour of one employment form over another. Employers may deliberately misclassify workers in an attempt to circumvent employment regulation, fiscal obligations and worker unionisation, as well as to shift risks onto workers and/or gain a competitive advantage. Similarly, workers may choose between different employment forms in order to benefit from a better tax regime.

Such behaviour has several negative consequences. It results in workers losing employment protections and leaves firms that properly classify their workers at a competitive disadvantage. Where incentives are so strong as to lead to an “inefficiently high” level of self-employment, this could damage public finances, undermine the social protection system and have wider societal impacts (due to diminished access to healthcare, mortgages or housing, and maternity coverage). To the extent that the self-employed participate less in training, very high levels of self-employment could also act as a drag on productivity.

In most cases where individuals are falsely self-employed, courts will be able to determine this relatively easily using the applicable criteria and tests. However, there are also cases where the issue is less clear, and where genuine ambiguity may remain.

In the questionnaire, a number of countries acknowledged the potentially vulnerable position associated with workers who are in a “grey zone” between dependent employment and self-employment. Some specifically mentioned characteristics that might pose challenges for classification, such as economic dependence of the worker on a single client or the firm having control over how the work is performed. These characteristics mark certain self-employed workers out from the traditional notion of a self-employed entrepreneur, while at the same time these workers do not have access to most of the standard rights and protections afforded to employees.

The issue of worker classification and, in particular, the importance of ensuring that employees are correctly classified, were mentioned by most countries that responded to the questionnaire. While a number of countries reported discussion on this “grey zone” between dependent employment and self-employment, many of them also stated that this was not driving them to consider changes to the definitions of employee and self-employed, nor to the wider classification system.

This section notes some ways in which countries are attempting to:

• Reduce incentives for worker misclassification by reducing differences in tax treatment between employees and the self-employed;

• Ensure that existing regulations are being properly implemented and enforced;

• Extend particular employment rights to workers in the “grey zone” between dependent employment and self-employment; and

• Address the classification of platform workers.

3.1. The tax treatment of different employment forms and worker misclassification

This section focuses on the tax treatment of standard employment and self-employed contractors. If tax differences are large enough, they have the potential to shift the preferences of both firms and workers toward self-employment, encouraging misclassification. The section starts by reporting findings from an ongoing OECD study, which provides evidence on the size of the tax differential between self-employed workers and standard employees in a range of countries. It then discusses some policy actions, reported in the survey, to identify and address these differentials.

3.1.1. Comparing the tax treatment of employees and self-employed

A forthcoming study by the OECD (Milanez and Bratta, forthcoming[7]) investigates the potential tax arbitrage opportunities provided by different tax systems by assessing the extent to which the taxation of self-employed workers differs from that of standard employees. The study models the labour income taxation, inclusive of social contributions, of standard employees and of self-employed workers according to 2017 tax rules. It currently covers eight countries: Argentina, Australia, Hungary, Italy, the Netherlands, Sweden, the United Kingdom and the United States.

While the tax treatment of standard employees and unincorporated self-employed contractors1 varies between countries, there are some typical differentiating characteristics:

• While a firm that hires a standard employee typically faces labour costs consisting of the employee’s gross wage and employer social security contributions, a firm that hires a self-employed worker such as an independent contractor is often not liable for social contributions on behalf of these workers.

• Whether hired as an employee or a contractor, the worker will typically be liable for personal income tax and social contributions. However, the level of social contributions may differ for employees and contractors.

• Some countries offer tax incentives for individuals who are self-employed or who operate small businesses.

For both types of worker, the analysis calculates the total labour cost to the firm and the worker’s net take-home pay. The difference between these two quantities is the payment wedge, a measure of the net amount that government receives as a result of taxing labour income, inclusive of social contributions. The difference in total labour costs between each type of worker provides a measure of the incentive a firm may have to hire one type of worker as opposed to the other. Similarly, the difference in net take-home pay (held constant in this analysis) would provide a measure of the incentive workers face to be hired as a standard employee or as a contractor. As an example, Figure 3.1 shows that the tax system in the Netherlands provides an incentive for a firm to hire an unincorporated self-employed worker, as by doing so it pays a total employment cost of EUR 40 911 (with a payment wedge of 22%) instead of EUR 64 960 for a standard employee (with a payment wedge of 51%). This represents a total labour cost savings, for the firm, of 37%.2

Figure 3.1. Decomposition of the total employment cost by employment type: Netherlands (individual take-home pay held constant)

Note: In this exercise, the gross wage is equal to the average wage for employees. The calculations assume that the individual analysed is unmarried and without children.

Source: (Milanez and Bratta, forthcoming_[7])

The lower employment cost for an unincorporated self-employed contractor relative to an employee in the Netherlands is attributable to two key differences in tax treatment:

• Firms that contract labour are not liable for employer social contributions on the worker’s behalf and the workers themselves are not liable for the equivalent of employer social contributions.

• The unincorporated self-employed are eligible for two tax provisions that reduce the individual’s personal income tax liability:

  • A private business ownership allowance (zelfstandigenaftrek), which allows eligible individuals to deduct a lump sum of EUR 7 280 from gross profit;

  • A profit exemption for small businesses (MKB-winstvrijstelling), which allows eligible individuals to deduct a 14% of profits net of the private business ownership allowance.

Figure 3.2 shows the payment wedges for all eight countries included in the analysis. As mentioned, the payment wedge is a measure of the net amount that government receives as a result of taxing labour income, inclusive of social contributions. Higher values indicate a disincentive to work, in the sense that higher payment wedges imply reduced take-home pay for workers and higher total labour costs for employers. Thus, to the extent that firms are able to select among employment forms, they will prefer to offer employment contracts with minimal payment wedges.

Figure 3.2. Comparison of payment wedges calculated at average gross earnings by employment type, 2017

Note: Some countries have multiple unincorporated self-employed or employee statuses (with different payment wedges), differentiated by labels above. The vertical axis shows the payment wedge in percent. These payment wedges were calculated using the average gross earnings in each country in 2017.

Source: (Milanez and Bratta, forthcoming_[7])

Some countries (such as Hungary, Italy and Sweden) show little difference in payment wedges between different employment forms, suggesting low potential for tax treatment to drive preferences over work arrangements. Argentina, Australia, the Netherlands, the United Kingdom and the United States display greater differences in payment wedges, suggesting greater potential for tax arbitrage opportunities across employment forms.

It is nevertheless important to emphasise that the ultimate dynamics governing the prevalence of different working arrangements will also depend on a range of other factors such as the balance of market power between firms and workers, social protection coverage, preferences around flexibility and control, industrial structure, age profile of the population, etc. For instance, even if there are tax incentives for self-employment, workers may still prefer an employment contract if there are large gaps in social protection for self-employed workers or they feel they can obtain higher rates of pay as members of an employee trade union than as individual contractors. Firms may still prefer to employ workers in order to monitor their work effort more closely and reap productivity gains that come with investing in their employees’ skills.

Tax differentials may also reflect the particular policy priorities within a country. In some cases, the incentives may not even be deliberate, but may be consequences of trying to achieve another policy goal (e.g. tax advantages to encourage entrepreneurship, which may or may not be well targeted). As discussed in the next section, some countries have performed their own reviews of tax differentials across employment forms, the extent to which they drive preferences of firms and employees, and whether this is as intended.

3.1.2. National reviews of tax treatment of employees and self-employed

In the Netherlands, Ireland and the United Kingdom, reviews of tax differentials between employees and self-employed have resulted in recommendations that they be reduced.

A 2015 report suggested that growth in self-employment in the Netherlands was above the EU average, and was being driven by tax incentives originally introduced to encourage entrepreneurship, innovation and growth, as well as by procedures for declaring employment status to the tax office (2015[8]). The report considered this undesirable from an economic perspective and presented policy options for reducing differentials between employment and self-employment, in terms of social contributions, taxation and labour law treatment. The government at the time attempted to take action to target false self-employment, as described in the next section.

In the United Kingdom, the government found an effective self-employment subsidy of GBP 5.1 billion, or GBP 1 240 per person per year (2017[9]). Initially, the tax differential aimed to promote entrepreneurship – but the policy fails to target this population effectively. Instead, it incentivises firms and workers to identify their relationship as self-employment so they can save money, without a commensurate reduction in benefits. In the United Kingdom, the difference in benefits entitlement between employees and the self-employed is very low, limited to contribution-based jobseeker’s allowance or statutory maternity/paternity/adoption/shared parental pay (Adam, Miller and Pope, 2017[10]). The implication is that regular workers subsidise the self-employed since they pay higher contributions without a commensurate increase in benefits.

The independent Taylor Review of modern working practices (2017[11]) suggested that the rates of social contribution paid by employees and self-employed people be more closely aligned, while expanding social protection coverage for the self-employed (such as providing parental leave). In the government’s response to the review (2018[12]), it accepted that the differences in rates were no longer justified but said that it had no plans to revisit the issue (following the reversal of a decision in the Spring 2017 budget to increase social contributions for self-employment).

A 2018 report by the Irish Department of Employment Affairs and Social Protection on the use of intermediary-type structures and self-employment arrangements (2018[13]) recommended reducing the differential in social contribution rates between the employed and self-employed:

“Accordingly the group is of the view that there is a strong rationale for increased social insurance rates not just to reduce Exchequer revenue losses but to reduce distortive effects in the labour market, to reduce the incentive to construct disguised employment relationships that may undermine employment rights, to bring the Irish social insurance system into closer alignment with systems in other EU countries and to better reflect the increased range of benefits now available to self-employed people” –(2018[13])

As part of a wider effort to address tax evasion and avoidance, the Swedish government has appointed a committee of inquiry to review the tax system for the self-employed. One of the objectives of the review will be to assess whether the system is being abused to circumvent employment protection legislation and occupational health and safety rules in the labour market, and leading to false self-employment. A final report is to be published in June 2019.

3.1.3. Reducing tax discrepancies between employees and self-employed

The Slovenian Ministry of Labour, Family, Social Affairs and Equal Opportunities reported actions since 2013 to address the tax wedge between employment and other forms of work by increasing social contributions, as part of wider efforts to include self-employed workers and those performing work under civil contracts in the social security system.

In the Netherlands, in light of the 2015 report (2015[8]) that showed that growth in self-employment was being driven by tax incentives and by procedures for declaring employment status to the tax office, the government at the time attempted to take action to target false self-employment. It reduced tax rates for employees by introducing a tax credit for low incomes, which had the effect of halving the cost difference for employers between hiring employees and self-employed at minimum wage levels.

At the time, responsibility for declaring the correct employment status fell on workers, who would sometimes be in a weak bargaining position relative to their client. Under the new Assessment of Employment Status (Deregulation) Act, liability for all insurance and tax payments would fall on the firm, where a contractor was found to be an employee. However, enforcement of this new measure was suspended until 2020 following very negative reactions from both firms and self-employed individuals.

“People who are self-employed and have no employees have a key position on the labour market. It is important that they choose to be self-employed for the right reasons and that they are not engaged in what are actually formal employment relationships. The Assessment of Employment Status (Deregulation) Act failed to create clarity with respect to the latter; in fact, the law caused unrest and as a result too many truly independent contractors were adversely affected. False self-employment and unfair competition on employment conditions are still a problem, particularly in the lower segment of the labour market.” – 2017–2021 Dutch Coalition Agreement (2017[14])

The next government proposed some further measures in its 2017 coalition agreement (2017[14]). Tax deductions for the self-employed would be limited to the basic rate, reducing the cost difference for firms between employees and self-employed at higher income levels. Additionally, to ensure that low income self-employed would not undercut employees, self-employed with hourly earnings under 125% of the minimum wage were to be automatically classified as employees unless they worked for a firm for a short time and did not perform the firm’s core activities.

In November 2018, the Dutch Ministry of Social Affairs and Employment announced that it was establishing a high-level independent commission to prepare for future labour market developments, including those pertaining to relationships between client/employer and contractor/employee.

3.2. Enforcing existing regulations for worker classification

In some cases, existing regulations for worker classification may be deemed adequate, but efforts might be needed to enhance awareness so that firms and workers can correctly identify employment relationships. Some countries have attempted to facilitate challenges to classification by placing the burden of proof on the employer (rather than on the employee) or by simplifying enforcement procedures. Other countries’ efforts to tackle misclassification and false self-employment include offering an amnesty to encourage firms to reclassify misclassified workers and launching targeted inspection efforts.

3.2.1. Helping firms and workers identify employment relationships

Most countries reported efforts to provide guidance and information to firms and workers that would enable them to classify their working relationship correctly. Almost all of these countries mentioned documentation available online (sometimes in multiple languages) that contained information about the characteristics that would point to the existence of an employment relationship. The Australian response described their online decision tool, which asks contractors 16 questions to determine what type of working relationship they are likely to have (Australian Government, 2016[15]).

Many countries reported a specialised team within the labour inspectorate or ministry for employment that could provide verbal or written advice to queries from firms or workers. Other countries (such as Ireland in 2018) have run awareness campaigns on false self-employment.

3.2.2. Reversing the burden of proof

In some countries (including Greece, Hungary, Italy and Saudi Arabia), there is already a presumption of an employment relationship meaning that the burden of proof is placed on the employer (rather than the employee) in disputes about employment status. In these cases, the firm must establish that the relationship is not one of dependent employment. Reversing the burden of proof can facilitate challenges to classification for the worker.

In Belgium, there is a presumption of an employment contract (subject to certain criteria) in certain “at-risk” sectors including caretaking/security, construction, transport, cleaning, agriculture and horticulture. An ongoing review is assessing how to update the list of sectors in light of recent trends.

In an effort to discourage employers from misclassifying employees as self-employed independent contractors, the Canada Labour Code was amended in 2018 to explicitly prohibit employers from treating employees as if they were not employees (e.g. by misclassifying them) and to put the burden of proof on the employer. In other words, the employer must demonstrate that a person who has made a labour standards complaint against them is not their employee. This provision was not yet in force at the time of writing.

In the United Kingdom, the Taylor Review (2017[11]) included recommendations aimed at making it easier for individuals to take legal action, such as reversing the burden of proof where employment status was in dispute and allowing individuals to get an early and free determination of employment status. The review noted that wronged individuals could be discouraged from taking action due to the prospect of retaliation from the employer during a long tribunal process. In its response (2018[12]), the government explained that it did not consider it necessary to take action on these points as the removal of employment tribunal fees in 2017 had already resolved the issue of cost.

3.2.3. Simplifying enforcement procedures

Portugal and Slovenia mentioned efforts to simplify enforcement procedures in cases of suspected misclassification, making it easier for workers to challenge their employment status in the first place and/or to get redress once misclassification is discovered.

Following public concern about precariousness and growing bogus self-employment, Portugal introduced a new, simplified judicial procedure to target the growth of bogus self-employment through changes in 2013 and 2017. It provides workers with a speedier court decision recognising the existence of an employment relationship. In addition, employers may receive a pre-notification from the labour inspection authority to regularise a bogus self-employment relationship where one has been detected.

In Slovenia, the Labour Inspection Act was updated in 2017 to address issues with the use of civil law contracts and other observed labour market trends. Where the Labour Inspectorate discovers elements of an employment relationship in a civil law contract, the inspector prohibits work under the contract and obliges the employer to provide a written employment contract to the person within three working days. Also in 2017, a Collective Actions Act was adopted which introduces the possibility of class action lawsuits in workers’ rights cases.

3.2.4. Offering an amnesty to firms that reclassify employees

To tackle labour informality in Argentina, the government has proposed a “Labour Whitening Law” (Ley de Blanqueo Laboral). This law would offer an amnesty on fines and termination of criminal proceedings for employers who report and regularise informal employment relationships.3 At the same time, there are plans to increase the labour inspectorate’s capacity to detect informal relationships.

3.2.5. Targeted inspection efforts

Some countries are also targeting inspection efforts on particular sectors or geographical areas known to have a greater prevalence of false self-employment:

• Irish social welfare inspectors were said to be developing a more targeted approach to dealing with false self-employment in particular sectors of the economy, including engaging with trade unions to help identify particular sectors or geographical areas that would benefit from inspection.

• The Spanish response mentioned campaigns targeted at false self-employment and specific actions as part of the Labour and Social Security Inspection Strategic Plan 2018-2020 dedicated to platform work, including developing a dedicated operative procedure, providing specialised training to inspectors and implementing regional pilot programmes.

• Greece reported that a new inspectoral body for the agricultural sector was planned.

3.3. Extending rights to workers in the “grey zone”

While some workers may be misclassified, others will genuinely be difficult to classify as either self-employed or dependent employee – i.e. there is genuine ambiguity about the employment status. Many countries acknowledged the potentially vulnerable position associated with workers who sit in this “grey zone” between dependent employment and self-employment. These workers may share characteristics of the self-employed (e.g. they can choose when and where to work; they use their own equipment); but they may also share some characteristics of employees (e.g. they cannot set their own rates of pay, they may have to wear a uniform, they cannot be replaced in executing their tasks by someone else).

Because of this, it can be argued that some of the labour rights and protections given to employees should be extended to workers in the “grey zone” as well. The challenges for policymakers are to identify the workers in the “grey zone” and decide which labour laws and protections should be extended to them (and how).

Several countries have already identified “dependent” or “employee-like” self-employed as groups to whom particular employment rights should be extended. The definitions and eligibility criteria associated with these groups varies widely between countries. In countries that extend rights to “dependent self-employed” workers, the eligibility criteria generally rests on relying on a single client for a particular share of the worker’s income (as in Portugal and Slovenia). Other countries extend rights based on the working relationship resembling an employment relationship in other ways (as in the United Kingdom).

The Japanese questionnaire response reported ongoing discussions on “Work Style Similar to Employment”, with two government-established expert study groups (one since 2017 and the other since 2018) currently analysing whether these arrangements should be considered merely business transactions between independent businesses or instead equivalent to relationships between an employer and employee.

In most countries that extend particular employment rights to certain vulnerable self-employed workers, this is not a recent development – and the motivation varies from country to country. The following sections describe some of the more recent policy actions, where this approach has been introduced for the first time or where there have been some recent reforms to existing systems. A distinction is made between the different rights that have been extended (whether social protection, labour law protections or collective bargaining rights), although some countries extended multiple rights.

3.3.1. Extending social protection

In Portugal, changes in 2012 extended unemployment protection to the economically dependent self-employed, in cases whether there was termination of professional activity. When first introduced, the eligibility criteria for dependent self-employment was that at least 80% of yearly income came from a single client. In 2018, the criteria was reduced to 50%, with the effect that more self-employed workers are covered by unemployment protection and that more client firms take responsibility for financing this protection.

In Spain, the trabajador autónomo económicamente dependiente (economically dependent self-employed, or “TRADE”) category has enhanced access not just to social protection (health and accident insurance, pensions and unemployment benefits), but also to a wide range of rights and protections, including the right to breaks and work/life balance, non-discrimination, and the right to be collectively represented through the Independent Work Council (Consejo del Trabajo Autónomo). They need to rely on a single client for at least 75% of their income.

Some recent changes to these groups’ eligibility criteria and entitlements are discussed in Section 8.1.1 on social protection.

3.3.2. Extending labour law protections

In January 2019, a Court in Turin ruled that the compensation paid to home-delivery platform workers (employed as a type of “semi-subordinate” worker called collaboratori coordinate e continuative) should be based on the compensation paid to employees in the same sector. The reasoning was based on article 2 of Legislative Decree 81 of the 2015 Jobs Act which extended employment protection to workers who “continuatively collaborate, by providing exclusively personal work, with a main client who can organise the activity also with respect to the time and the place of work”.

In 2013, new laws entered force in Slovenia to extend limited labour law protections to economically dependent self-employed persons. The definition of economic dependency rests on earning at least 80% of annual income from a single client and the rules guarantee protection against discrimination, assurance of minimum notice periods and payment for contractually agreed work, and protections against the cancellation of a contract where there are no valid reasons.

In Austria, Germany and Korea, there are also groups of dependent or employee-like workers who have been granted enhanced rights (relative to independent self-employed workers) in relation to one of more of the following labour law protections: protection against discrimination, paid leave, coverage under minimum wage or working time legislation, and protection under rules governing dismissal. These entitlements are generally not new.

3.3.3. Extending collective bargaining rights

In Sweden and Canada, dependent self-employed workers have had the right to bargain collectively since the mid-1900s. In both cases, there is some evidence that the application of the dependent self-employment status is relatively limited today, potentially because such workers have obtained employee rights in other ways. In Sweden, Rönnmar (2004[16]) suggests that individuals in this group are nowadays considered employees and covered by labour law in general.

There has been discussion in Canada about extending employment rights to certain contractors whose status lies in between employee and independent contractor. The Government of Canada’s 2006 Fairness at Work report (Arthurs, 2006[17]) noted that the binary approach of “employees” and “independent contractors” did not address the full continuum of employment relationships that exist, and included a recommendation to create a new category of ‘autonomous worker’ with limited coverage under federal labour standards. A labour market review commissioned by the Ontario Ministry of Labour (Mitchell and Murray, 2017[18]) suggested amending the definition of “employee” to include dependent contractors. Québec and Yukon already define employee within labour standards legislation as explicitly including contract workers. There is also evidence of Canadian courts acknowledging dependent contractors as existing on a continuum between employment and independent contracting, in the context of wrongful dismissal actions.

Some countries that extend labour law protections to particular groups of workers in the “grey zone” also extend collective bargaining rights to the same group. Some examples are dependent “workers” in the United Kingdom, TRADE (trabajador autónomo económicamente dependiente) in Spain and employee-like workers in Germany.

3.3.4. Deciding which workers to extend rights and protections to

In order to extend protections to workers in the “grey zone”, countries need to decide which workers to extend these protections to. Countries have taken various approaches, and each comes with its advantages and disadvantages (see OECD Employment Outlook 2019 (2019[1])). For example, many countries have singled out the financially dependent self-employed. This approach has the advantage of targeting a very specific and relatively well-defined group – however it comes at the expense of excluding many other workers in the grey zone who may not be financially dependent on one client/employer, but nonetheless deserve stronger protections because they share other characteristics with employees. Another approach is to use a vaguer definition and capture a wider group of workers – but this comes at the risk of creating two rather than just one grey zone: one between “employees” and this “third category” of workers; and one between this “third category” and the self-employed. This was a view put forward in the Belgian response. These issues, and alternative solutions, are further analysed and discussed in the OECD Employment Outlook 2019 (2019[1]). In addition to workers in the “grey zone” there may be other self-employed workers to whom countries may wish to extend rights and protections. In particular, there are self-employed workers who have little bargaining power vis-à-vis their clients/employers, so that pay rates are often set unilaterally by the latter. This is a particular problem where such workers have few or no outside options.

3.4. Addressing the classification of platform workers

Classification of platform workers is considered an active policy issue in many countries. Platform work is not in and of itself a form of employment, but rather refers to the means (an app or a website) through which the work is obtained, paid for and, sometimes, carried out. In practice, platform workers are often classified as own-account workers for legal, tax and social protection purposes.

However, “platform work” is heterogeneous in terms of the range of activities performed and the relationships with the platform, with workers covering the full spectrum from those resembling employees to those in the “grey zone” to those that are very clearly self-employed. The appropriate worker classification will therefore depend on the nature of the work performed through the platform.

In many countries (including Australia, Canada, Spain and the United Kingdom), there are court cases ongoing in which platform workers are challenging their employment status, particularly in the delivery and passenger transport sector.

In Portugal, new legislation came into force in November 2018 addressing employment conditions with respect to platforms operating in the passenger transport sector. The “Uber law” said that drivers must have an employment relationship with the platform, as these platforms were judged transportation operators, not just intermediation services. These platforms had previously been in a grey zone regarding digital and transport regulation. This legislation provided a legal framework for them to operate, but also imposed new restrictions, including an obligation for drivers to acquire a special road-training certificate valid for 5 years and a 5% tax on platforms’ net profit to cover administrative and regulatory costs.

The United States response noted that the regulation of relationships between workers and platforms was an active area at state level. They mentioned that several states had recently passed laws providing that workers are independent contractors, rather than employees, of platforms, if several conditions are met. Conditions include that the worker and platform enter into a written agreement specifying the independent contractor relationship; the platform does not unilaterally prescribe hours during which the worker must be available to accept service requests, and the platform does not prohibit the worker from using other platforms.

The Swiss response said that the government had committed to examining the advantages and disadvantages of an intermediary status (between employment and self-employment) for platform workers. The intention was to enhance social security for platform workers, even if it will not be as favourable as social security for employees.

The Norwegian Sharing Economy Committee (appointed by government) delivered a report in the beginning of 2017 on opportunities and challenges presented by the sharing economy, including labour market considerations. The Committee focused particularly on taxi and passenger transport services and the accommodation market. A majority of the Committee concluded that developments within the sharing economy did not challenge the term “employee” in a manner that could be dealt within the existing Working Environment Act.

The classification of platform workers was also discussed within the Danish Disruption Council. It was widely acknowledged within the Council that the existing classifications were fit for embracing new ways of working, including platform work. Whether someone should be classified as an employee or a self-employed was said to depend on the specific conditions in each particular case, among other things on the relationship between the platform, the place where the work is carried out and the person who performs the work.

Notes

← 1.  The study also includes analysis of the tax treatment of incorporated self-employed workers.

← 2.  In this example, the worker’s net take home pay is held equal across employment forms. This ensures the worker’s indifference between contract types in order to analyse the firm’s perspective. Results based on the inverse of this exercise (holding the firm’s total labour cost equal in order to analyse the individual’s perspective) are shown in (Milanez and Bratta, forthcoming[7]). The study also presents findings across the income distribution.

← 3.  One problem with amnesties is that they create an expectation of further amnesties and therefore can encourage future deviations, except if they are introduced simultaneously with a real change in legislation that makes the reduction of sham arrangements more durable.