On 29 September 2022, the European Commission (Commission) formally approved the "Guidelines on the application of EU competition law to collective agreements regarding the working conditions of solo self-employed persons" (Guidelines) that were initially drafted in December 2021.
The Guidelines clarify two headline issues:
- In certain instances, where solo self-employed people are "considered to be in a situation comparable to that of workers", their collective agreements will fall outside the scope of competition rules; and
- The Commission will not enforce EU competition rules against collective agreements in cases where there is a "clear imbalance in bargaining power" such that the solo self-employed workers involved are "in a weak bargaining position" compared to their negotiating counterparty.
The Guidelines represent the culmination of Commission work that was initiated in the summer of 2020. A full history of the extended consultation and developments can be found in our previous pieces: (Solo self-employed) Workers of the World Unite! – EC draft guidance on application of competition law to collective bargaining and Collective bargaining for the self-employed – a tough gig?
Under existing EU competition rules, self-employed workers who come together in order to negotiate better working conditions could find themselves in breach of the prohibition against anti-competitive agreements set out at Article 101(1) of the Treaty of the Functioning of the EU (TFEU). This is because self-employed workers are individually classed as "undertakings" for the purposes of competition law.
By contrast, collective action by those in employment (and with the purpose of improving working conditions) is generally exempt from the scope of Article 101(1) TFEU by virtue of the well-known Albany exception.
When placed in the context of the rapid evolution of the digital platform labour market, and the rise in self-employed workers working in the so-called "gig economy", the Commission has deemed that further clarity is required to provide such workers the necessary legal certainty.
Who do the Guidelines apply to?
The Guidelines do not seek to extensively change legal definitions of "worker" or "self-employed". Instead, the crucial classification for the Guidelines is of "solo self-employed persons" that are "in a situation comparable to that of workers".
The Guidelines set out a number of examples of those likely to be included within this definition:
Those who provide their services exclusively or predominantly to one undertaking. These individuals are considered to be in a state of "economic dependence" if at least 50% of their total annual work-related income is received from a single counterparty. The Guidelines state that in general these individuals "do not determine their conduct independently on the market" and are likely to be under clear directions as to how their work must be carried out.
Those who work "side-by-side" with others for the same counterparty but remain "solo" i.e. working completely alone and not employing anyone else. Importantly, these individuals perform "the same or similar tasks" as other self-employed persons working with the associated counterparty.
Those who provide services to or through a "digital labour platform". These are defined within the Guidelines and are, broadly, digital service providers that are provided to a willing recipient at a distance through electronic means and involving (as a necessary and essential component) the organisation of work performed by individuals. A digital platform which simply allows a solo self-employed person to reach an end-consumer, but does not organise the work of the service providers, would not be a digital labour platform for the purposes of the Guidelines.
Whilst the Guidelines form part of the Commission's plan to address the working conditions of digital platform workers, the scope of the Guidelines extends to qualifying self-employed people in both the online and offline work environments.
However, the genuinely self-employed will not benefit from the position set out in the Guidelines.
What activities/situations are covered?
The Guidelines outline when self-employed persons can protect their interests by participating in collective engagement with employers in a manner formally recognised as compatible with competition law. As noted above, the Commission has made two headline statements:
- Collective Agreements and Article 101(1) TFEU
The Guidelines make clear that collective agreements entered into by self-employed people who are "in a situation comparable to workers" are outside of the scope of Article 101(1) TFEU.
It is important to note that the Guidelines only apply to collective bargaining for the purposes of improving work conditions. This would include agreements regarding "remuneration, working time and working patterns, holiday, leave, physical spaces where work takes place, health and safety, insurance and social security, and conditions under which the solo self-employed person is entitled to cease providing his/her service". The Guidelines, however, do not exempt collective agreements that relate to the provision of services to particular counterparties, or any agreements that attempt to determine the way in which services are offered to end-consumers.
- Enforcement priorities of the Commission
Even where it cannot be assumed that a collective agreement falls outside the scope of Article 101(1) TFEU, the Commission will not intervene in situations where certain other factors place the self-employed persons in a weak bargaining position.
Examples of this imbalance include:
- Where the counterparty is of a "certain economic strength" – counterparties that would meet this definition include those who represent a whole sector or industry, or have an annual aggregate turnover that exceeds €2m, or a staff headcount of 10 or more persons.
- Where the collective agreement is concluded pursuant to national or EU legislation – this accounts for instances where the national legislator has acted in an attempt to balance the bargaining position of the negotiating counterparties in order to achieve social objectives.
In these instances, and to the extent that the collective agreement is intended by its "nature and purpose to improve working conditions", a collective agreement may, in the Commission’s view, be considered a legitimate means to correct any such "imbalance".
The Guidelines set out the principles for assessing collective agreements between certain categories of solo self-employed persons and their counterparties, to the extent that these agreements (by their nature and purpose) concern the working conditions of the solo self-employed persons. To that end, Margrethe Vestager (Executive Vice-President & Commissioner for Competition) stated in a press release that “the new Guidelines aim to provide legal certainty to the solo self-employed people by clarifying when competition law does not stand in the way of their efforts to negotiate collectively for a better deal."
The Commission will monitor how these new Guidelines are reflected by Member States in national law and will then review the position by 2030.
The adoption of these Guidelines represents the culmination of two years of concerted effort by the Commission to clarify the position of self-employed persons. It also demonstrates a willingness to broaden the scope of competition issues to labour markets, and address issues arising out of the growth of the gig economy.
Please get in touch with us to discuss the impact that the new Guidelines could have on your business. Hogan Lovells practises law at the intersection between business and government and is particularly well placed to help – having a deep understanding of the regulatory landscape and the detail of Commission legislative and policy initiatives. We also have extensive experience of working inside governments and advising corporations on the machinery of government and their policy priorities. Let us help you consider the implications of these new Guidelines and, if necessary, engage with the Commission and relevant stakeholders to advance your interests.
Authored by Christopher Hutton, Matt Giles, and Harrison Gower.