Digital Labor Platforms – Employment Contract & Algorithmic Management

The so-called “digital labor platforms” are currently present across various economic sectors. The impact assessment accompanying the proposed Directive on improving working conditions in digital labor platforms (Directive (EU) 2024/2831, 23 October 2024) identified more than 500 active digital labor platforms in 2021, employing over 28 million people.

One of the main purposes of this Directive is to improve the working conditions of these people, in particular through the correct classification of their professional status.

Additionally, fostering digital innovation and an inclusive labor market further depends on establishing specific rules regarding transparency in work conducted on these platforms and the algorithmic management of automated monitoring and decision-making systems.

1. General Provisions

The Directive applies, on the one hand, to platforms that organize platform work performed within the EU, and on the other hand, it establishes minimum rights for all persons performing platform work with a contract or an employment relationship.

In this context, “platform work” refers to work organized through a platform and carried out within the EU, based on a contractual relationship between the platform, or an intermediary, and the individual performing the work – regardless of whether there is a contractual relationship between that person or intermediary and the recipient of the service.

2. The Correct Professional Status

Member States must establish effective and proportionate procedures for determining the professional status of persons performing platform work in order to verify the existence of an employment relationship.

To this end, the Directive establishes a legal presumption of an employment relationship between the digital labor platform and the individual working on it, provided the factual circumstances indicate direction and control. This determination must be made based on national law.

3. Algorithmic Management – Innovations

a) Limitations on the Processing of Personal Data by Automated Monitoring and Decision-Making Systems

The Directive introduces special provisions in relation to the General Data Protection Regulation (GDPR), prohibiting several categories of data processing. These limitations are applicable to the processing of personal data of persons performing platform work from the beginning of the recruitment process.

b) Transparency regarding automated monitoring and decision-making systems

Digital labor platforms have a duty to inform about the use of automated monitoring and decision-making systems. This information should be provided to the platform workers, their representatives, and, upon request, to the competent national authorities regarding the use of these systems.

The information will vary depending on whether it is an automated monitoring system or a decision making system.

c) Human Supervision and Review

Supervision

Member States must ensure that digital labor platforms supervise and, with the participation of workers’ representatives, regularly conduct (at least once every two years) an assessment of the impact of individual decisions taken or supported by automated systems on individuals working on digital labor platforms.

Review

Individuals working on digital labor platforms have the right to a human review of decisions made by automated systems and the right to receive, without undue delay, an explanation from the platform regarding any decision made or supported by an automated decision-making system.

4. Next Steps

The Directive must be transposed by the Member States until 2 December 2026.

Digital Labor platform operators should assess whether they fall within the scope of this legal framework and develop a compliance strategy accordingly.

For more information, please contact our Employment Law and Information Technology Practice Areas.