Abstract
There has been considerable discussion regarding the regulation of platform-mediated forms of work, yet less attention has been paid to the actual impact of regulations already enacted. In this brief analysis, I examine the cases of Spain and Chile, policy benchmarks in their respective regions. While Spain has introduced a presumption of employment, Chile’s legislation leaves this point open but implicitly encourages classifying workers as self-employed. Nevertheless, both countries have encountered significant complications in implementing these laws, stemming either from the narrow scope of the legislation or from corporate strategies aimed at circumventing it, leading to ever more fragmented and prolonged regulatory battles. Looking ahead, trade unions and workers’ organisations should engage more strategically in the regulatory conflict, considering the enforcement problems emerging and, more importantly, preventing regulation from concealing the radical potential of these movements against precarious work more generally.
Introduction: the quest for new employment regulations in the wake of platform capitalism
Almost a decade after the emergence of Digital Labour Platforms worldwide, and amid numerous legal cases questioning the operation of this new business model, governments have begun responding with new employment regulations. A new chapter in this story ended in March 2024 with the adoption of the EU Platform Work Directive, which could extend labour rights to millions of workers in the 27 Member States. 1 As expected, the main point causing a stir in the debate was whether to introduce a ‘presumption of employment’, implying that platforms are assumed to be employers and those who work for them are, therefore, employees unless the firm proves otherwise. 2 At the time of writing, the European regulation is poised to adopt an employment presumption and mandates sharing algorithmic information with workers, akin to Spain’s Rider Law. But advancements extend beyond this region alone. In the Latin American context, Chile has been a notable policy reference, implementing a new regulation as well but without an employment presumption.
However, little is said about the real impact of these regulations and to what extent they have corrected the structural problems denounced by unions, activists, and left-wing organisations alike. Against this backdrop, this brief commentary aims to summarise the actual outcomes in Spain and Chile as pioneering cases within their respective continental regions, where these specific – and, to some extent, distinct – regulatory interventions have already been implemented. These cases can offer valuable lessons about what has worked and what is missing, allowing reflection on the significance and utility of these regulations. I will argue that a critical perspective is crucial in this new phase of the class conflict, where the central question revolves around how these laws can serve (or not) the workers’ movement and the fight against precarious work more generally.
As mentioned earlier, the Rider Law in Spain introduced a ‘presumption of employment’. The Royal Decree-Law 12/2021 incorporated two new provisions within the Workers’ Statute, the first indicating that workers working for delivery platforms must be recognised as employees, and the second stating that workers must have access to information concerning the functioning and use of algorithms in the management and organisation of their work. While the first provision essentially reaffirms the Supreme Court’s ruling in a landmark case from September 2020, the second provision has garnered particular interest and acclaim for its innovative approach, extending beyond platforms to encompass all productive sectors (Todolí-Signes 2021). While labour law experts and trade unions at both national and international levels celebrated this legislation, it faced strong resistance from certain riders’ organisations in alliance with platform companies, who advocated for maintaining their self-employment status, as previously discussed in this journal (Fernández-Trujillo and Betancor 2023). The law emerged from a process of social dialogue involving major trade unions and employer organisations. However, since it was a fraught negotiation, the law’s scope ended up being somewhat modest. This new regulation targeted only delivery platform riders, much to the disappointment of labour organisations and activists, as it led to further employment fragmentation and minimised its overall impact. 3
The law has sparked debate over its impact on the Spanish labour market. On one hand, as highlighted in the ESADE/Just Eat (2022) report, the number of employment contracts doubled after a year of the law in force, signalling a positive trend for social security and formal employment within the sector. In addition, due to the new legal framework, major national unions UGT and CCOO have made strides in the sector, securing the first company-based collective agreement with JustEat, establishing essential employment rights and a minimum wage, 4 while also winning the majority of union delegates in Glovo’s union elections in both Barcelona 5 and Madrid. 6 On the other hand, companies’ reactions have been challenging, with cases of platforms ceasing their operations in the country or modifying their employment model in an irregular manner (Sanz de Miguel et al. 2023). One of the leading companies, the British-owned Deliveroo, announced the closure of its operations after the law’s promulgation, leaving workers without their usual source of income. UberEats, for its part, transitioned to an outsourcing model, making riders legal employees of the contracting companies that supply labour for the delivery platforms, raising concerns about potential illegal agency work. Meanwhile, Glovo, the largest company, has flouted the regulation and incurred more than 400 million euros in fines from the Labor Inspection agency (Inspección de Trabajo y Seguridad Social ) for non-compliance with the law over the 2015–2021 period. 7 This has forced the state to enact additional legislation to facilitate enforcement of the Rider Law, one by increasing criminal penalties for non-compliance and the other by simplifying procedures for the labour inspectorate to enforce sanctions (Rodríguez-Piñero Royo 2023). In this sense, the response to the once-celebrated regulation has elicited broad, varied, and often antagonistic employer reactions, raising questions about its medium-term effectiveness.
The Chilean case represents, in this regard, a different regulatory development. Law 21.431 regulates employment contracts in so-called ‘Digital Service Platforms’. It specifies that workers can be classified as independent contractors or employees, depending on specific indications of direct employment, though it does not directly define these indicators but refers to what the Labour Code already sets out (Leyton-García et al. 2022). In this sense, the Chilean regulation is, to some extent, an example of a law where there is no presumption of employment, and therefore, the burden of proof is on the worker to prove that the indicators of a standard employment relationship are met (Palomo et al. 2022). The particularity of this legislation is that it introduces a new category in the Labour Code, the ‘independent platform worker’, that is entitled to a specific – albeit limited – set of labour rights (Azócar-Simonet Leyton-García 2022), thus seeking to provide the worker with minimal social security rights without changing its self-employment status. This begs a question about whether this more ‘flexible’ option works better from an enforcement point of view.
The regulation has garnered praise and criticism. Among the positive aspects, it extends to a broader population of workers, regulating contracts in delivery companies, ride-hailing, and potentially other sectors like platform-mediated domestic work. Ministry of Labour data in Chile shows that formal employment levels in the sector increased following the law’s implementation, though it remains three times higher than the national labour market’s average informal employment rate (SUBTRAB 2023). However, the central problem with this regulation lies in the perceived option for workers to choose between different categories of work, as platforms have only utilised the independent contractor category to reclassify their workers. So far, according to the data managed by the Labour Inspection agency (Dirección del Trabajo), no employees have been registered under the new law. 8 In short, we are facing a law that fails to address the problem of misclassifying workers, which in practice has transferred the responsibility to the workers, who will have to keep on litigating to be reclassified, and to the Labour Inspection, which is supposed to oversee the law’s enforcement, but clearly does not have the resources or capacity to resolve all potential cases of misclassification.
Thus, after this apparent partial failure of both options to accomplish their purpose, we return to the central question of the true scope of regulatory change, and who benefits from it. As Adams (2023: 574) has recently pointed out, the law itself constitutes the material context in which these struggles unfold, and is part of the reason why grassroots gig workers’ unions have emerged and why traditional unions have shown an interest in supporting these campaigns, but it can also conceal the radical potential of these new movements, and instead indirectly align these struggles and dissent compatible with existing capitalist relations. In this sense, what the state, and regulation in particular, does on occasions may well be a setback for these workers’ struggles, although neither can we deny the importance and materiality of the law. The opportunity for radical change will thus depend on how workers engage directly with these developments, and how regulatory proposals address the root cause. Some key points in this direction can be mentioned below.
New issues arising from the current re-regulation trends and challenges ahead
The cases mentioned earlier may evolve in different ways over time, but they provide insight into the dilemma inherent in future political debates regarding employment in the platform economy and the construction of regulations for platform workers. They highlight several issues that researchers and workers’ organisations have widely criticised, including the fragmentation of state intervention, characterised by relying on narrow or truncated laws targeting specific populations (Aloisi 2022), an emphasis on individual rights or particular groups rather than collective law (Howell 2021), and significant challenges within the state’s enforcement mechanisms that are increasingly common (Mustchin & Martínez Lucio 2023). The future of other regulations, such as the European directive, the possible International Labour Organization (ILO) convention on the subject, and what other countries have already pursued or may do, will undoubtedly face similar problems to those already seen in Spain and Chile, hence the relevance of the cases.
Yet, several points warrant particular attention. First, the contentious nature of the presumption of employment remains a focal point in regulatory discussions. The outcomes from these laws underscore that none of the potential paths under discussion adequately address the underlying precariousness faced by these workers. In Spain, although the presumption has served to reclassify some workers, the majority has ended up being subcontracted by other companies that offer equal or worse working conditions. 9 In the case of Chile, these workers may be incorrectly classified, and it seems that more regulations or instruments will be needed to ensure compliance. 10
Second, and as the previous point suggests, it is urgent to regulate the platforms themselves as employers, as it is not enough to solve the problems concerning the condition or status of their workers in isolation of other regulatory or social dynamics. Instruments are needed to limit or regulate the discretionary power of these new corporate actors, who have learned very well how to play with the new regulations and adjust their business models based on the legal loopholes each form of regulation opens. For these new employers, it becomes more convenient to adjust employment models as regulations change (Benassi & Kornelakis 2021), to minimise the application or openly circumvent labour laws.
Third, the scope of these new regulations is relatively narrow when looking at the set of platform jobs emerging. In Spain, the law deliberately limits its scope to delivery platforms. In sectors like ride-hailing, the issue has been addressed with other parallel regulations, but even these are being strongly questioned by the taxi sector in different autonomous regional communities of the country (Riesgo Gómez 2023). For example, Uber and Cabify, who are major players in this sector, have found a significant business niche by establishing alliances with the leading companies controlling private transport licences in the country, and the subcontracted workers seem to be a second order of priority for labour inspection, 11 precisely because they are not technically ‘false’ self-employed workers. In Chile, although the law has a broader scope, other laws are now seeking to regulate the issue of passenger transport, which is, at the time of writing, giving rise to aggressive campaigns against regulation more generally from both Uber and specific sets of drivers. 12 Here, workers in ride-hailing companies are particularly vulnerable since current platform work law (21.431) regulates their employment contracts, but the sector they work for is still considered technically to be illegal in the country. Certainly, the labour process is different compared to the delivery sector, but these conflicts are symptomatic of the fact that these regulations are not solving the ‘platform work problem’ in a definitive or at least sustainable way.
Fourth, institutions such as the labour inspection have been at the forefront of the enforcement battle, in Spain, where it has been a leading actor since the beginning of the regulatory conflict, and in Chile, where it has gained relevance after the enactment of the new law. However, these are institutions facing different constraints to fulfil their functions, either due to a lack of available personnel to inspect these ever-broader companies both quantitatively and qualitatively, a lack of detailed knowledge about how algorithms work and the speed with which these companies are modifying the employment model, or simply because they cannot always formally compel companies to comply with the law beyond fines. These companies have developed very detailed legal knowledge through their own legal departments or the extensive use of management and legal consultancies, and often tend to confront inspection actions effectively and on a continuous basis. In this sense, it seems necessary for labour inspectorates to work together with other state agencies that can discern whether they are dealing with more serious crimes, in terms of tax avoidance and others, and outline strategies to stop them: but the limits of the state within this new and fragmented capitalist context are increasingly apparent.
Undoubtedly, governments are in some cases likely to seek a balance between the benefits of technology and digitisation along with effective regulation that protects not only workers but also the basis of the welfare state against the corporate power of these new actors. However, these forms of re-regulation, or the way a ‘return of the state’ is perceived, reveal structural shortcomings in their scope and implementation, further complicating the issue and exacerbating fragmentation within emerging forms of work. Ultimately, it is not just about addressing labour precariousness but also about defending the very capacity of these new regulatory instruments to encourage effective rights at work, working together with the endless efforts of these workers to organise, speak out and fight back. This is, in effect, the core political dilemma of what workers face given the changing and facilitating nature of the state in relation to the market more generally.