Crowdworkers in startups can be employees!

German court concretizes status when working for platform operator

A contribution by attorney Fiona Schönbohm

The new digital world is creating new jobs. This includes jobs at so-called crowdsourcing companies, which pass on jobs from different customers to supposedly self-employed, so-called crowdworkers. This includes pizza delivery people at Lieferando as well as many supposedly self-employed workers in the postal sector - but also many programmers and web designers in the startup sector.

The german Federal Labor Court (BAG verdict of 01.12.2020, Az. 9 AZR 102/20) now ruled in a significant judgment that such crowdworkers can certainly be qualified as employees and thus finally protects them.

Further information on false or ficitional self-employment can be found on our webseite: False self-employment 

Job on crowdsourcing platform with 20 hours per week

The background to the ruling was the complaint of such a crowdworker against his expulsion from such a crowdsourcing platform. He had received orders from the platform for a good year, which probably served in the broadest sense to promote product recognition and improve advertising strategies on the Internet. For example, he was asked to take photos of product shelves in stores and gas stations or answer questions about an advertising poster at a bus stop.  On average, he was paid around EUR 1,750 per month for 20 hours of work per week.

When disputes arose within the scope of an assignment, the company wanted to get rid of him. The man took legal action against this. He argued that, despite registering his business, he did not consider himself to be self-employed, but rather an employee.

German employment law: Worker depending on instructions & personal dependence

While the first instances dismissed the man's claim because he was neither subject to instructions nor involved in the operational organization of the crowdsourcing platform, the Federal Labor Court now ruled in favor of him, at least in part, in the final instance.

According to the judges, the status of employee in german employment law depends on the fact that the employee performs work that is bound by instructions and determined by others in personal dependence. Accordingly, the overall assessment of all circumstances required by law for this purpose could show that crowdworkers are to be regarded as employees.

"It speaks for an employment relationship if the client controls the collaboration via the online platform operated by him in such a way that, as a result, the contractor cannot freely organize his activity in terms of place, time and content," the court writes in its press release.

Organizational structure of the platform ensures de facto dependence

It is true that the man was not contractually obliged to accept orders. However, the organizational structure of the platform had been designed so that users registered and trained via an account continuously accept bundles of simple, step-by-step contractually specified micro-orders in order to complete them personally.

The judges emphasized: "Only a level in the evaluation system that increases with the number of completed orders makes it possible for users of the online platform to accept several orders at the same time in order to complete them on one route and thus, in effect, to earn a higher hourly wage." Through this incentive system, the man was said to have been induced to continuously complete control activities. As a result, a de facto personal dependency had been achieved.

Result: remuneration owed to employee?

However, the court partially rejected the man's claim. Contrary to his opinion, the employment relationship did not give rise to an entitlement to continued remuneration in the amount of the sums previously paid.

Rather, the platform now owed him the remuneration customary for such work in accordance with Section 612 (2) of the German Civil Code. This would have to be determined by the Regional Labor Court in a next step.

Consequences for practice

As is so often the case, the Federal Labor Court is forced here to do the job that should actually fall to the politicians of our country. Those affected are left with legal uncertainty and the need to litigate their rights in individual cases.

The exploitation of supposedly self-employed workers by large corporations in order to circumvent various regulations of German employee protection - notice periods, pension insurance contributions, entitlement to sick pay, vacation or maternity leave - is not a new phenomenon. Also relevant for many workers: The validity of a non-compete agreement often stands or falls with the employee's status as a self-employed person or employee. This is because a non-competition clause for employees is assessed completely differently than a non-competition clause for self-employed persons.

Everyone has been busy ordering the last presents online for Christmas - the Corona crisis shows particularly clearly the defencelessness of supposedly self-employed persons in the transport sector. At the German government's digital summit, Labor Minister Hubertus Heil (SPD) announced plans to provide greater protection for bogus self-employed workers in the so-called "gig economy" in the future. Among other things, he is thinking about mandatory pension insurance for freelancers, an entitlement to sick pay, maternity leave and vacation, as well as notice periods and an easier way to clarify one's own employment status. It's about time, after all...