BRUSSELS - The European Parliament and European Union member states have struck a landmark deal to potentially reclassify millions of people working for ride-hailing and food-delivery apps as employees, a move that could cost the industry billions each year.

The provisional deal could require platforms to give full status to the estimated 5.5 million workers who meet at least two out of five conditions that indicate their relationship with the apps fits that of an employee rather than someone who is self-employed, the EU said in a statement on Dec 13.

Those conditions include: the platform setting upper limits on worker pay, monitoring performance, controlling the distribution of tasks and working hours, and making rules about staff appearance or conduct.

The status of delivery couriers and drivers using apps, such as those offered by Uber Technologies and Deliveroo, has been a point of controversy worldwide.

While many of the apps say they offer riders flexibility and the freedom of self-employment, some labour activists have said that they offer too little protection.

Some EU members, including France and Spain, have opted not to wait for a regional deal to introduce measures that strengthen gig worker protection.

The EU deal would give eligible individuals rights typically enjoyed by employees, including minimum wage, paid leave and unemployment benefits.

“This is a revolutionary agreement and the first legislative framework for digital platform workers,” said Ms Elisabetta Gualmini, the lead author in the Parliament. “We have better rights for the least protected workers in the world, and we have fair competition for platforms.”

The deal will also require platforms to tell workers when they are being monitored or managed by algorithms, which can result in a lack of transparency for workers about how decisions are made and how their personal data is used, the statement said.

Platforms will not be allowed to process certain kinds of personal data, including private conversations and information that can be used to infer race, political opinions, migration or health status.

The provisional agreement on Dec 13 must still be endorsed and adopted by the Council of the EU and Parliament. Member states will then have two years to incorporate the rules, the EU said. 

Move EU, a trade group that represents Bolt, Uber and Free Now, said it was deeply concerned, arguing the deal would “create legal uncertainty for hundreds of thousands of drivers throughout the EU”. The group called on EU countries to vote against the political agreement.

An Uber spokesperson said the company supports efforts to improve working conditions and mandate protection for platform workers in Europe, but said it hoped for legal clarity as the final text emerges.

Wolt Enterprises, a Finnish food delivery app, said in a statement that it was “key that people can continue to freely decide when and how to work, while having fair pay and good social protections”.

A spokesperson for Deliveroo said the company would not comment until it had seen the final text.

The European Commission had proposed a version of the rules in 2021 to give gig workers stronger protection associated with employment contracts.

The industry would have been on the hook for an additional €4.5 billion (S$6.5 billion) a year, based on the number of eligible workers at the time, according to the commission’s own estimates.

Still, there are fears that stricter employment rules will push the delivery platforms to cut back.

A similar law passed in Spain two years ago prompted Deliveroo to pull out of the country and other food-delivery apps to reduce their operations.

The provisional agreement on Dec 13 must still be endorsed and adopted by the Council of the EU and Parliament. Member states will then have two years to incorporate the rules, the EU said. BLOOMBERG, REUTERS