Ciara McDermott
I’m Ciara McDermott, and I’m joined by Declan MacQuillan. We’re senior associates in the Employment Group at Arthur Cox, and today we’re going to discuss the EU Platform Work Directive.

Declan MacQuillan
Yeah, so maybe just to set the scene, at its core, the Directive is a response from the EU to the growth of work organised through online platforms. So things like ride-hailing, food delivery apps, and also apps that organise remote or freelance work. There were concerns at an EU level that the existing labour and employment frameworks either weren’t capturing or weren’t keeping up pace with the development of the way that work is organised in this space. And kind of recurring concerns and issues kept arising over things like worker misclassification, the use of opaque automated decision-making processes, and also in relation to data management.

Ciara McDermott
We’ve had the Directive since 2024. It’s due to be transposed into Irish law by the end of this year, so December 2026. So based on what you’ve said there, it seems like there’s quite a long time for platforms and organisations to get their houses in order. But actually, when you consider what the scale of change really in terms of the legal, the organisational, and the technical change that’s required. It’s not really that long.

Declan MacQuillan
Yeah, not really, yeah. I mean, ultimately, the Directive is built around 3 key pillars that we think it’s worth kind of focusing on. The first is a rebuttable presumption of employment. The second is regulation of the use of algorithms and other automated decision-making processes and systems. And then the third is a strengthened data protection and transparency obligation framework.

Ciara McDermott
So I might just jump in there and talk about the first pillar. It’s one of the kind of key challenges and major changes that the Directive will introduce. The presumption basically is an assumption that in a relationship where there’s any degree of control, the worker will be an employee. It’s the obligation of the platform then and not the worker themselves to rebut that presumption. So this is obviously a key change when you think of how these platforms such as the ride-hailing apps, delivery apps have operated until very recently, until the introduction of the Karshan decision. So while we don’t have the Irish implementing legislation just yet, the Directive sets out for Member States that they will have to introduce their own procedures for determining employment status by reference to collective agreements, existing case law, and existing legislation.

Declan MacQuillan
And like from an Irish perspective, that feels quite familiar.

Ciara McDermott
Yeah. So as I mentioned there, until the Karshan decision, things worked a little bit differently. But since that decision, it’s better known as the Domino’s decision. The Supreme Court in that case set out a very clear and multi-factor test in terms of how we should go about determining employment status. The focus really should be on the reality of the relationship. So not just the contractual paperwork or the labels that organisations put on their workers.

Declan MacQuillan
Yeah, and then I suppose flowing out of that Karshan decision, we have the Code of Practice on determining employment status.

Ciara McDermott
Yeah, exactly. So after that decision, it was devised by not just the Workplace Relations Commission but also the Revenue Commissioners and the Department of Social Protection came together and put together this framework essentially for determining employment status. The focus again being the operational reality and not the contractual label. It adopted the 5-step test from Karshan and introduced 3 filter questions centred on remuneration, personal service, and control, without which an employment contract is not even really possible. So what the Directive does then is it builds on our existing framework following the Karshan decision. It doesn’t change the test. But it does shift the burden of proof from the individual worker to the platform. And what the platforms will now have to do, I suppose, is to really retain evidence to show whether an employee or a worker is self-employed or not. So evidence won’t just be in the form of contracts or paperwork, it’ll be things like the background app architecture, their, you know, pricing set-up, communications between the platform and the worker, performance management, things like that.

Declan MacQuillan
Okay, okay. I might then take the second key pillar of the Directive, which is the regulation of algorithms and other automated processes. And what that is going to involve is an individual platform stepping back and taking a look at how the work that it offers is actually organised as between the workers that are engaged for the purpose of fulfilling the various demands on the platform. And, you know, we’re kind of familiar with the various food delivery and ride-hailing apps. So we know that using automated systems to assign workers is pretty fundamental to those apps. And what the Directive does is imposes an obligation to be transparent with workers if automated systems are used in, you know, for example, things like assigning work or monitoring performance, monitoring interaction or engagement with the app or the platform. And then also, you know, if automated systems are used to make decisions around pay or suspension, there’s also going to be a positive obligation to inform workers of that fact. And the obligation doesn’t stop there because it’s also going to involve a kind of human oversight step whereby suitably trained and qualified staff are going to need to be involved in regularising and interrogating decisions reached through the use of automated systems.

Declan MacQuillan
So you have that kind of eyes on the outcome phase or step that we’re becoming familiar with from the EU AI Directive. So, for example, if your automated system makes a recommendation on something like suspension or reducing pay or even terminating the working relationship, you’re going to have somebody there who’s suitably trained and qualified to interrogate that outcome before it’s communicated to the worker and where necessary to actually override it.

Ciara McDermott
Yeah, that’s interesting. And it really speaks to some of the concerns that we’re seeing from an HR perspective around automated decision-making in those kinds of situations, termination, suspension, etc.?

Declan MacQuillan
Yeah, exactly. Because, you know, what you don’t want is a situation where a client comes to us and says, you know, actually, we don’t have somebody or we don’t have a human who’s able to stand over this decision. And historically, that’s been a problem because workers haven’t been able to either challenge the rationale for a decision made with the use or through the use of an automated system, or actually have visibility on the extent to which it was made in the first place by an automated system.

Ciara McDermott
In addition to that, then, the platforms, they’ll also have to carry out these assessments to assess how their algorithmic systems are impacting equality, discrimination, pay distribution, access to work, things like that. Yeah, ongoing, right?

Declan MacQuillan
Yeah, like that’s, that’s all going to be a continuous obligation. So organisations are going to need to kind of have audit-ready data ready to go, to have clear kind of documentation trails and paper trails on the decisions that are reached with the assistance of automated systems, and also proof and evidence that those decisions have been probed and interrogated and triaged by that human oversight level, just so that they can ensure that they’re fulfilling the obligations imposed on them by the Directive.

Ciara McDermott
Okay, I might move on then to the third and final pillar, which is data protection. Platforms and organisations now are going to have increased obligations versus what they’re dealing with at the moment under GDPR. It’s also one of the key changes that I think these platforms will have to deal with when the implementing legislation is introduced. The reason for this change is that worker consent can no longer be generally relied upon as a legal basis for processing platform worker data, the rationale being that there’s economic dependence and therefore consent can’t be freely given in that context.

Declan MacQuillan
So that kind of means that lawful bases are going to need to be revisited across the board.

Ciara McDermott
Yeah, exactly. So platforms can’t rely on consent. They’ll have to look at contractual necessity, legitimate interests, things like that. The Directive will also introduce a prohibition on processing certain types of data altogether, so psychological data, private communications, and data that is used to predict the exercise of fundamental human rights, so in an employment context, membership of trade unions. So for platforms who regularly use behavioural analytics or any other kind of monitoring tools, this will represent a significant shift.

Declan MacQuillan
Okay, okay. I might turn then to the kind of compliance roadmap, and I think the first step for any platform here is going to actually be to confirm whether or not they fall within the scope of the Directive. And in that context, you know, the definition of digital labour platform under the Directive is intentionally broad. So it’s going to require an organisation to kind of step back and think about the way that it manages and organises the work that it offers through the app to see the extent to which either automated systems or algorithms are used to assign work and to make decisions about workers, because that will inform the extent to which an organisation is going to come within scope of the Directive. So it’s not really a straightforward process, I don’t think.

Ciara McDermott
No, it’s not, and I suppose we can’t really just think in traditional terms about these gig economy type businesses then.

Declan MacQuillan
Exactly, yeah. And the other thing that we can’t think about in isolation is that just because, you know, a platform’s place of establishment might be outside the EU, that that means that they’re automatically not within the scope of the Directive. The fact that work is performed within the EU means that a platform could come within scope of the Directive. Notwithstanding that the platform’s place of establishment might be outside the EU. And another kind of key point in that context is that it doesn’t or it’s not going to matter whether or not there’s a contract in place between, say, the platform or the worker, or between the worker and the service recipient. And that’s a direct feature of the Directive intended to avoid a situation where platforms can point to the lack of a contract or try and insert an intermediary or a third party to avoid the obligations that the Directive imposes.

Ciara McDermott
Yeah, okay. And so once an organisation has stepped through that scope analysis you’ve just described, what then should they do in terms of compliance planning?

Declan MacQuillan
So I think that kind of breaks down into 4 key areas. The first is worker classification audits, and these are something that in an ideal world organisations would be doing anyway. And relatively routinely. And that’s kind of essentially getting your roles, looking at your role architecture, triaging and probing them by reference to the Karshan framework to see where the presumption of employment might arise, and then to be very clear on the rationale that the organisation has for making the worker classification decisions that it has done in relation to those roles.

Ciara McDermott
What I’m taking from that is align your operational reality with the legal requirement. No more reliance on labels.

Declan MacQuillan
Completely. Yeah. Yeah. And then the second key area is algorithmic governance, and that’s going to require organisations to identify and catalogue their automated systems, to identify and pinpoint exactly where those systems make decisions that can impact the working relationship and to ensure that there’s that human oversight or kind of eyes on the outcome step that we’ve referred to before.

Ciara McDermott
Yeah, and that’s quite a big shift then for these organisations or platforms that have kind of embedded systems prior to now.

Declan MacQuillan
Completely. Yeah, yeah, yeah. And then the third key area is data readiness, and that kind of has four key components. The first is that organisations are going to have to map all worker data that they process arising from the working relationship, reassess the lawful basis, as we discussed, for the actual processing of that data. Thirdly, updating data privacy notices where that proves necessary, and then ensuring at all times that the proper controls and procedures are in place to safeguard restricted data categories. The final key area, I think, is then in relation to kind of training and corporate governance. And that’s something that we don’t think an HR team or a legal team should or can be expected to do in isolation. It’s going to need kind of buy-in and input from, you know, your senior decision makers within an organisation, your ops teams, your data privacy teams, as well as your HR and your legal teams to ensure basically that anyone from those teams or functions within the organisation who’s involved in decision-making processes that have an automated element has sufficient levels of training and qualification to be able to interrogate and probe the decisions that these automated systems produce.

Ciara McDermott
Yeah, okay. So what you’re saying is essentially organisations need to be really proactive. They need to start working on this now and they shouldn’t wait until the end of the legislative process when we have the implementing legislation to start.

Declan MacQuillan
Exactly, yeah.

Ciara McDermott
Okay. So to wrap up, my takeaway would be that the legislation is yet to come, but that the direction of travel here is actually very clear.

Declan MacQuillan
Yeah, exactly. And it’s kind of a situation that we’re becoming used to here in terms of transposing legislation not being available. When we might expect it, but ultimately compliance planning can absolutely start now.

Ciara McDermott
Thanks Declan, I think that wraps us up. If you have any questions, you can visit the employment page at arthurcox.com or contact a member of the Employment Group.