Can ‘Crowdworkers’ Be Workers? A German Federal Labour Courtroom Ruling And Its Potential Penalties For Restructuring – Employment and HR

Germany:

Can “crowdworkers” be employees? A ruling by the Federal Labor Court and its possible consequences for the restructuring

January 04, 2021

The labor law

To print this article, all you need to do is register or log in to Mondaq.com.

The Federal Labor Court has ruled that crowdworkers can be awarded the status of employee if the person carries out their tasks according to the instructions and instructions of the potential employer, if there is an employment relationship. This article examines the judgment and its possible consequences in the context of a restructuring.

On December 1, 2020, the Federal Labor Court made an important decision on the employment law classification of so-called “crowdworkers”. However, hopes for a landmark decision that would set a precedent were thwarted. Numerous questions about this much discussed and forward-looking topic “Work 4.0” remain unanswered. However, this is a decision with far-reaching consequences. It poses new challenges for an entire industry, especially with regard to restructuring.

Crowdworking

Crowdworkers are micro-jobbers on the Internet. Crowdworking involves doing small, paid tasks that are advertised online. Typical tasks include testing apps, photographing opening times or checking online information. So far there has been no entitlement to minimum wage, vacation or paid sick leave due to crowdworkers without employee status. In return, there was usually no obligation to accept the order and at the same time the client has no authority to decide where and when the order is placed.

The case

The plaintiff worked for the defendant on the basis of a “basic contract” and general terms and conditions. The service was provided by enabling the plaintiff to accept orders offered online via a user profile without being contractually obliged to do so. If an order was accepted, it usually had to be completed within two hours following detailed instructions from the defendant. “Experience points” were credited to the crowdworker for completed tasks. As the number of experience points increased, it became possible to take on several jobs at the same time and thus increase the wage level. Due to discrepancies, the defendant prevented the plaintiff from executing orders from spring 2018.

In the first instance, the crowdworker sued, among other things, to determine his employee status in connection with a claim for damages for refusing to accept orders.

The lower courts dismissed the lawsuit and denied the crowdworker employee status. The Federal Labor Court ruled differently and found that the parties actually had an employment relationship.

The regulation

According to the Federal Labor Court (BGA), a crowdworker can acquire the status of an employee if, taking into account the overall circumstances, the work performed is carried out according to the instructions of other people. In addition, employee status requires a certain degree of personal dependency. The wording in the contract is irrelevant for the determination of the employee status.

(see press release of the Federal Labor Court).

In the present case, the fact that the defendant controlled the provision of services in terms of place, time and content of the service, i.e. the crowdworker was integrated into an organizational structure bound by instructions and determined by third parties, spoke in favor of the status of an employee. The Federal Labor Court held that the plaintiff was not obliged to accept the order to be irrelevant. The decisive factor in this case was rather the obligation to provide personal services and the incentive system of the experience points. In the opinion of the court, the plaintiff was therefore obliged to accept further orders on an ongoing basis.

Despite the acceptance of employee status, the Federal Labor Court largely dismissed the appeal. In the opinion of the court, the plaintiff could not simply demand payments based on the fees he had previously received as supposedly freelance workers. If a supposedly freelance employment relationship turns out to be an employment relationship in retrospect, it is generally not to be assumed that the level of remuneration agreed for freelancers was also agreed for employees. Rather, the usual remuneration would be owed.

Outlook and assessment

The hoped-for fundamental decision of the BAG did not materialize. In the future, too, disputes about employee status will be assessed on a case-by-case basis according to a wide variety of criteria. The conditions under which crowdworkers work are as varied as their tasks. The employer can only make a reliable forecast of the likely employment status of crowdworkers in advance in more obvious cases.

In order to avoid nasty surprises, employers should refer to the status determination procedure of the German pension insurance in case of doubt. Because it is better to be safe than sorry: the employee status entails a multitude of additional rights and obligations as well as costs. If this is not the desired result, the contract must be designed and implemented with foresight from the outset.

What practical consequences does this decision have for the restructuring?

Although this is an individual decision on the employee status of crowdworkers, it can be assumed that the discussion about the employee status of these and other solo self-employed will be resumed.

The classification of crowdworkers as employees has many consequences. The classification as an employee leads in particular to the application of regulations on working hours, vacation entitlement and employee protection, such as protection against discrimination for employees in atypical employment relationships and, in particular, collective protective rights in the event of restructuring.

In many cases, crowdworkers are deployed during the restructuring to complete and perform certain tasks. The previously existing risk that they could be classified as employees and this could lead to a permanent employment relationship is exacerbated by the decision of the Federal Labor Court discussed above. If crowdworkers are classified as employees, collective property rights apply. This includes rights in the event of a transfer of business (§613a BGB), mass layoffs or the insolvency of the employer and could make restructuring more difficult and in particular increase costs.

(Federal Labor Court, judgment of December 1, 2020, Az. 9 AZR 102/20; lower instance: LAG Munich, judgment of December 4, 2019, Az. 8 Sa 146/19)

The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.

POPULAR ARTICLES ON: Employment and Personnel from Germany

Banter or bullying?

W Legal

This is evident not only in people’s private lives, but now also in the workplace.

Can an employer rely on an anonymous witness?

Knight

The testimony is often critical to an investigation, especially in the case of misconduct. A common problem faced by employers is the situation in which the witness …