by Yana Simutina, Visiting Professor, University of Bristol Law School
The digitalisaton and emergence of the gig economy has led to significant changes in employment and labour relations around the world. As businesses seek more flexible and cost-effective solutions for hiring workers, policymakers are considering adapting the regulatory framework to the challenges of new forms work. Ukraine, a country undergoing economic and social transformation, has experienced growth in the digital sector over the last decade (especially before the full-scale Russian invasion). Against this background, a new legal framework for IT companies is called Diia.City was launched in 2021 by adopting the Law on Stimulating the Development of the Digital Economy in Ukraine (LSDDE). The LSDDE introduced new legal concepts such as the ‘gig contract’, which is not legally defined or applied in other jurisdictions or EU law. In any case, the use of the term ‘gig’ is associated with digital platforms and fragmented activities carried out outside the framework of traditional forms of employment, with irregular or additional income without labour protection. Given that the ‘gig contract’ category has a rather negative connotation from a labour law perspective, several questions arise. First, what are the potential benefits and challenges of this employment model? Secondly, in a broader context, are gig contracts a sustainable solution to the challenges of employment relations in the digital economy, or do they further blur the boundaries between civil and labour law?
Although working arrangements under a gig contract share most of the characteristics of employment relationships, the LSDDE has artificially excluded gig contractors from the scope of labour law and defined a gig contract not as a special type of employment contract but as a civil contract. For example, an IT company must provide work assignments to its gig contractors, including the equipment necessary to perform the work/provision of services or compensation if a gig contractor uses personal equipment. In addition, a company has the right to control the performance of work/provision of services by monitoring communication networks, video surveillance in public places or other means of monitoring under a gig contract. Overall, a gig contractor must perform the work/provision of services at a place specified by the parties. However, the IT company may unilaterally change the place of work, including to a new city or other location, with compensation for all moving and accommodation expenses. At the same time, as opposed to civil contracts with an individual entrepreneur, IT workers as gig contractors are provided with social guarantees, including the right to sick leave (they are subject to mandatory state social security for temporary disability and may have sick breaks and maternity or adoption breaks) and paid vacation. However, gig contractors remain unprotected against the uncontrolled conclusion of short-term gig contracts, the possibility of unjustified unilateral termination of a gig contract by an IT company, and violations of occupational health and safety rights, as the Law of Ukraine on Labour Protection does not apply to gig contractors. Overall, gig contractors are deprived of fundamental labour rights such as freedom of association and collective bargaining, as Labour Code does not apply to them, nor does the LSDDE define the right of gig contractors to form trade unions or other representative bodies or to bargain collectively with the IT company.
Although the LSDDE designates the gig contract as a civil law contract, it allows for considerable legislative interference in its terms and conditions despite the freedom of contract being central to civil law contracts. More specifically, the LSDDE contains a specific provision according to which the conclusion and performance of a gig contract do not constitute the exercise of entrepreneurial or other economic activity of a gig contractor. Such an interpretation creates even more confusion in understanding the legal nature of the gig contract and the place of gig workers in the employment classification.
It’s hard to deny that how gig contracts are legalised in Ukrainian law poses challenges to fundamental labour rights. After all, by creating a specific model of legal regulation of labour relations in the IT sphere, the Ukrainian legislator deviates somewhat from the general international and European trends in ensuring labour rights in the digital economy. Furthermore, as the growth of platform work continues worldwide, it is crucial to understand its consequences for all workers, especially platform workers whose work is an actual ‘gig’.
The risks of intermediate categories of workers in the legal system should be recognised. On the one hand, such categories can provide a certain degree of protection for workers who fall between the traditional employee/self-employed binary. On the other hand, they can also introduce uncertainty and complexity into the regulatory framework. Such an approach may provide greater flexibility for workers and employers but may also deprive workers of certain fundamental labour rights. The Ukrainian experience of formalising gig contracts for IT workers is a striking example of the latter. Therefore, excluding a specific category of workforce from the scope of labour law, despite the de facto nature of their employment relationship, and thus depriving them of fundamental labour rights, cannot be justified on the grounds of tax optimisation, business benefits or flexibility. Such exclusion ultimately leads to insecurity for workers. Far from bringing Ukraine into line with the labour standards and practices of other European states and the international community, it represents a further departure from established norms and obligations. Finally, and most worryingly, there is a risk that the concept of gig contracts in the IT sphere could be further applied to regulating work on other digital platforms, ultimately removing precarious gig workers from the scope of labour law.
This post is derived from: Yana Simutina. 2023. ‘Flexibility or Insecurity? Exploring the Concept of Gig Contracts from Ukrainian Experience’. Hungarian Labour Law E-Journal, Issue 2, 42-55. Available at: https://hllj.hu.
Yana Simutina is a Senior Research Fellow at the Koretsky Institute of State and Law of the National Academy of Sciences of Ukraine. Since September 1, 2022, she has been a Visiting Professor at the University of Bristol Law School under the Researches at Risk Fellowships Programme established by the British Academy with Cara (the Council for At-Risk Academics).