With the help of the Federal Labor Court („Bundesarbeitsgericht“, „BAG“) from "crowdworker" to employee

Judgment of the BAG of December 1, 2020, 9 AZR 102/20 (so far only available as a press release)

The BAG decides - quite surprisingly - that so-called "crowd workers" can be employees. 

The "Crowdworker" and the "Crowdsourcer

In the underlying business concept, crowdworkers are called upon by so-called "crowdsourcers" (non-legally "clients") via an online platform/app on the basis of a framework agreement to perform a wide variety of small (or very small) tasks (so-called "microjobs"). The complexity of the individual tasks can vary greatly. In addition to evaluating product placements (e.g., in retail) or collecting data/addresses, online stores can also be checked for their user-friendliness, for example. A large number of tasks can be completed digitally "from the sofa" without contact with colleagues. The choice of when, which and how many tasks are performed by the crowdworker is the sole responsibility of the crowdworker; there is no legal obligation to take on even a minimum number of microjobs. According to the usual definition of employee status (provision of work subject to instructions and external control in personal dependence, Sec. 611a of the German Civil Code [„Bürgerliches Gesetzbuch“]), crowdworkers were largely not regarded as employees in case law and literature. The concluded framework agreement merely forms the basis for the individual employment contracts to be concluded and does not contain any obligation to perform work. Crowdworkers are therefore neither bound by instructions nor personally dependent (e.g., according to the appellate instance of the present decision: Local Labour Court [„Landesarbeitsgericht“, „LAG“] LAG München, judgment of December 4, 2019, 8 Sa 146/19; cf. also BAG, judgment of February 15, 2012, 10 AZR 111/11).

Why does the BAG now see it differently?

It should first be noted that the BAG did not make a general decision on all possible forms of crowdworking and crowdsourcing; this can already be seen from the guiding principle, which explicitly states that crowdworkers can be employees.

The key to the present decision lies - as so often - in the details of the facts, namely the business and compensation model applied here. 

The defendant controls the presentation of branded products in retail stores and gas stations on behalf of its customers. The defendant has these jobs performed by crowdworkers. On the basis of a framework agreement, the crowdworkers are each offered various microjobs via an online platform or app of the defendant, without being contractually obligated to take on individual jobs. Tasks taken over must regularly be completed within two hours according to the detailed specifications of the crowdsourcer, otherwise the job is lost and will not be remunerated. 

The defendant uses an attractive incentive system for crowdworkers. The crowdworker can collect experience points on a virtual points account, which enable him - from a certain amount of points - to reach a higher level, which enables him to accept better remunerated or several jobs at the same time. The respective amount of points required to reach a higher level is displayed to the user in the app. The plaintiff, who had registered a trade, worked an average of 20 hours per week for the defendant and earned an average amount of EUR 1,749.34.

The legal proceedings were ultimately set in motion by the fact that the defendant terminated the plaintiff's contract and the plaintiff then filed an action for protection against unfair dismissal, requesting a declaration that an employment relationship existed between the parties.

Reasoning of the BAG

The BAG subjects the contractual relationship of the parties to an overall assessment of all circumstances and concludes that an employment relationship exists in this case. Unsurprisingly, the BAG clarifies that a different contractual classification by the contractual partners themselves is of secondary importance. 

The BAG assumes, as far as can be gathered from the press release, that the plaintiff is bound by instructions and is externally determined in his work, in particular due to the incentive system of the defendant. This induces the plaintiff to continuously and personally carry out bundles of individual, detailed small orders in the district of his usual place of residence in order to be able to carry out better paid or several orders at the same time at a higher level. The defendant controls the cooperation - presumably also through the set time window of about two hours per order - in such a way that the plaintiff can no longer freely organize his activities according to place, time and content.

Notes

Contrary to - initial - cries of doom or jubilation (depending on the "camp"), the BAG's ruling is neither a swan song for placement platforms nor does it mean that crowdworkers must always be considered employees. It is a (first) case-by-case decision that can provide valuable assistance in determining the boundary between self-employment as a "crowdworker" and dependent employment as an employee. This is by no means to say that the discussion - which is indeed being conducted worldwide - about the legal classification of Uber and Lyft drivers, Deliveroo delivery drivers and many other participants in the so-called GIG economy in Germany is over. The tendency remains clear: the tighter the net of indirect supervision/instruction - by means of remuneration, order specifications and deadlines, etc. - the more likely it is to be assumed that an employment relationship exists. However, this does not exclude the legally compliant design of crowdsourcing platforms - especially where the crowdsourcer only acts as an intermediary between the end customer and the crowdworker.

At the same time, it remains clear that crowdsourcing structures can involve considerable risks. Supposedly self-employed persons may subsequently turn out to be employees. This often entails considerable obligations to make additional payments to social security institutions and involves risks under criminal law (see Update Compliance 12/2020). At the same time, the "bogus" self-employed person will assert his claim to the usual remuneration - pursuant to Sec. 612 (2) German Civil Code („Bürgerliches Gesetzbuch“, e.g., vacation pay, continued payment in the event of illness, etc.). However, this is not quite as simple as many imagine, as evidenced by a decision of the BAG dated June 26, 2019 (5 AZR 178/18) (see Update Employment Law March 2020).

In any case, the topic remains exciting. Politicians have also put it on the agenda; on November 27, 2020, the German Federal Ministry of Labor and Social Affairs published a key issues paper on "Fair Work in the Platform Economy" (press relase BMAS). According to this, crowdworkers are to be given various additional opportunities to make their employments "more transparent and secure". For example:

• Inclusion in the statutory pension insurance and participation of the platform operators in the contribution payments.
• Improving accident insurance.
• Formation of employee organizations.
• Minimum notice periods.
• Taking "ratings" to other providers.

It is to be hoped that the key issues paper will not become a legislative initiative or that at least a balanced regulation will be created.