Judgment of the Federal Labour Court of 1 December 2020 in Case 9 AZR 102/20
The constant performance of numerous minor contracts (“microjobs”) by a user of an online platform (“crowdworker”) based on a framework agreement concluded with the platform operator (“crowdsourcer”) can, as a whole, be viewed as an employment relationship in accordance with § 611a (1) fifth sentence of the German Civil Code (Bürgerliches Gesetzbuch) when the crowdworker is required to perform the services him or herself, the activities to be performed are relatively simple and how the tasks are to be conducted is prescribed and the crowdsourcer controls the award of the contracts and use of the online platform.
Facts of the case
Crowdworking is a form of work that has become increasingly important over the last few years. Companies offer “jobs” via an internet platform. Those interested in a job can then offer their services via the same platform. The scope of activities varies widely, from writing texts to testing software and even to controlling activities or quality management. The contracts normally stress the independent nature of the crowdworker’s work and exclude the existence of an employment relationship.
After some discrepancies from companies, a crowdworker did not receive any more contracts and his account was deleted. He brought an action for a declaration that an employment relationship had been established for an indefinite period and sought remuneration and holiday pay. He complemented his claim with an action against unfair dismissal after receiving a notice of termination from the defendant during the legal proceedings as a precautionary measure in case the Court held that an employment relationship had been established. Like the Labour Court in Munich before it, the Regional Labour Court (LAG), also in Munich dismissed the case and held that no employment relationship existed. The Federal Labour Court (BAG) largely reversed the decision of the LAG Munich and referred the case back to the LAG in part. The essence of the judgment: crowdworkers can be employees.
The jobs in question concerned the performance of checks on the way branded goods were presented in retail or at petrol stations. The “crowdworker” accessed a website operated by the client and, in combination with an app, checked the way the goods were presented in the stipulated markets and provided the information to the client. The whole contractual relationship was transacted via the app, from the description of the work to the acceptance of the job. Payment was made via PayPal. The foundation for the work was a so-called “Basis Agreement” which essentially provided that the contractor could select which of the available jobs to take, but did not have to take any. The agreement also did not contain any stipulations about the place of work or working time, and the contractor was entitled to employ staff or sub-contractors. This Basis Agreement was supplemented by “General Terms and Conditions,” which contained a bonus payment rule. Contractors gained so-called experience points to achieve a higher “user status,” which made it possible for them to apply for a greater number of higher value contracts, resulting in higher pay. The General Terms & Conditions explicitly provided that the contractor was not bound by instructions and no employment relationship had been established. Effectively, the performance of the contract involved the company providing the contractor with the opportunity to accept jobs on the company website and through an app accessed via his own smartphone. The app contained a GPS that could access the user’s current position and geographically limited the location of jobs. It also ensured that the contractor visited the correct target, in short: it was also used for control. In this case, the crowdworker completed around 3,000 jobs between February 2017 and April 2018, generating on average 15 to 20 hours of work per week. In April 2018, the Defendant informed the contractor that he would not be offered any more contracts and that his account would be deleted.
The crowdworker brought an action seeking a declaration that an employment relationship for unlimited duration had been established, together with a claim for further employment and the payment of lost remuneration. The was extended to include a claim for protection against unfair dismissal once the crowdworker received a notice of termination during the litigation. The LAG in Munich rejected the employee status: the Court stressed the fact that the Claimant was not obliged to take jobs but was free to choose when and which jobs he accepted.
The BAG took a different view. The company had designed the platform so that the crowdworker could not freely decide of the place, time or nature of the job, but could only accept a bundle of jobs, which had to be completed within a prescribed time period and in line with the instructions for performing checks on the relevant retailers and petrol stations. The incentive system also supported a view of personal and economic dependence because the crowdworker was forced to take several jobs in order to coordinate them and obtain a higher hourly rate.
Consequences for practice and practical tips
Declaratory provisions, such as those here which sought to rule out an employment relationship and state that the crowdworker could work without instructions, are little help for contractual design. To provide both parties with legal certainty about the status, both the agreement itself and any practical implementation must provide either as little information as possible or further information about the time and place and personal performance of the activities. Even in light of the judgment of the BAG, awarding a high volume of contracts to a crowdworker reinforces the personal and economic dependence and is decisive as a criterion for employee status. In this respect, it is recommended that employers or platform operators implement maximum limits for the award of contracts. Finally, we recommend that you include provisions, which have at least an indicative value in the case of a solo contractor, and provide that the contractor is not economically dependent on the repeated award of contracts but that crowdworking is only a “side job” and/or the contractor is active on multiple platforms so that their reliance on one platform is eliminated.
Author: Dr Thomas Drosdeck