Nordic labour law must face the future

“The big question we have asked ourselves is whether Nordic labour law is ready for the future of work,” Marianne J. Hotvedt told the webinar Nordic Future of Work at the end of November.

She is an Associate Professor at the Department of Private Law at the University of Oslo, who together with Kristin Alsos from the research foundation Fafo has coordinated the work on the report the Future of Nordic labour law, which makes up the final analysis of the research project Nordic Future of Work.

Necessary renewal

The report looks at how Nordic labour law can and must be renewed in the meeting with new technology and new forms of work. 

New flexible contracts and the platform economy represent fundamental challenges for labour law. From a legal perspective it is crucial to distinguish employment contracts from other relations, particularly self-employment, she pointed out.

“To preserve the societal functions and purposes of labour law, we might have to reform it, said Hotvedt.

Cracks in the foundations

The concepts of employer and employee form the very foundation of labour law. This develops cracks in the face of new forms of work like you find in the platform economy, argued Hotvedt.

“The concept of employee determines who may be covered by collective agreements, and the concept of employer pins the legal responsibilities on the principal.”

Marianne J. Hotvedt has led research on what Nordic labour law says about who is an employee and who is an employer. Here the former head of the Confederation of Norwegian Enterprise, Kristin Skogen Lund, is peering over her shoulder. (The picture is taken before the Corona pandemic). 

Yet an increasing number of people now work in a grey area where their employment status is unclear. These are not employees in the traditional sense, and also not self-employed. This is particularly true for platform workers, since they do not have the protection of an employee nor the independent responsibility for their own job like a self-employed worker has. 

Hotvedt and her colleagues have also studied similarities and differences in labour law between the different Nordic countries.

“This was useful as it allowed us to stress-test the legal framework and its ability to cope with changing labour relations, but also the strengths that give us a basis from which to develop legislation in the right direction.”

Strength in a flexible legal framework 

“Employee” is a fairly flexible concept in all of the Nordic countries, said Hotvedt. It gives the courts the freedom to gradually adapt the concept and define what it means in legal terms on a case-by-case basis.

“A platform worker who is formally operating as self-employed is therefore an employee in legal terms if there in reality is subordination and dependency of a principal,” explained Hotvedt. 

Many types of non-standard work are also recognised as employment contracts in Nordic labour law, including agency work.

“There are a number of interesting examples of collective agreements regulating platform workers as employees. If the social partners have leeway to define workers in the grey area as employees, this is a potential for further adaption,” argued Hotvedt.

One clear example can be found in Sweden, where collective agreements can include an intermediary category – independent contractors.

More challenges remain

Nevertheless, the report’s authors want to underline that many challenges remain. Determining employee status on a case-by-case basis does not provide the clarity needed for labour law.

There are for instance still no court cases in the Nordic countries guiding the classification of platform workers. 

The authors therefore recommend that employment status be anchored in so-called legal presumption, which means platform workers are presumed employed until “the opposite is proven” by the company.

”Then it would have to be proven in court that a worker is truly and generally self-employed,” said Hotvedt.

What is an employer, and what is it not?

But Nordic labour law also faces challenges when it comes to the definition of “employer”, especially when it comes to platform solutions like Deliveroo and Uber.

“Here we are less optimistic. This concept is generally less inclusive and adaptable than the concept of employee,” said Marianne J. Hotvedt.

“The employer is the stronger contractual party in an employment relation, and the legal framework rests on an assumption that the contractual party and the principal with employer function and powers is one and the same. This is not always the case in for instance the platform economy.” 

But there is light at the end of the tunnel here too, according to the authors.

“In Nordic labour law, the employer’s responsibility is not solely related to a contract of employment. If you connect the dots of all the different nuances, a rough pattern is that employer functions can justify at least some legal obligations.”

Is the Nordic model under threat?

The Nordic model is supported by legal norms like collective bargaining, protection of health and safety and basic social security.

If we fail to adapt labour law to include protection also for those in new forms of work, the Nordic model itself might be at risk, argue the authors.

Jeremias Adams-Prassl, who explores the idea of innovation and entrepreneurship in depth in his book Humans as a Service: the Promise and Perils of Work in the Gig Economy?

Support from British professor

Jeremias Adams-Prassl is Professor of Law at the University of Oxford, and joined the webinar with his comment on the presentation of the Future of Nordic labour law.

He pointed to the paradox that the further away you are from stereotypical employment, the more protection you need from labour law.

“And yet the law tends to end up protecting those who are least vulnerable socio-economically more than the socio-economically vulnerable,” Adams-Prassl told the webinar.

So far this has been particularly relevant to platform workers. Adams-Prassl believes there now are signs in Europe that this sector could be facing important changes – although perhaps not the kinds of changes companies like Uber would embrace.

Nothing new under the sun

“The gig economy for a long time was characterised by two narratives – one, that it was all about entrepreneurship, and the second that it was all about innovation. 

“And the point of these narratives was to say ‘it’s entrepreneurship and therefore it’s not employment, and it’s innovation and therefore it’s new and different and shouldn’t fall under the existing framework,” Adams-Prassl told the Nordic Labour Journal after the webinar.

He argues that the algorithms used by platforms like Uber and Foodora are actually very strict and have little to do with entrepreneurship, and that their basic business model is the same that existed 200 years ago.

“What we now are seeing is that courts all over Europe are starting to wisen up to precisely that. They’re starting to say that actually, when it comes to working for a gig economy platform, given just how tightly regulated it is, given just how much control is exercised, these people are workers, they’re not entrepreneurs.”

Important supreme court rulings

He mentions how the French supreme court in March ruled that Uber drivers must be considered employees and the Spanish supreme court that said the same in September about people working for the food delivery service Glovo.

“Senior courts around Europe are not buying the narrative of entrepreneurship and innovation."

Adams-Prassl himself is a tech enthusiast, as long as employers use technology on a level playing field.

“Genuine innovation can only happen when there is a set of rules that everybody plays by.”