The Commission's proposal for a Recommendation on access to social protection for workers and the self-employed is part of the initiatives implementing the European Pillar of Social Rights. The Recommendation relates in particular to Principle 12, which states that 'regardless of the type and duration of their employment relationship, workers, and, under comparable conditions, the self-employed have the right to adequate social protection'.
During the public consultation on the Pillar, many stakeholders expressed concerns that workers in atypical (or non-standard) forms of employment and the self-employed face obstacles in having access to social protection. The recommendation will support Member States in adapting social security systems to changes in the world of work. Everyone who works will be protected and people will find it easier to change jobs, sectors and even their employment status because their rights will be preserved and transferred. The financial sustainability of social security systems will be maintained. The widest possible sharing of life risks is a crucial aspect of the European social market economy. Several Member States are undertaking reforms to better protect affected workers and the self-employed. The aim of the EU action is to ensure that progress is not partial or uneven but is instead secured across groups, social security branches and Member States, creating a level playing field within the Single Market.
What are non-standard forms of employment?
Temporary or short-term contracts, part-time and on-demand work, as well as employment relationships between more than two parties are usually regarded as non-standard forms of employment – as opposed to a standard employment relationship which typically refers to full-time work on a permanent contract.
Within these categories, a variety of forms can be identified, for example casual work (i.e. zero-hour contracts, such as for instance a shelf-stacker in the supermarket who only gets called when there is a lot of business), temporary agency work (i.e. interim positions) or platform work (i.e. people working for digital platforms, without having a fixed work place).
For this initiative, the definition is kept broad on purpose, to include also emerging or future categories of non-standard work. Labour markets are evolving fast and technologies are giving rise to many different new forms of employment not yet known. The Commission's approach ensures that the reforms will be future-proof, to make the most of the changing world of work.
The enforcement would be facilitated by the recent proposal for a Directive on transparent and predictable working conditions, which allows to clarify the boundaries between workers and self-employed and brings clarity on where the status of self-employed is unduly used (bogus self-employment). In relation to access to social protection, such clarity will help ensure that those people erroneously considered self-employed can now have access to social security as workers.
What is the objective of this Recommendation?
The Recommendation proposes that workers and self-employed in comparable conditions:
- can adhere to corresponding social security systems (closing formal coverage gaps),
- can build up and claim adequate entitlements (adequate effective coverage),
- can easily transfer social security entitlements from one job to the next,
- have transparent information about their social security entitlements and obligations.
Who is covered under this Recommendation?
With this Recommendation, Member States shall be encouraged to provide access to adequate social security coverage to all workers and the self-employed. In 2016, around 40% of employed people in the EU were in atypical employment or self-employed.
In many Member States, people from these groups face gaps in access to social protection. As a consequence, they are exposed to higher economic uncertainty and lower protection against social risks. The Recommendation would contribute to extending coverage where corresponding gaps exist.
What are the social security branches covered?
Overall, the proposal would apply to the branches of social security that are more closely related to the employment situation rather than citizen or resident status, namely:
(1) unemployment benefits;
(2) sickness and healthcare benefits;
(3) maternity and equivalent paternity benefits;
(4) invalidity benefits;
(5) old-age benefits, including pensions;
(6) benefits in respect of accidents at work and occupational diseases.
Why did the Commission decide to act?
A growing number of people in the labour market have only insufficient access to social protection. This issue is widespread across Member States. Reforms in certain Member States are steps in the right direction, but there is evidence that they do not relate to all previously uncovered groups, or are not sufficiently systematic. For example, rules were adapted for some social security branches only, or did not include the self-employed.
EU action can be a springboard for further national reforms. It can avoid short-term distortions of competition, long-term erosion of social standards and ensure that all Member States move in the same direction at the same time. This would promote upward convergence towards better living and working conditions, in line with the purpose of the European Pillar of Social Rights, to the benefit of the EU society and economy as a whole.
In the run-up to the presentation of the European Pillar of Social Rights, the Commission held a broad public consultation, from March to December 2016, which pointed out the need to act in this area. The consultation report is available here. The need to act was again confirmed in the EU-level social partner consultations following the presentation of the Pillar in April 2017.
What will be the benefits for workers?
The Recommendation aims to support people in non-standard forms of employment and self-employment who, due to their employment status, are not sufficiently covered by social security schemes and thus are exposed to higher economic uncertainty.
The social impact for workers and their families is expected to be positive resulting in a reduction in the individualisation of risk, income uncertainty, precariousness and notably a lower risk of poverty.
Adequate social security provides workers with opportunities and incentives to participate in education and training and devote time to search for a job matching their skills. It helps people feel secure in order to fully embrace the opportunities created by new forms and patterns of work, new working relationships with employers, growing career transitions as well as self-employment. Social security systems thereby fulfil important functions for individuals and labour markets.
Women in particular would benefit from an extended coverage to social protection as they are currently especially exposed to non-standard employment. More often than men they work part-time and take career breaks related to children or caring for dependent relatives.
What will be the benefits for companies?
The Recommendation will create more fairness between companies, by creating a level-playing field. The extension of coverage is set to lead to a noticeable reduction in unfair competition between those firms that employ staff on non-standard contracts exempted from social security contributions and their competitors not reducing costs in this manner.
In addition, companies could benefit from an increase in productivity of individuals in the newly protected forms of employment as well as from the positive effects of social security systems on labour markets.
Aren't the social partners better placed to regulate practices regarding employment relationships?
In line with EU Treaties, the Commission consulted EU-level trade unions and employers' organisations in a two-stage approach to see if they were willing to address the challenges by an agreement between themselves. The consultations took place from 29 April to 23 June 2017 and from 20 November 2017 to January 2018. While both sides broadly agreed with the challenges presented by the Commission, there was no agreement among them to enter into negotiations to conclude an agreement at Union level. All contributions from social partners have been taken in due consideration in the preparation of the proposal.
See also press release here.