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The EU Directive on Adequate Minimum Wages. How will it affect the operations of European digital platforms?

The EU Directive on Adequate Minimum Wages. How will it affect the operations of European digital platforms? In 2022, the European Parliament adopted the Directive on Adequate Minimum Wage, which is intended to facilitate the establishment of a legislative minimum wage level in all EU member states. Thanks to this document, by 2024, all workers in the European Union should receive a fair and adequate wage regardless of their place of residence.

The Directive introduces several innovations compared to the previous labor relations policy, and it affects not only employees with standard employment contracts. It will have a significant impact on workers in digital platforms as well as domestic, temporary, voucher-based, on-call workers, interns, and apprentices in companies. From the perspective of social guarantees and wages, these listed categories of employees will differ little from regular employees now.

The directive contains recommendations aimed at strengthening the role of social entities in wage negotiations. Minimum wage updates should now occur no less than once every two years (or no less than once every four years for countries using an automatic indexation mechanism).

As a result, due to the increase in labor costs for owners of digital platforms (delivery, taxi, online educational platforms, online handyman services, etc.), there is a question of how to properly build the business further. If before the directive, it was possible to optimize processes in terms of taxation and social guarantees for workers without standard employment contracts, now avoiding addressing these issues won't be possible.

There is a high likelihood that in the near future, taxi and food delivery prices in Europe will increase. Otherwise, company owners may have to reduce their tariffs, which is unlikely to have a positive impact on their businesses. The directive mandates EU countries to create a system to monitor various issues on-site, including:

Subcontractor abuse
Fictitious self-employment
Unregistered overtime work
Increased work intensity, and more.

... Everything that happens in the EU, one way or another, affects processes beyond its borders. I do not exclude that similar legislative norms may emerge in other countries after some time. After all, digital platform workers exist everywhere.

Many 'norms and rules,' such as banking compliance or the exchange of tax information, initially began to be applied within the G20 territory but eventually spread to other countries ...

Vladislav Makarenko, Managing Partner, Antwort Law

Therefore, a large number of individuals belonging to various categories of foreign company employees fall under the scope of the directive on adequate minimum wage. Navigating the intricacies of taxation in all these cases is not easy, and the directive has introduced new nuances. Our Antwort Law team is ready to analyze each situation and offer a solution that will help achieve success in running your business in compliance with all legal norms in the current conditions.

Maryna Makarenko

CEO,
Antwort Law

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