Case analysis: Dutch Trade Union sues gig platform.
It had been in the air for some time already, the rumor mill had been grinding for over a year, but it only happened last week. On the day home cleaning platform Helpling was to announce a newly received investment and expansion to Switserland, the Dutch Trade Union FNV pooped the party by their announcement to sue the platform.
The message of the union’s press release was very clear: FNV is of the opinion Helpling should hire cleaners that are using the platform. What struck me is that the article contained quite some factual errors. Statements in such a measure incorrect that it could not just be coincidence. Throughout the article, the FNV speaks about freelancers, which is incoherent with the Dutch legislation which describes these workers under the domiciliary services act.In the case of small-scale services and home related gigs between private persons, this act is an exemption provision on mandatory financial burdens employers are supposed to carry. Besides this, the article states that each cleaner earns €11,50 per hour, although each and every one is free to set their own price on the platform. Although there is a lower bound to avoid a race to the bottom, there is no maximum price. Only recommended prices are shown as an indication of how other cleaners in the same region have set their rates.
Apart from quite a few suggestive statements —as former marketeer, I know very well how to exaggerate things in your own favor and that, when receiving a message, the sender’s agenda shouldn’t be overlooked— the reasons behind these errors are highly questionable. The overall message is clear anyhow and would not have been less clear if facts had been presented correctly. These mistakes are simply unnecessary.
Is it a random choice to sue Helpling?
Helpling is not the only platform mediating between individual demand and supply working under on the domiciliary services act with a revenue model based on a commission per transaction. Similarly, cleaning platforms iemand.nl, ziso.nl, and babysitting platform Charley Cares use this combination. Although this is a separate discussion from the one concerning the employment of workforce, I do notice more platforms working with the same construction by profiting from the margin on transactions. In this respect, FNV could have been less picky.
This case in perspective: is the Helpling model really that revolutionary?
What does Helpling do? It enables households to order a cleaning help by means of an online platform (market place). Besides this, the platform supports in quality control (intake by phone, ID checks, and a reputation system), in back office (complaints, questions, replacement help in case of leave), a planning tool, and payment module. The company earns money by skimming off a small margin of every transaction. A widely used model, although I am aware of different forms such as subscription models used by other platforms that offer household cleaning services.
Is Helpling unique in its way of working? It definitely isn’t. This kind of service has existed for years. One example is the Dutch company HomeWorks; a business exploiting the same model as Helpling for the last 25 years. The only difference is in the fact that it isn’t an online market place, but a company that deals with supply and demand in the market manually. It also has service coordinators checking on the quality and are even coming along on the first cleaning; this surely is an interesting case in the discussion on hiring or not. All of this makes HomeWorks’ model expensive, with a final commission of about 39%, compared to Helpling which receives about 23%.
If it is of importance to the FNV to fight for the rights of this target group, why didn’t they speak up much earlier at the establishment of companies like HomeWorks, or even at the turn of the century?
This example shows that that the gig economy has existed for ages, but the emergence of platforms has shifted the matchmaking to become automated or even outsourced to the client by a market place model. Solely taking into consideration the matchmakers working with a digital first platform strategy when it comes to the gig economy, most of the gig market is being ignored. And that, that is a missed opportunity. Read more about it in my blog: “Is the discussion on the gig economy still on-topic?”.
What would happen if the FNV will prevail?
Not being a jurist myself, I haven’t read the charges and can’t make any predictions in respect of this case. Yet, when the FNV prevails and Helpling will be ordered to hire the domestic workers, the consequences are obviously foreseeable. As Helpling starts hiring the domestic workers, the final price per worked hour will surge to at least 20 euro. As hardly any individual is willing to pay this amount per hour, the platform won’t receive any further bookings and Helpling will soon go bankrupt. Would that solve the problem? Not at all. The cleaning will still be done, but moved to black market.
(The domestic service act has been criticized more often. Another interesting system is in place in Belgium: the Service Cheque. After all the good I’ve heard about it, I’ll soon delve deeper in its ins and outs.)
Does the FNV burn its bridges with this approach?
Every unionist I’ve spoken to in person is convinced that the rise of work mediating platforms (in the broadest sense of the word) isn’t stoppable anymore. I also see many opportunities for cooperation between platforms and trade unions in a way of ensuring collective agreements in algorithms. In the end, both of them should focus on their common interest, especially in markets where workers are scarce. Everyone understands that if the market really wants to grow, it will be necessary to eradicate all unclarities and uncertainties. Investors want clarity above anything, for unclarity equals risk.
Being convinced that both stakeholders will have to find common ground more often in the future, this isn’t quite a desirable start for their relationship. Furthermore, I’m convinced that the FNV has burnt its own fingers by choosing this approach. A solution to these kind of cases only arises when all parties (platforms, interest groups, unions, and government) take their responsibilities. FNV already has an interesting track record in relation to platforms:
- Charged Deliveroo (soon to be decided);
- Cooperation of Temper and FNV Horeca, about which the FNV board ventilated its dissatisfaction publicly;
- Here, the case Helpling.
I can’t imagine any platform willing to start a cooperation or join in an experiment in which the FNV is involved. If I would be working for a platform, I wouldn’t take the risk and rather look out for another cooperation partner. This, in my opinion, really is a missed opportunity. Mostly because a cooperation between platforms and unions could create opportunities to work on an inclusive labor market. Mainly in industries known for their fragmented workforce, we have no official figures on what working conditions look like, but we do know that they would be up for improvement (including those in the cleaning and food delivery industries).
The main conclusion is that the cleaner, described by the FNV as the ‘brave individual’, will not be better off in the end, even if the union prevails in their charges against Helpling. Moreover, it is clear that suing Helpling alone appears as a random act; the example of HomeWorks shows that this way of working has existed much longer. The gig economy is much, much larger as what is happening on a platform like Helpling.
All in all, the predominant purpose of these charges seems to be the raising of awareness of the problems behind the platform economy. FNV is not choosing an unknown route, although it surely isn’t the one I would have chosen.
To see if there will be room for a more mature and constructive debate, we will have to await the outcomes of this court case.