Employee vs. Self-Employment: EU Labor Law

Employee vs. Self-Employment: A Deep Dive into EU Labor Law

In the 19th century, the FCC recognized two types of renting agreements: one for things and one for works. Contracts for renting work (louage) assumed that workers trade the abstract and commodified aspects of their working activity. Workers, considered free and equal to their counterparts, could consent to unilateral control over their labor. This led to the development of labor protection to react to the harsh consequences of labor, questioning the idea of labor as a commodity separate from humans and recognizing the personal involvement of workers in the performance of the contract.

Personal Value: Fundamental rights (freedom of association and collective bargaining, no discrimination, privacy).

Relational Contracts: These are incomplete and extended over time, with terms and conditions unspecified as the relationship unfolds. Parties set out basic rules governing the business relationship. The nature of the firm is such that recurring to the market for business transactions is expensive because of transaction costs: searching for counterparts, negotiating and agreeing on terms and conditions, and enforcing contracts. To get rid of transaction costs, the incorporation of production into the firm is done through a hierarchical relationship, which eliminates or reduces consensus and cuts costs.

Understanding Employment Relationships

Employment relationships involve contractual relations between employer and employee. The employer gets advantages from the employee's performance, and the employee receives a salary for their duties. A key element is subordination, which refers to the managerial power of employers and allows for internal flexibility.

Factors and Evaluation of Subordination

Case law has developed subordination factors using a multi-factor test. These factors include:

• Requirement that the worker follows reasonable work rules and non-specific guidance
• Length of the relationship and nature of the work
• Respect for working hours
• Remuneration
• Absence of risk of loss for the worker
• Integration with the employer's business

No single factor is dispositive. In civil law, tribunals have discretion. The 'primacy of facts' dictates that substance must prevail over form. Neither legislatures nor parties can classify a relationship to exclude the principle of the 'unavailability of legal regimes.'

EU-Level Definitions and Considerations

At the EU level, there is no definition of 'worker' under Article 45 TFEU, which only addresses the free movement of workers. Case law evolution, starting with Hoekstra, defines "worker" in respect of the free movement of workers. Levin clarifies that this involves effective and genuine economic activity. Lawrie-Blum establishes three criteria:

1. Monetary reward
2. Subordination
3. Genuine economic activity

The aggregate considers important facts of the agreement between the parties.

Self-Employment: Definition and Distinctions

Self-employment refers to persons performing work for compensation, through their own effort, and without a relationship of subordination to a manager. General principles of civil and commercial law apply. Self-employed individuals enjoy the freedom to determine their own working terms and conditions under the agreement.

The Jany case clarifies that economic activity pursued by a self-employed person is outside any relationship of subordination, under the person's own responsibility, and in return for remuneration. Bogus self-employment occurs when someone is declared to be self-employed while fulfilling conditions characteristic of an employment relationship, often to avoid legal or fiscal obligations.