Unprotected freelancers wait for laws to formalize relationship with employer

Denys Nesteryak, 20, works as a courier for food delivery company Glovo. When he decides to start his working day, he launches a mobile app, receives an order, jumps on his bike and rides fast to deliver food.

Although convenient – student Nesteryak can work whenever and wherever he wants – his activity is legally unprotected in Ukraine, much like the work of Uber drivers and other online platform contractors dubbed “gig workers” in Europe.

Ungoverned by Ukrainian law, this job provides no social guarantees – no sick leaves, no days off, no fixed hours, no constant revenue — while allowing the firms behind these online platforms to potentially exploit their workforce.

The gig economy is huge and growing: By 2023, it is expected to reach $455 billion in global gross volume. And Ukraine is at the epicenter. It is one of the world’s top 10 countries with the largest numbers of gig workers and among the top five fastest growing freelance markets.

However, so far, Ukraine has failed to address the legal aspects of this new type of employment relations, which endangers workers’ health and rights.

This has led gig workers, trade unions, and economic experts to urge the country to introduce proper laws regulating the sphere. In response, Ukrainian lawmakers have submitted a new bill to change the status quo, introducing so-called zero-hour contracts.

But the bill seems to be far from flawless.

Change roadmap

In December 2019, the Ukrainian government made a first attempt at formalizing the gig economy when it submitted the controversial labor bill to parliament.

The draft law offered a new type of employment that introduces contracts with non-fixed working hours, known in Europe as zero-hour contracts. It will oblige companies to recognize independent workers as employees and grant them the same rights as full-time workers: paid holidays, sick leave, guaranteed working hours, medical coverage and a minimum wage.

However, despite the promises of protection, zero-hour contracts offer little stability and require workers to be available at all times. Ukrainian trade unions opposed the plan, stating that the proposal violates the constitution and international standards.

“Compared to the current law, the bill restricts the scope of existing rights and minimal employment-related guarantees,” the Joint Representative Agency of Ukrainian Trade Unions stated.

With Ukraine’s strategic aim to become a European Union member, the government has so far failed to conform to European principles of dignity and freedom in labor relations, the agency said.

The bill was temporarily removed from the political agenda on March 4 after President Volodymyr Zelensky dismissed the Cabinet of Ministers. According to its main author, Halyna Tretiakova, the bill will be resubmitted.

Essential legal protection

The move to give the same rights to gig workers as traditional employees didn’t appear out of the blue.

In July 2019, Ukrainian Glovo couriers like Nesteryak gathered outside the corporation’s headquarter in Kyiv, demanding a fair payment system and basic employment guarantees. A month prior, they formed a trade union to protect their labor rights.

Demonstrators pushed backed against zero-hour contracts, as they won’t get paid if there are no orders. But no changes have been made and, for any “disobedience,” workers risk being unplugged from the platform without warning.

The company responded in a few weeks, saying that Glovo is just a mediator between couriers and clients. As a result, it has no commitments to independent contractors, the company said. It even refused to refer to them as employees. Today, Glovo has about 5,000 Ukrainian couriers in its system.

“The protests of the Glovo workers confirmed that current working conditions with this type of labor relations do not meet the needs of the employees,” Julia Grishina, a lawmaker from the Servant of the People party and former labor law professor, told the Kyiv Post.

The zero-hour contracts, according to the proposed bill, aim to establish a legal framework for “gig” activity, while retaining freelancers’ flexibility.

Currently, every fifth Ukrainian is employed unofficially. By introducing new types of labor contracts, the government wants to “formalize all the shadow schemes that already exist in the Ukrainian labor market,” said Tymofiy Mylovanov, who served as economy minister until the March government reshuffle.

Freedom’s dark side

Far from providing an enticing alternative to the nine-to-five grind, zero-hour contracts are a source of enormous controversy. They were totally outlawed in New Zealand back in 2016 and are strongly opposed in Britain, where media and trade unions call zero-hour agreements toxic and detrimental to worker’s wellbeing. In May 2018, the European Parliament also adopted a resolution to combat these precarious employment practices.

Meanwhile, in Ukraine “there are no safeguards that (would) restrict the usage of such contracts,” labor law expert George Sandul told the Kyiv Post.

The main problem lies in the legal definition of this contract itself. Non-fixed working hours mean that employees are not guaranteed any work by their employers and, therefore, no pay when the work is unavailable.

The new labor bill determines the standard working time to be around 40 hours a week and no more than 12 hours a day, but the exact number of hours could be changed in a labor contract.

According to the draft law, one enterprise can have only 10% of zero-hours agreements.

“But we have a tendency toward the fragmentation of enterprises within one holding,” Sandul said, meaning that these contracts can be distributed among different departments of one enterprise.

Bill co-author Tretiakova says that the government will further discuss the conditions of such contracts and create restrictions for employers.

Although gig workers are not obliged to accept all offers, companies often use ratings, competitions and bonuses to incentivize them. As one Glovo workers, who wished to stay anonymous so as not to lose his job, told the Kyiv Post, couriers often voluntarily choose to work extra hours to receive more pay.

If couriers work 8 hours a day for 5 days a week, they can earn $780 a month. Every order pays $0.70 plus $0.20 for every kilometer traveled, and couriers receive bonuses for completing large numbers of orders.

Problem of definition

Presenting the draft law On Labor, the government defined zero-hour contracts as “legally protected freelance.” Among the sectors that can benefit – or suffer – from the new type of labor agreements are the tech sector as well as creative and service industries.

According to labor law experts, the reality of “gig workers” features all the attributes of traditional labor relations: They perform tasks within the hiring entity’s business, use brand equipment – bags or cars – and receive salaries.

And yet, popular on-demand online platforms like Uber, Bolt and Glovo refuse to comply with the traditional labor legislation.

“Our service works on a different business model,” Oksana Ridkous, the senior account executive at Glovo, told the Kyiv Post.

The app-based companies claim that they do not hold the standard responsibility of an employer for their couriers as they do not sign labor contracts with them.

“I just filled out an online form and immediately was invited to the onboarding session,” Glovo courier Anna told the Kyiv Post.

An agreement in the form of a click in a mobile application cannot be considered an electronic contract, labor law expert George Sandul said. And without a digital signature, it does not grant workers any rights, meaning that, in case of an on-the-job accident, no compensation will be provided.

“The whole system of the gig economy is built on tax exemption and the evasion of the employer’s social obligations to the employee,” Sandul said.

Meanwhile, the only official attempt to resolve this problem, introducing zero-hour contracts, remains controversial in Ukraine.

But, from the government’s point of view, it is a positive development.

“The introduction of labor contracts with non-fixed working hours will positively affect workers, lawmaker Grishina said. “Their rights will be legally enshrined.”