European Union negotiators backed a deal to reclassify millions of people working for ride-hailing and food-delivery apps as employees in a set of rules that could cost the industry billions of euros each year.
The provisional deal will require platforms to give full status to the estimated 5.5 million workers who meet at least two out of five conditions that indicate their relationship with the apps fits that of an employee rather than someone who’s self employed, the EU said in a statement on Wednesday.
Those conditions include: limits on worker pay, performance supervision, control of the distribution of tasks, control over working conditions and hours, and rules around appearance and conduct, including restrictions on freedom to organize.
The status of delivery couriers and drivers using apps, such as those offered by Uber Technologies Inc. and Deliveroo Plc, has been a point of controversy worldwide. While many of the apps say they offer riders flexibility and the freedom of self employment, some labor activists have said that they offer too few protections.
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“This is a revolutionary agreement and the first legislative framework for digital platform workers,” said Elisabetta Gualmini, the lead author in the parliament. “We have better rights for the least protected workers in the world and we have fair competition for platforms.”
The deal will also require platforms to tell workers when they’re being monitored or managed by algorithms, which can result in a lack of transparency for workers about how decisions are made and how their personal data is used, the statement said. Platforms won’t be allowed to process certain kinds of personal data including private conversations and information that can be used to infer race, political opinions, migration or health status.
An Uber spokesperson said the company supports efforts to “improve working conditions and mandate protections for platform workers in Europe” but said it hoped for “legal clarity” as the final text emerges.
The European Commission had proposed a version of the rules in 2021 to give gig workers stronger protections associated with employment contracts such as sick pay and eligibility for unemployment benefits. The industry would’ve been on the hook for an additional €4.5 billion ($4.9 billion) euros per year based on the number of eligible workers at the time, according to the commission’s own estimates.
Still, there are fears that stricter employment rules will push the delivery platforms to cut back. A similar law passed in Spain two years ago prompted Deliveroo to pull out of the country and other food-delivery apps to reduce their operations.
Wednesday’s provisional agreement must still be endorsed and adopted by the European Council and parliament. Member states will then have two years to incorporate the rules, the EU said.
This story originally Appeared on Fortune