The judgment of the CJEU in case C-356/21 strengthens the protection of the self-employed, albeit belatedly

ReLex senior lawyer Emilija Švobaitė shares her analysis in

According to the State Data Agency, in 2021 11.6% of employed persons in Lithuania were self-employed (200.2 thousand inhabitants). This figure has increased more than twice in 10 years. Individuals engaged in self-employment have declared an income of €2.9 billion in 2021 (35.1% more than in the previous year), and the income of the self-employed in Lithuania has quadrupled in 10 years. By comparison, more than 13% of the European Union population aged 20-64 were self-employed in 2021 (Eurostat).

One of the reasons why self-employment is gaining popularity in Lithuania is significantly lower personal income tax (PIT). To address this gap, in November 2022 the World Bank (WB) made recommendations to Lithuania proposing to tax income by size rather than type, thus adapting the tax system to the needs of a modern economy and removing the features specific to the tax system in transition. Such a reform would also entail fundamental changes in the legal situation of the self-employed.

Self-employment is encouraged by the fact that the party purchasing of service (the client) is not subject to the obligations imposed on employers as that the relationship between the parties is not governed by labour law. Even when the self-employment relationship between the parties is fictitious, self-employed workers cannot defend themselves through social dialogue and collective bargaining. This problem is also being addressed in other European countries: in autumn 2018, courier associations in France, Italy, Finland, Spain, the United Kingdom, Germany, the Netherlands, Norway, Austria, Switzerland and Belgium set up an international courier organisation to extend social protection and establish collective defense mechanisms. In this area the need for workers and social protection has been particularly acute during the COVID-19 pandemic, when demand for delivery services reached record highs. In Lithuania too, in 2020, Bolt Food couriers staged what they called a strike, provoking a legal debate on the status of the self-employed.

In response to rising social tensions and a growing number of national court decisions recognising the employment relationship of couriers, the European Commission has proposed a Directive in 2021 to improve the working conditions of platform workers. The Directive, which is in the final stages of the legislative process, seeks to ensure that workers on digital platforms (e.g. “Bolt Food”, “Bolt”, “Wolt”, “e-Taksi” etc.) are recognised as having a legal status that corresponds to the work they actually do. This is a welcome change, but the Directive leaves out all other self-employed workers whose work does not involve services provided on digital platforms. Questions remain as to whether the legal relationship defined as the provision of services is not, in fact, an employment relationship, and what protection mechanisms should be in place for the choice of this form of employment, both at national and at EU level.

The distinction between self-employed status and worker status determines not only the scope of social protection but also the scope of protection against discrimination. The Law on Equal Opportunities of the Republic of Lithuania provides for liability for the employer and the Office of the Equal Opportunities Ombudsman deals with complaints of discrimination in employment relations, but it is not clear whether this law protects self-employed persons.

Recent CJEU case law is of particular relevance to Lithuania in assessing this issue. On 12 January 2023, the CJEU ruled in Case C-356/21 J.K. v TP S.A. concerned a self-employed person whose service contract was terminated, allegedly on the basis of the claimant’s sexual orientation. In December 2017, the claimant and his partner posted a Christmas music video on YouTube to promote tolerance towards same-sex couples. Two days later, the applicant received an email from the state broadcaster “Telewizja Polska”. The applicant had been providing audiovisual services to the defendant continuously for 7 years, but after the appearance of the above-mentioned video, the letter unilaterally terminated the contract.

The plaintiff brought an action before the Warsaw District Court for unlawful direct discrimination on the grounds of sexual orientation. The national courts interpreted the Polish anti-discrimination legislation as exclusively protecting workers with regular employment contracts, and the case was referred to the CJEU for a preliminary ruling on whether the Polish legislation was in conformity with the provisions of the European Convention on the Protection of Human Rights and Fundamental Freedoms and  Council Directive 2000/78/EC establishing a general framework for equal treatment in employment and occupation, Article 3(1)(a) and (c), according to which the provisions of the Directive apply to all persons, as regards both the public and private sectors, including public bodies, in relation to “conditions for access to employment, to self-employment or to occupation, including selection criteria and recruitment conditions, whatever the branch of activity and at all levels of the professional hierarchy, including promotion”.

In its judgment, the CJEU held that self-employed workers, such as the applicant in the case in question, are covered by EU anti-discrimination legislation. The Court clarified that applicant constitutes a genuine and effective occupational activity, pursued on a personal and regular basis for the same recipient, enabling the applicant to earn his livelihood, in whole or in part, and that the question whether the conditions for access to such an activity fall within Article 3(1)(a) of Directive 2000/78 does not depend on the classification of that activity as ‘employment’ or ‘self-employment’, given that the scope of that provision and, accordingly, the scope of that directive must construed broadly.

In reaching those conclusions, the Court followed the Advocate General’s interpretation. The Advocate General pointed out that must the Directive must be interpreted as precluding national legislation which has the effect of excluding, on the basis of the freedom of choice of contracting parties, from the protection against discrimination to be conferred by that directive, the refusal, based on the sexual orientation of a person, to conclude or renew with that person a contract concerning the performance of specific work by that person in the context of the pursuit of a self-employed activity.

This landmark judgment of the CJEU may contribute to more efficient protection for self-employed workers. Until now, in disputes concerning the protection of the self-employed, the CJEU has systematically rejected criticisms regarding the application of national legislation. As new forms of employment relationships emerge in the labour market and as employment relationships move beyond the traditional definition of an employment contract, it is important to ensure that social protection and protection against discrimination apply equally to all workers. The CJEU’s judgment also calls for a reassessment of the current version of the Law on Equal Opportunities of the Republic of Lithuania, which transposes Directive 2000/78/EC into national law.




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