Classification of food delivery platform workers’ legal relationship in Hungary

What is platform work in Hungary and in the EU?

In Hungary, currently there is no general definition for platform-based work, and in addition to what has been discussed in recent years in the legal literature, we can basically accept the characterisation the present judgment of the Supreme Court “creates”.

Hungarian legislation follows a binary system when assessing work-related activities: the legal relationship is either an employment or a contractor relationship. There are no specific rules for working arrangements whose characteristics lie somewhere between those two types, as there are in other EU member states or third countries. Consequently, when assessing the situation of Hungarian food delivery workers or other platform workers, what is relevant is the circumstances in which the work is performed.

The Supreme Court also pointed this out in its judgment when it compared the facts of the case with judgments of the Court of Justice of the European Union and with the draft EU directive on platform work. According to the draft EU directive, “contractual relationships in which digital labour platforms exert a certain level of control over certain elements of the performance of work should be deemed, by virtue of a legal presumption, to be an employment relationship”. 

What is the factual background to the Supreme Court's decision?

In its judgment, the Supreme Court dealt with one specific case of platform work, where the food delivery platform provider provided an intermediary service through its platform, between customers ordering food and drinks and the restaurants concerned. Food delivery workers provided the services via an app and used branding elements determined by the platform provider, but they typically operated as individual contractors (or, exceptionally, as shareholders of self-owned companies).

The details of the legal relationship were set out in a service contract and general terms and conditions (GTCs), and the details of the work to be performed were set out in the order defined by the app: food delivery workers could set at their own discretion, the time periods during which they could be assigned to deliver food and drinks. They could also refuse order, but in such cases would be ranked lower in the system, meaning that they fell farther back in the ‘queue’ when applying for the preferred time slot they wanted. They were not disadvantaged in any other way (such as a pay reduction).

In the lawsuit, a food delivery worker filed a motion to have their contractor relationship reclassified as an employment relationship, and to have a minimum salary set for the “duration of work”, because they considered that their work met the criteria of a dependent, contingent employment relationship.

According to the Supreme Court, what should be considered when reclassifying a contractor relationship to an employment relationship?

In addition to the provisions of the Hungarian Labour Code, the Supreme Court used the criteria developed in case law to answer this question. The main findings of the judgment were as follows:

• The work to be performed was not defined by a job title or job description. The task of the food delivery worker was defined by the parties only as delivering food or drinks from one specific address to another specific address, but it could not be concluded from this that the parties defined the tasks as a job title. It was not established in the proceedings that the platform provider had any influence over the food delivery worker’s performance of their duties that determined the manner or essential conditions of that performance.
• The obligation to work personally was not an essential element in the operation of the food delivery service. The food delivery worker could work as an independent contractor or as a shareholder (or employee) of a self-owned company, so the food delivery worker was not required to personally perform the work. However in general, even in a contractor relationship it is possible to determine that the service provider must provide the services personally.
• The hours of performance and availability were determined by the food delivery worker, and the platform provider did not undertake to employ the worker. Hungarian labour law does not recognise any form of employment, even in an atypical employment relationship, where the employee can determine how much and when they wish to work, or when they are available. Moreover, the food delivery worker was entitled to terminate their availability at any time.
• For the purposes of establishing subordination and dependency, it is irrelevant whether the service provider is also a subordinate in an economic sense. Even a working relationship that provides low, insignificant income can be classified as an employment relationship provided that other conditions are met. What is relevant in this context is that the employer must have the right to give instructions and to exercise control over the place, time and manner of work.
• The “work schedule” created by an algorithm cannot be considered the exercise of the right to instruct. Since it was at the food delivery worker’s discretion to log in to the application, set their availability period, log out of the application without giving any reason, and refuse orders, it could not be reasonably argued that the platform provider had the right to instruct the worker in detail. In general, however, even in a contractor relationship it is possible to give instructions to the service provider.
• A service fee is not similar in nature to a salary. The facts that the food delivery worker was entitled to a “base fee” during their availability period and that they received an additional “address fee” after each order did not suggest the concept of salary or performance-related salary, for the amount of remuneration was not fixed or capped. As part of the service fee, the “base fee” could not be considered remuneration paid for “downtime”. Nor can regular bi-weekly accounting itself be considered to establish an employment relationship.
• Providing tools/equipment for unified branding purposes is only a marketing tool. The fact that the food delivery worker was dressed in the platform provider’s uniform and used boxes with the platform provider’s branding did not mean that the platform provider provided the tools/equipment for work, since the cell phone and the means of transport was provided by the worker.
• The food delivery worker was not integrated into the organisation of the platform provider. It was the food delivery worker, not the platform provider, who organised the delivery, chose the delivery route, and decided on the means of transport.
• The principles of a flexible work schedule, performance pay, holidays and breaks are not qualifying factors. These cannot, in themselves, be deemed to establish an employment relationship.

The Supreme Court did not intend to take a position on the “general question of legal policy or legislation”, that is, its decision was not intended to fill a regulatory gap concerning platform work, but merely to rule on the merits of the case at hand. In our view, however, the decision can be applied beyond this specific case and, perhaps with certain adjustments, can serve as a guideline when assessing other forms of platform work (to use the examples of the Supreme Court: transport of persons or goods and programming) or when answering reclassification questions.

Authors: Péter Sziládi, Zoltán Tarján, Karim Laribi and Dorottya Nagy