The gig economy market size was US$556.7 billion in 2024 and is expected to more than triple to US$1,847 billion by 2032.[1] The model relies on digital platforms that connect gig workers with buyers seeking goods or services, from ride hailing and food delivery to short-term property rental. It offers flexible work but can have downsides: lack of job security and employee benefits, as well as few employment rights, such as the minimum wage. The gig economy presents difficulties for labor market policies designed for traditional employment models, and the market isn’t free of legal risks for employers either. More generally, many governments are giving additional protection to low-paid or vulnerable workers to enhance their rights and minimize the risk of exploitation.
The EU Platform Work Directive came into force on 1 December 2024. It has broad scope to cover various platform work business models, particularly those that advertise services and control and direct how the work is performed. It introduces a rebuttable presumption that platform workers are employees if a digital labor platform directs and controls their work. The Directive also regulates the working arrangements of gig workers – whether employees or freelancers/self-employed – through data protection measures beyond those of the GDPR.
Notably, the Directive has strict transparency rules for companies that use high-risk AI systems. And it bans outright the use of automated monitoring or decision-making systems to process certain sensitive personal data. EU member states have until 2 December 2026 to transpose the Directive into their national laws.
Crackdown on misclassification
Germany, which has yet to implement the Directive, makes a strict distinction between employment and self-employment, and there are risks to getting this wrong. Gig workers can claim they are employees through the labor courts, but regulatory authorities can also intervene if misclassification means platforms aren’t complying with tax and labor laws. Consequences include charges of tax evasion and social security fraud, along with criminal and administrative penalties. During 2024, investigations and raids related to disguised self-employment looked at contracts and working relationships in various industries. The scale of the issue is apparent from the statistics. The Financial Control for Undeclared Work, part of the Federal Ministry of Finance, audited 42,631 employers, resulting in 101,423 criminal and 48,812 administrative proceedings.
Misclassification of employees is also a priority in the Netherlands. After an eight-year moratorium on enforcement, on 1 January 2025, the Dutch tax authority resumed investigations into whether people classified as self-employed are really employees. If they’ve been misclassified, there’s the prospect of back taxes, social insurance contributions, and fines. Normally the look-back period for additional taxes and social insurance contributions is five years, though the tax authority cannot make corrections to periods before 1 January 2025. Factors indicating employee status are largely aligned between tax and employment law, so a finding that someone is an employee for tax purposes will be significant from an employment perspective, too.
Alongside the tax focus, the Dutch VBAR Bill is a proposal that would clarify the statutory criteria used to decide whether an employment relationship exists. It would also tackle disguised self-employment by introducing a presumption of employment for workers earning less than €33 an hour for the purposes of civil employment law rights. By clarifying the distinction between employees and the self-employed, the draft Bill seeks to reduce bogus self-employment. It hasn’t yet been passed and will probably change because of the Directive. The government is also considering a ban on zero-hours contracts similar to the reform under way in the United Kingdom, introducing a draft bill on more security for flexible workers.
Extending employee rights to gig workers
The framework governing platform workers in Italy continues to evolve. In 2019, the Italian legislator adopted regulations to protect self-employed couriers and delivery riders working through digital platforms. These gave riders social security protection, compulsory insurance against accidents at work and occupational diseases, minimum hourly compensation that can’t be based on the number of deliveries, data protection and non-discrimination rights, and health and safety protection. Despite the new law, Italian case law tends to reclassify gig workers and grant them the same protection set out for subordinate employees in Italy. In this context, the Directive should have a significant effect in Italy, but there are no proposals to implement it as yet.
The UK Employment Rights Bill also extends protections for vulnerable workers. It’s expected to pass into law in summer 2025, though it’s unlikely to take effect until 2026. Designed to clamp down on the one-sided flexibility of zero-hours contracts, common in the gig economy, under the proposals employers will need to offer some workers guaranteed minimum hours. The government has also committed to review the distinction between employees, workers, and the self-employed to create a dual status of worker/self-employed. This would extend existing employment protections to workers, who currently receive paid holiday, the minimum wage, and working time entitlements, but not unfair dismissal protection, redundancy pay, family-related leave, and so on.
Mexico is another country extending rights through legislation. It has amended its Federal Labor Law; the amendments take effect in June 2025 and include a new chapter on digital platform work. Non-compliance could trigger fines of up to $2.7 million MXN (US$134,000) after an inspection. The reform grants employment rights to gig workers and recognizes gig economy workers as employees entitled to various benefits and protections under Mexican law. Benefits include breaks, sick leave, health care, paid maternity leave, a Christmas bonus, insurance against job risks, social security, and profit sharing. Going forward, the gig economy sector will need to consider labor and social security costs in their operations.
As with transparency laws in the EU, the Mexican Federal Labor Law requires platform companies to explain how their task-assigning algorithms work. If there’s a risk that this will reveal trade secrets, employers should make sure they have suitable confidentiality agreements in place. The amendment is a significant shift and could potentially influence similar reforms in other Latin American countries.
Singapore is also addressing vulnerability through direct statutory protection and the social security system, not as a matter of employment status. The country’s Platform Workers Act came into effect on 1 January 2025. It grants gig workers certain benefits, such as the right to collective bargaining, work injury compensation, and, for gig workers who are Singapore citizens or permanent residents, Central Provident Fund (CPF, a social security savings scheme) contributions designed to pay for retirement, health care, and housing. The Act requires platform companies to deduct a portion of its gig workers’ earnings and contribute it, with its own contribution, to the workers’ CPF accounts and to insure workers in case of incapacity from a work injury.
In addition to the extra costs, companies face an increased record-keeping burden. Hong Kong may take similar action. In February 2024, the Labor Advisory Board agreed to relax the rules about what counts as a continuous contract, making a wider group of employees eligible for benefits including holiday pay, paid sick leave, and family leave. Detailed rules are expected in early 2025. Casual and part-time workers who work more than 68 hours over a four-week reference period are likely to be the main beneficiaries.
China also introduced three guidelines, below, in 2023. These aim to help platform companies standardize employment practices and to protect the rights of platform employees. Among other measures in the Guidelines for the Protection of Rest and Remuneration Rights of Workers in New Forms of Employment, Guidelines for the Public Disclosure of Labor Rules for Workers in New Forms of Employment, and Service Guidelines for the Protection of Rights of Workers in New Forms of Employment, the authorities encourage platform workers to form trade unions to negotiate with platform companies.
To give a regional contrast, Indonesia’s legal framework mainly recognizes formal employment, which leaves other workers with few legal rights and benefits. Around 70 million people work in informal jobs, such as street vendors and platform-based motorcycle taxi drivers. Platform companies classify them as independent contractors, and the relationship between workers and platforms isn’t regulated. The Ministry of Manpower, which oversees labor laws, is in ongoing discussions about informal workers’ rights. But it’s unclear whether this is still a political priority.
In the Middle East, while governments haven’t legislated specifically for gig economy or vulnerable workers, governments are moving to a more employee-friendly regulatory environment. The UAE has streamlined dispute resolution processes for smaller employment disputes, extended time limits for employees to file labor claims, and significantly increased fines for labor market violations. This aims to deter non-compliance and encourage employers to adhere strictly to labor protections and will have lasting effects on the workplace culture and business operations in the UAE.
Overtime rule and legal rights on hold
The United States is one jurisdiction where there’s less momentum for the expansion of workers’ rights. Although there’s often a concern that low-paid workers are vulnerable to exploitation, in November 2024, a U.S. federal court blocked a nationwide rule promulgated by the Department of Labor, which would have raised the minimum salary threshold for employees exempt from overtime pay under the Fair Labor Standars Act (FLSA). In effect, the rule would have given more employees working over 40 hours a week eligibility for overtime. As a result of the court’s ruling, the salary threshold increases will not take effect and the threshold will revert to US$35,568. Employers still need to comply with state-level FLSA rules, which may set higher thresholds.
[1] Business Research Insights.