How The EU Platform Work Directive Affects All Contractor Relationships In 2025

Spain's €79 million fine against Glovo in early 2025 wasn't just about gig workers. It signalled a fundamental shift in how EU regulators view all contractor relationships—and mid-market companies using project managers, compliance consultants, or clinical trial specialists are next in line for scrutiny.

The Platform Work Directive, which came into force on 1 December 2024, creates a rebuttable employment presumption that member states are now applying universally, far beyond food delivery platforms. In this article, we break down how the five control tests define employment status, why so many traditional businesses are getting caught out, and what your finance, HR, and legal teams can do to avoid reclassification risk before the 2026 deadline.

Key Takeaways

• The Platform Work Directive creates a rebuttable employment presumption that now applies to all contractor relationships across the EU, not just gig platforms
• Five control tests determine employment status—work organisation, pay structure, performance monitoring, subcontracting limits, and exclusivity clauses
• Spain's €79 million fine against Glovo signals aggressive enforcement, with member states applying these principles before the December 2026 deadline
• Mid-market companies in defence, pharma, and financial services face heightened scrutiny because existing regulatory frameworks amplify contractor classification risks

The ripple effect: how platform rules became universal employment standards

The Platform Work Directive came into force on 1 December 2024. Its impact extends far beyond Uber drivers and Deliveroo couriers.

Member states are applying its core principle—a rebuttable employment presumption—to all contractor relationships. This sets a new compliance baseline for all 27 EU countries. Regulators now presume a worker is an employee if a company appears to control their work, placing the burden of proof on businesses to demonstrate genuine independence.

This shift affects any organisation using contractors. Pharmaceutical companies hiring clinical trial specialists face the same scrutiny as financial services firms engaging compliance consultants.

Early enforcement patterns:

• Slovakia and the Netherlands are implementing reforms before the 2026 deadline, applying Platform Work Directive principles to existing contractor audits
• UK companies hiring EU contractors face Platform Work Directive compliance in those jurisdictions, whilst EU companies hiring UK contractors follow IR35—creating dual obligations
• Defence and pharma companies already under regulatory scrutiny face compounded risk when contractor relationships fail the new tests

Spain's €79 million fine against Glovo in early 2025 shows just how serious enforcement has become. The bigger risk is that tax authorities and labour inspectors are already re-examining contractor arrangements under the Platform Work Directive, even in countries that haven't fully implemented it yet.

Who falls under the new employment presumption?

The employment presumption applies when a digital platform—or any business using automated systems—appears to control and direct work, with mandatory human oversight over automated decisions. Member states are extending this logic to traditional contractor relationships, particularly where companies use software to assign tasks, monitor performance, or manage schedules.

Slovakia, where 30% of self-employed workers are suspected of misclassification, is conducting aggressive audits. Financial services firms hiring interim risk officers, defence contractors engaging cybersecurity specialists, and pharmaceutical companies using clinical research associates all face scrutiny.

Contractor categories at highest risk:

• Technical specialists: software developers, data scientists, cybersecurity consultants
• Professional services: legal advisors, compliance officers, financial analysts
• Project-based roles: implementation managers, interim executives, clinical trial coordinators

Even standard project management practices—weekly check-ins, shared task boards, performance dashboards—can trigger the employment presumption if they suggest direction and control rather than a commercial partnership.

Control indicators that trigger regulatory scrutiny include setting specific hours, requiring availability during core business times, supplying laptops or software licences, using HR software to track deliverables, limiting contractors from serving other clients, and dictating how tasks get completed rather than focusing solely on outcomes.

[IMAGE PLACEHOLDER: Infographic showing control indicators across financial services, defence, and pharma, with visual examples of what triggers employment presumption]

The five control tests HR teams face

The Directive establishes five legal tests that create an employment presumption. Member states are now using these tests across the board, making them the go-to standard for judging any contractor relationship.

1. Organisation of work

This test examines who controls work scheduling and task assignment. If your company sets deadlines, determines project priorities, or requires contractors to attend regular meetings, you're demonstrating employer-like control. Regulators look for fixed working hours, mandatory attendance requirements, or restrictions on when and where work can be completed.

2. Remuneration control

The test focuses on payment structure and determination. Hourly or daily rates that mirror employee salaries, rather than project-based fees or deliverable-linked payments, suggest employment. Regulators look for payment terms that resemble wages, including regular intervals (weekly or monthly), standardised rates across similar roles, or lack of negotiation over fees.

3. Performance monitoring

This evaluates supervision intensity. Using HR systems to track contractor activity, conducting formal performance reviews, or implementing productivity monitoring crosses into employment territory. Regulators look for management oversight that extends beyond output quality to include work methods, time tracking, or behavioural expectations.

4. Restriction on subcontracting

The test examines whether contractors can delegate work or grow their own business. Prohibiting subcontracting or requiring personal service indicates employment dependency. Regulators look for contractual clauses preventing delegation, requirements for personal performance, or restrictions on building a contractor's own client base.

5. Exclusivity or non-compete

This assesses business autonomy. Preventing contractors from serving other clients or including non-compete clauses demonstrates employment-like dependency. Regulators look for exclusivity requirements, non-compete terms, or practical barriers to maintaining multiple client relationships (such as full-time hour expectations).

TestContractor indicatorEmployee indicatorWork organisationContractor sets schedule and methodsCompany dictates hours and approachRemunerationProject fees, negotiated ratesHourly or monthly wages, standardised payPerformance monitoringOutput-focused quality checksOngoing supervision and activity trackingSubcontractingFree to delegate or build businessPersonal service requiredExclusivityMultiple clients permittedRestricted from other work

Financial services firms face particular risk here. Regulatory requirements often necessitate oversight that can inadvertently trigger multiple control tests—security protocols requiring on-site work, compliance monitoring that resembles performance management, and exclusivity driven by confidentiality concerns.

Implementation timeline and enforcement intensity

The official transposition deadline is 2 December 2026, giving member states two years to implement the Directive into national law. Enforcement is ramping up, with countries already using Platform Work Directive principles in contractor audits and labour inspections.

Spain, France, and Italy are leading enforcement. Slovakia's labour inspectorate is conducting over 2,000 annual inspections, targeting suspected misclassification across all sectors. The Netherlands is preemptively reforming self-employment rules to align with Platform Work Directive standards.

This creates immediate compliance pressure for tax authorities and labour inspectors are reinterpreting existing contractor relationships through the Platform Work Directive lens, even before formal implementation. A manufacturing firm in Central Europe faced €1.2 million in back taxes after authorities reclassified 300 contractors using the five control tests.

Member state variations:

• Early movers: Spain, France, Italy implementing ahead of schedule
• Gold-plating risks: Germany and the Netherlands adding requirements beyond minimum Platform Work Directive standards
• Enforcement leaders: Slovakia's 30% suspected misclassification rate driving proactive audits across all industries

UK companies hiring EU contractors face Platform Work Directive compliance in those jurisdictions. EU companies hiring UK contractors follow IR35. Having to comply with both sets of rules increases risk, especially for financial services and defence companies working internationally.

"We're seeing companies caught between UK and EU rules, neither of which they fully understand. The cost of getting it wrong in both jurisdictions simultaneously can be existential for mid-market businesses." — Employment law partner, international law firm

Financial exposure from the new standard

The financial risk goes way beyond just the headline fines. Reclassification triggers retroactive employment rights, including back-pay for wages, holiday entitlements, and social security contributions—often stretching back six years.

Spain's Glovo fine totalled €79 million for misclassifying 10,600 workers, plus €16 million in social security arrears. A manufacturing firm paid €1.2 million in back taxes for reclassifying 300 contractor relationships after audit. A pharmaceutical company settled for €850,000 after misclassifying clinical trial coordinators across three countries.

Individual penalties can reach €200,000 per violation in some jurisdictions. For a mid-market company with 50 misclassified contractors, total exposure can easily exceed €3 million when combining fines, back-pay, and social security arrears.

Cost categories:

• Back-pay wages and holiday: Retroactive employment rights including minimum wage top-ups, overtime, and accumulated annual leave
• Payroll tax and social security arrears: Employer contributions dating back six years, plus penalties and interest
• Operational disruption: Public violation registries blocking government contracts for five years—particularly damaging for defence contractors

Financial services firms face compounded risk. Regulatory frameworks like MiFID II and GDPR create additional liability when misclassified contractors handle sensitive data or perform regulated activities without proper employment status.

[IMAGE PLACEHOLDER: Cost breakdown chart showing real penalty examples for 50 misclassified contractors over three years, including back-pay, social security, penalties, and total exposure by jurisdiction]

Why traditional businesses are getting caught

The Directive's scope extends beyond digital platforms to any business using automated systems in employment relationships. Standard HR software, project management tools, and performance dashboards can all trigger the employment presumption if they demonstrate control and direction.

Authorities now presume employment if workers lack autonomy over schedules, tools, or client selection—regardless of whether a "platform" is involved. A pharmaceutical company using project management software to assign clinical trial tasks faces the same scrutiny as a food delivery platform.

This often takes mid-market companies by surprise. Many believe the Directive only affects gig economy platforms, not traditional B2B contractor relationships. Regulators are applying Platform Work Directive principles universally, focusing on control indicators rather than business models.

Sector-specific risk factors:

• IT and healthcare: Intensive project management and quality oversight trigger multiple control tests
• Financial services: Regulatory requirements necessitate supervision that resembles employment relationships
• Defence: Security protocols requiring on-site work and restricted client relationships suggest employment

Companies using third-party contractors through staffing agencies or consultancies aren't insulated from risk. Joint liability provisions in some member states extend responsibility to end clients, particularly when they exercise day-to-day control over contractors' work.

"We've had clients who thought using a consultancy protected them from employment risk. When the tax authority reclassified the contractors, both the consultancy and the client were jointly liable for back-pay and penalties." — HR director, defence contractor

Action plan to stay compliant

If you wait until 2026, it's already too late. Early enforcement means companies face immediate risk from existing contractor relationships being reinterpreted through Platform Work Directive principles.

1. Regulatory risk assessment

Start by reviewing contractor relationships against Platform Work Directive principles, not just platform work. Quantify exposure by identifying arrangements that trigger multiple control tests.

Audit current contractor agreements for control indicators. Map contractors against the five legal tests. Calculate potential back-pay exposure assuming 30% reclassification (Slovakia's benchmark). Assess cross-border compliance obligations for contractors in multiple jurisdictions.

2. Update engagement strategy

Strengthen commercial terms demonstrating genuine independence. This means moving beyond boilerplate "independent contractor" clauses to evidencing autonomy in practice.

Shift to project-based deliverables rather than time-based payments. Remove exclusivity clauses and non-compete terms. Document contractors' business autonomy (multiple clients, own equipment, commercial risk). Eliminate performance monitoring that extends beyond output quality.

3. Strengthen compliance infrastructure

Make sure you have evidence for every contractor relationship that clearly shows it's a real commercial partnership, not hidden employment.

Maintain documentation of contractor business registration, insurance, and other clients. Record fee negotiations and commercial terms. Document autonomy over work methods and scheduling. Monitor evolving enforcement patterns across member states where you operate.

4. Engage a regulatory risk partner

With complex rules across different countries and changing interpretations of the Platform Work Directive, expert advice is more valuable than ever, especially for businesses working internationally.

Look for experience navigating dual compliance obligations (EU Platform Work Directive plus UK IR35). Having local expertise that keeps track of how each member state is implementing the rules really matters. Keeping a close eye on enforcement trends and audit triggers helps you avoid nasty surprises.

Talk to Teamed's compliance experts about assessing your contractor risk and building compliant engagement models.

EOR vs contractor vs entity: choosing the compliant model

The Platform Work Directive ripple effect changes the risk calculation for different employment models. Contractor relationships now carry significantly higher compliance risk, making EOR and entity options more attractive for certain roles.

Risk mitigation through clear employment status:

• EOR benefits: Complete compliance certainty, zero classification risk, full employment protection without entity setup
• Entity management: Proper subsidiary setup eliminates control indicators by creating genuine employer-employee relationships
• Strategic contractor use: Higher evidence bar for genuine commercial relationships, suitable only for truly independent businesses

Speed to hire varies significantly. EOR enables 24-hour onboarding. Entity setup takes three to six months. Contractor engagement is immediate but high-risk.

Compliance certainty differs across models. EOR provides full protection. Entities require ongoing management. Contractors carry reclassification risk that can cost €200,000 per person in penalties.

Financial services and defence companies increasingly favour EOR for roles requiring oversight, security protocols, or regulatory compliance—situations where demonstrating contractor independence is nearly impossible under the new standards.

How Teamed removes ripple effect risk

Teamed's compliance-first approach tackles the ripple effects of the Platform Work Directive across all 27 EU countries, protecting mid-market companies from reclassification risk and supporting fast international growth.

Our platform combines built-in AI Agents that automate 70% of compliance monitoring with in-country experts who track evolving Platform Work Directive implementations and enforcement patterns. This ensures you're covered as member states roll out the Directive and apply it to contractor relationships.

What this means for your business:

• Zero reclassification risk: EOR services provide genuine employment status, eliminating exposure to Platform Work Directive control tests
• Seamless graduation: Move contractors to EOR status without re-onboarding when risk assessment indicates employment relationship
• Cross-border expertise: Navigate dual compliance obligations (EU Platform Work Directive plus UK IR35) with specialists in 180 countries
• 24-hour onboarding: Get new team members compliant and working in less than a day, even in highly regulated sectors

We've helped defence contractors navigate security clearance requirements whilst maintaining compliant employment status. We've supported pharmaceutical companies through clinical trial staffing complexities. We've guided financial services firms through MiFID II compliance for trading floor roles.

Our approach works because we have years of global employment experience, so we know the compliance pitfalls. At the same time, we're agile enough to use AI where it really counts, like automating payroll, HR, and compliance monitoring, while our experts handle the tough cases that software can't solve on its own.

Talk to our team about assessing your contractor relationships and building a compliant international employment strategy.

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FAQs about the EU Platform Work Directive ripple effects

Can the employment presumption apply retroactively to non-platform contractor relationships?

Member states are applying similar principles to all contractor relationships during audits. This could mean back-pay liability for existing setups, especially if your software systems show signs of control. Slovakia's labour inspectorate is already reclassifying traditional contractor relationships using Platform Work Directive tests, with back-pay stretching six years.

How do the ripple effects impact companies that don't use digital platforms?

Countries are applying Platform Work Directive principles to traditional contractor relationships, focusing on control indicators rather than platform involvement. Standard project management software, HR systems, and performance monitoring can trigger the employment presumption. Slovakia's 30% suspected misclassification rate includes traditional B2B contractor arrangements across all sectors.

What happens when cross-border compliance obligations conflict?

UK companies hiring EU contractors face Platform Work Directive compliance in those jurisdictions, whilst EU companies hiring UK contractors follow IR35. This leads to complicated dual obligations, with different tests and thresholds to manage. Companies working across borders face extra layers of risk and usually need expert advice to deal with conflicting requirements.

Will traditional performance management systems now trigger employment presumption?

Standard HR software and performance monitoring may trigger scrutiny under the new control and direction focus. The key distinction is whether monitoring focuses solely on output quality (contractor-appropriate) or extends to work methods, time tracking, and behavioural expectations (suggesting employment). Financial services firms face particular challenges here due to regulatory oversight requirements.

How can companies prove genuine commercial relationships under the new standards?

The standard of evidence you need is much higher now. Companies document multiple clients, financial risk assumption, business autonomy, and clear commercial terms—all evidenced through contractor business registration, insurance, fee negotiations, and operational independence. Boilerplate contract clauses stating "independent contractor" status are insufficient without supporting evidence of genuine autonomy in practice.

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