By Foo Yun Chee

BRUSSELS, (Reuters) – Uber (NYSE:), Deliveroo (and other platforms companies that use the internet to connect with customers) may be required to reclassify their employees as workers under new EU rules. These EU rules are meant to increase their rights and social security. According to Reuters, a document from EU was seen.

As countries around Europe attempt to tackle the problems of the gig economy, this proposal by the European Commission is the first. Judges in many cases support the right to workers to the same rights as those who work in brick and mortar shops.

This document estimated that 15 companies, with between 1.7million and 4.1million workers from 28 million people could be affected. The rules set five criteria to determine who is an employee.

Workers in gig economies could be considered employees when online platforms set pay and conduct standards for them, monitor their performance, control their tasks through electronic means and restrict their freedom to work from third parties.

The paper stated that a platform company can be considered an employer when it fulfills two criteria.

These rules also mandate ride-hailing companies, food delivery services and other businesses to disclose to their employees how they use algorithms to evaluate and monitor them. They will also need to allocate tasks and set fees. For breaches, employees can seek compensation.

These rules require online platforms to prove that they do not cover them. You can challenge your reclassification via administrative or court processes.

According to the paper, EU countries can expect an annual increase of between 1.6 and 4 Billion Euros in tax contributions due to reclassified employees.

These draft rules must be reviewed with EU lawmakers and member states before being adopted.

EU countries can impose sanctions, including fines and penalties, on non-compliance. However, national authorities who fail to take the appropriate measures may face legal action by Commission.

After a string of failures, the Supreme Court in Britain ruled that Uber drivers have workers’ rights. A Spanish court ruled last year that Glovo, a food delivery service based in Barcelona, was an employee and not a freelancer.

Trade unions claim the gig economy exploits workers, while businesses say it gives them flexibility.

Bolt, an Estonian startup that offers ride-sharing services and food delivery services, said draft regulations could lead to job loss. “This will lead to one out of two drivers losing their job, which is close to at least 140,000 people across the EU,” said Aurelien Pozzana, head of Public Policy Western Europe at Bolt.

Deliveroo also expressed the same concern. A spokesperson stated that these proposals would increase uncertainty, and be more beneficial for lawyers than platform workers who are self-employed.