Platform Employment: 5 Key Aspects of Regulation

Contents:

• What is platform employment?
• The difference between platform employment and self-employment: key aspects
• Advantages and disadvantages of working on online platforms
• Why businesses choose online recruitment platforms
• Regulation of platform employment: what you need to know
• Platform employment: key aspects in three points

What is Platform Employment?

Platform employment is a relevant and flexible work model in which professionals use digital platforms to find clients, collaborate and complete tasks, and trade goods and services. This industry employs specialists in various professions, such as taxi drivers, couriers, psychologists, tutors, copywriters, and designers. This model of work allows for easy job searches and flexible terms of cooperation, making it attractive to many. Platform employment facilitates the development of new forms of labor relations and adaptation to rapidly changing market conditions, providing the opportunity to earn money anytime and anywhere. Online platforms serve as an important link between supply and demand in the labor market. These resources simplify the job search process for specialists and allow clients to quickly find suitable workers. Platforms offer a wide range of tools, including job search systems, secure payment mechanisms, and feedback functions. Typically, these services charge a commission on each successful transaction, making them a win-win solution for both parties.

YouDo is one of the leading platforms for finding and hiring specialists, with over 3.5 million registered professionals. According to Skillbox Media, the most popular professions in 2023 were construction, couriers, and virtual assistants. The platform allows users to quickly find qualified specialists for a variety of tasks, making it popular among both employers and freelancers.

The process of hiring freelancers through the YouDo platform is as follows: the client reviews the freelancer profiles, selects the most suitable candidate, discusses the terms and cost of services, and then transfers funds to the platform. The client also has the opportunity to post a task for freelancers to respond to. It is important to emphasize that funds are first received on the platform, and payment to the freelancer occurs only after the service is completed and confirmation from the client is received. This mechanism ensures the safety of both parties and guarantees the high quality of services provided.

Online platforms offering a wide range of services are rapidly developing in Russia. Among the highly specialized solutions, the Yasno psychotherapy service stands out, providing access to professional psychologists. Meanwhile, multifunctional platforms such as Profi.ru offer the opportunity to find specialists in various fields, including repairs, beauty services, and training. Leading players in the platform economy in Russia include companies such as Yandex, Avito, Ozon, and Wildberries, which offer a variety of goods and services that meet the needs of modern users. These platforms play a key role in transforming the market and shaping new consumer habits.

Over the past ten years, there has been a significant increase in the popularity of platform employment. According to the International Labor Organization, more than 611 digital platforms were registered in G20 countries in 2020, five times the number of such platforms in 2010. This trend reflects a transformation of the labor market and an increase in the number of people working freelance or through digital platforms. Platform employment offers flexibility and access to a variety of opportunities, making it attractive to many workers worldwide.

According to experts from the Center for Interdisciplinary Research of Human Potential at the Higher School of Economics, the number of workers in the Russian platform economy reaches 15.5 million people, which is about 20% of the total working-age population, according to Rosstat. Of this number, only 1.7 million people consider platform employment as their main source of income. The rest use it for temporary work or as a supplementary source of income.

The Difference Between Platform Employment and Self-Employment: Key Aspects

Self-employment is a special tax regime called the professional income tax (PIT). Under this regime, individuals and sole proprietors are required to pay a tax of 4% on income received from individuals and 6% on income from legal entities. Self-employment provides an opportunity to legalize income and optimize tax liabilities, which makes this regime popular among freelancers and self-employed professionals. Using the NPF allows you to avoid complex accounting and reduce the tax burden, making it a profitable choice for many working citizens.

In 2023, according to the Federal Tax Service, the number of registered self-employed individuals in Russia exceeded 4 million. This indicates a significant increase in the popularity of the self-employment tax regime. For more detailed information on the taxation of the self-employed and the specifics of applying this regime, we recommend reading the article on the Skillbox Media website.

Platform employment differs from self-employment in that it involves work through online platforms. The two concepts are related, as many self-employed individuals use platforms as a primary source of orders and job offers. According to a 2022 study by the consulting firm Strategy Partners, over 60% of the self-employed rely on online platforms for income. Thus, platform employment is becoming an important tool for the self-employed, allowing them to find clients and complete projects in a convenient format.

It should be noted that many workers who work on online platforms do not register as self-employed, despite the fact that their income depends largely on work on these resources. At the same time, some self-employed professionals choose not to use online platforms, relying on their client base and traditional methods of attracting clients, such as word of mouth. This highlights the diversity of approaches to work and running a business, as well as the importance of choosing a strategy that suits individual goals and needs.

Advantages and Disadvantages of Working on Online Platforms

Working through online platforms is becoming increasingly popular due to its various advantages. Professionals have the opportunity to independently plan their time, choose the number of orders, and not worry about the risks associated with non-payment by clients. However, along with these advantages, there are also certain disadvantages, including income instability and a lack of social security. It is important to take a closer look at what exactly a remote employment platform offers and how it impacts the professional lives of professionals.

One of the key advantages of working on online platforms is the flexibility of the work schedule. This makes such employment particularly attractive for students, retirees, parents on maternity leave, and people combining multiple sources of income. According to a study by the Higher School of Economics, respondents aged 25 to 34 most often noted that online platforms are their primary source of income, while students use them as a supplementary or temporary source of income. The flexibility of online work allows you to adapt your schedule to your personal needs and maintain a work-life balance, which is especially important in the modern world.

Online platforms provide access to new markets, allowing remote service professionals to work with clients from different cities and countries. This is especially relevant for professionals offering services such as psychological counseling and photo training. Online platforms not only expand their client base but also improve efficiency, making remote services more accessible and in demand globally. Online platforms play a key role in ensuring the security of both clients and providers. They accept payments from clients and hold funds until the provider completes the task. This mechanism significantly reduces the likelihood of fraud and creates an atmosphere of trust. Furthermore, platforms offer dispute resolution services, increasing confidence in the collaboration process and protecting the rights of both parties. Such measures contribute to the development of effective and secure business relationships in the online environment. Working on online platforms, despite its appeal, has a number of disadvantages. One of the main drawbacks is the instability of income, which can fluctuate significantly depending on demand, seasonality, competition, and other factors. Many professionals face difficulty predicting their earnings for the next month. This makes financial planning difficult and creates uncertainty in the lives of freelancers and remote workers.

Work on online platforms is often carried out without employment contracts, which puts workers in a vulnerable position. This leads to a lack of social guarantees stipulated by the Labor Code. As a result, they are deprived of important benefits such as health and pension insurance, as well as the right to paid leave. Without these guarantees, workers face additional risks, highlighting the need to review working conditions in the digital economy.

One of the main drawbacks is the limited ability to influence working conditions. Platforms often dictate their own rules and pricing policies, which can lead to dissatisfaction among workers. For example, in December 2022, more than 600 Yandex Food couriers staged a strike to protest market monopolization and wage cuts following the merger with the Delivery Club delivery service. This event highlights the importance of taking into account the voices of employees and the need for a more flexible approach to shaping working conditions in the delivery sector.

Why businesses choose online recruitment platforms

Every year, the number of employers using online platforms to search for employees increases. This is due to several factors that contribute to a more efficient recruitment process. Online resources allow you to quickly and conveniently find qualified candidates, expanding the geographic search and reducing the time it takes to process resumes. In addition, such platforms offer tools for filtering and assessing applicants' skills, which significantly simplifies decision-making. In the conditions of the modern labor market, the use of online platforms is becoming an integral part of a successful recruitment strategy.

• Wide choice of contractors. On the platform, you can find professionals with any skill level, including highly specialized experts ready to complete one-time tasks.
• Reduced labor costs. Thanks to the diversity of contractors from different regions, companies in large cities have the opportunity to hire highly qualified specialists from less developed regions at lower rates.
• Quickly find the right candidate. Modern online platforms offer tools for quickly selecting contractors, which eliminates the costs of posting vacancies and interacting with applicants.

Most platforms offer filters that help you find specialists with the desired experience and education. Furthermore, many of them use rating systems, in which highly rated contractors have a significant number of successfully completed projects and positive client reviews. This ensures a reliable choice of professionals and increases the chances of successful cooperation.

Many platforms implement user verification processes to verify their identity and confirm the documents provided. This is especially relevant for services such as Avito, YouDo, and Profi.ru, which strive to ensure security and trust between users. Verification helps reduce the risk of fraud and improve service levels by creating a safe environment for transactions and interactions.

Numerous companies use online platforms to search for specialists and form long-term working relationships. This allows them to effectively find qualified personnel and optimize hiring processes.

Evgenia Tudaletskaya, an entrepreneur and expert in online projects, notes that HR managers are increasingly aware of the availability of highly qualified specialists on online platforms. As a result, they are beginning to actively recruit employees for permanent positions, offering them attractive working conditions. This creates a kind of "lake" of talent, from which companies draw personnel to fill vacancies, regardless of the specialists' geographic location.

Regulation of platform employment: what you need to know

The platform economy, as a new direction in the field of labor relations, is beginning to receive a legal basis. An important step in this direction were the changes that came into force in December 2023, within the framework of the Federal Law "On Employment of the Population." Currently, the State Duma is developing a bill that will clarify the rules of platform employment, providing legal protection for both employees and employers. These changes are aimed at developing the platform economy and creating more transparent conditions for all participants in the labor market.

Recent legislative changes introduce the terms "platform employment" and "self-employment" for the first time. These changes aim to align the rights of self-employed workers and employees employed on online platforms with those of permanent employees and those employed under civil contracts. One key aspect of the changes is the granting of unemployment benefits to self-employed citizens, subject to the fulfillment of tax obligations. These measures contribute to improving the social status of the self-employed and provide them with additional guarantees in a volatile labor market.

According to experts, including Oksana Sinyavskaya, Deputy Director of the Institute of Social Policy at the Higher School of Economics, the development of the platform economy and employment poses new challenges that undermine traditional forms of work. This phenomenon illustrates how technological progress outpaces social and legal change. The lack of proper legal regulation can negatively impact platform employment, making legislative changes necessary to ensure its stable growth. Ensuring a legal framework for the platform economy will not only promote worker protection but also foster the development of innovative business models.

The bill "On Platform Employment" is currently being discussed in the State Duma. It aims to define clear rights and responsibilities for both workers and digital platforms. One of the key proposals is the creation of a unified registry of digital platforms, which would be overseen by regulatory authorities, most likely Roskomnadzor. Furthermore, deputies are considering introducing mandatory notification of providers about the availability of voluntary medical and pension insurance. This innovation could significantly improve working conditions in the platform employment sector and enhance the level of social protection for workers.

Oksana Sinyavskaya notes that there is currently a lack of clear demand for social guarantees among platform service workers. This is due to several factors: the low level of social guarantees offered, insufficient public awareness of existing opportunities, and short-term planning prospects. It is important to raise workers' awareness of social guarantees and their importance in ensuring stability and protecting workers' rights in a rapidly changing labor market.

Platform employment is work organized through digital platforms, including freelancing, remote projects, and short-term contracts. It is becoming increasingly popular in the modern world of work, providing flexibility and a variety of opportunities for employees.

The rights of platform workers have been updated in accordance with new legislative initiatives. They are now entitled to unemployment benefits, provided they pay taxes. This change is aimed at protecting the interests of workers in the growing platform economy.

The draft law "On Platform Employment" aims to clearly define the rights and responsibilities of both workers and platforms. It also proposes the creation of a register of digital platforms, which will improve transparency and regulation in this area. Thus, the bill will be an important step towards ensuring fair working conditions for all participants in the platform economy.

Platform Employment: Key Aspects in Three Points

• Platform employment is an innovative and flexible model of work activity, in which professionals use online platforms to find clients, interact and perform various tasks, as well as sell goods.
• The use of online platforms allows specialists to independently regulate their working hours, accumulate a variety of orders and not worry about the risk of not receiving payments from customers. For businesses, these platforms are a convenient tool, as they reduce labor costs and simplify the process of finding suitable performers for specific tasks.
• Today, employment platforms are beginning to receive legal regulation. In December 2023, updates to the Federal Law "On Employment of the Population" came into force, which introduced the concept of "platform employment". In 2024, a bill is expected to be developed that will specify the rights and responsibilities of both specialists and online platforms.