ILO Experts Clarify the Classification of the Self-Employed and the Term “Dependent Contractors”
“Dependent contractors are workers who maintain contractual relationships of a commercial nature (but not an employment contract) to provide goods or services to another economic unit, or through it. They are not employees of that economic unit, but they depend on it for the organization and performance of their work, for their income, or for access to the market. These are workers engaged with the aim of generating profit, but who rely on another organization that controls their productive activities and directly benefits from the work they perform,” the ILO experts explained.
Examples include hairdressers renting a chair in a salon, who depend on the salon owner for access to clients. Another example is a driver taking ride orders via a digital platform while using their own car.
This category was first defined in the International Classification of Status in Employment (ICSE-18). According to the ILO, dependent contractors are now having a growing impact on the economy and the labour market. Data collected from 16 countries demonstrate that their share in total employment varies significantly by region and level of economic development—from fractions of a percent (0.3% in Russia) to nearly one-fifth of all workers (18.9% in Tanzania). The weighted average stands at 6.5% of the employed.
“Dependent contractors represent a distinct group of workers at the boundary between paid employment and self-employment. Their characteristics—including their potential for job creation and their high level of dynamism—make them key actors in labour markets worldwide,” the ILO specialists concluded.
At the same time, the ILO highlights that questions continue to arise regarding whether labour rights and protections apply to dependent contractors, and whether some of them should be legally recognized as employees.
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