The bill, which was approved by the government late on Thursday but still needs to get the final stamp of approval from parliament, aims to grant thousands of riders working rights as employees and not freelancers.
It is likely to be approved as the Socialist government has the support from other left-wing parties. If given the green light, it will be another win for unions worldwide fighting for better pay and benefits for those employed in the gig economy.
Britain's Supreme Court ruled in February that Uber drivers were entitled to workers' rights and, a few months later, Spain gave food delivery companies three months to employ their couriers as staff.
Portugal's Labour Minister Ana Mendes Godinho said the bill assumes that a worker of the digital platform operator is staff with a formal contract whenever there is evidence of relationships between the platform, the worker who provides the service and the customers.
"Fighting precarious employment is one of our top priorities," Godinho told a news conference.
She said that digital platforms will also have "the obligation to transparently inform the Work Conditions Authority, workers and their representatives, about the criteria of algorithms and artificial intelligence mechanisms used."
Under pressure to come up with an EU-wide solution, the European Commission launched a public consultation earlier this year to determine couriers' legal employment status and how to improve their working conditions.
The gig economy grew during the COVID-19 pandemic as people around the world needed goods and food delivered to their homes and millions of newly unemployed were eager to work.
But many digital platform workers say they are being exploited by companies that pay low wages, encourage long working hours, while providing little social and health protection.
(Reporting by Sergio Goncalves and Catarina Demony; Editing by David Evans)
By Sergio Goncalves and Catarina Demony