Glovo Riders in Spain Set for Employee Status Change

Background

In a significant move, the German owners of app-based food delivery firm Glovo have announced that their freelance riders in Spain will be hired as employees. This decision comes after pressure from the government to provide labor contracts to its workers.

Key Points

• The change in operation model is limited to Glovo’s activities in Spain and will result in a 100 million euros dent on Delivery Hero’s 2025 core profit.

• Shares in Delivery Hero fell 11.51 percent to 34.28 euros in early afternoon trade in Frankfurt following the announcement.

• Glovo employs nearly 15,000 people in Spain, with the majority being freelancers.

• The company will continue to focus on Spain, its home country and main market.

Context

Spain became the first European Union nation to give food delivery riders labor rights in 2021. This requires app-based food delivery firms like Glovo to pay their riders employee contributions for benefits such as sick leave and protections against dismissal.

Previous Fines and Investigations

Glovo has faced fines totalling 205 million euros ($215 million) from Spain’s labor ministry for violating the law. The European Commission is also investigating Glovo for labor law violations.

Reaction from Labor Minister

Labor Minister Yolanda Diaz stated, “No matter how big it is, no matter how much power it has, no big technology can impose itself on democracy. Today democracy has won in our country,” adding “the principle of legality has been imposed.”

Conclusion

The decision by Glovo to hire its freelance riders as employees marks a significant shift in the company’s operation model. This move is likely to have far-reaching implications for the food delivery industry and labor laws in Spain.

Sources:

• 1

Glovo is a food delivery app that operates in various countries across Europe. In Spain, where the company was founded, Glovo employs nearly 15,000 people, with the majority working as freelancers.

Regulatory Developments

• Following the introduction of this law, Just Eat began employing its riders after the law came into effect and filed a lawsuit against Glovo on Friday, accusing it of “unfair competition” and demanding 295 million euros in damages.

• The European Union adopted a directive requiring member states to classify people who work for online platforms as employees under certain conditions. However, the bloc left it up to each member state to decide what criteria must be met.

Glovo’s Response

Market Impact

Industry Trends and Scrutiny

Gig work, which became mainstream thanks to ride-hailing and food-delivery platforms such as Uber and Deliveroo, has come under greater scrutiny in recent years, with several countries taking steps to protect workers in the sector.