Deliveroo Prepares to Quit Spain After New Law Gives Delivery Riders Rights

If other European capitals follow suit, turning a profit is going to become even harder for food delivery platforms.

The UK-based, Amazon-backed food delivery services platform Deliveroo will shut down its operations in Spain on November 29, six months after the Spanish government announced changes to the legal status of food delivery riders. The company first announced its intention to leave Spain in the summer, shortly before the so-called “Riders’ Law” came into force. The law requires platforms such as Deliveroo to hire full-time delivery workers instead of using self-employed workers.

Riding to the Rescue

In Spain, as in most countries, platform companies have tended to offer their couriers zero contract hours, no sick pay or paid holidays. Since the lockdowns of last year those same workers have become an even more essential cog in the fast-evolving digital economy. With zero rights or benefits and having to pay their own social security, they make it possible for food delivery companies to operate at the tightest of margins. For those companies the lockdowns were manna from heaven, though many of them, including Deliveroo, still managed to report operating losses in 2020.

In recent years, more and more delivery riders have demanded recognition as salaried staff as well as the corresponding rights, such as paid vacation time and sick leave. As Open Democracy reported in a February 2020 article cross-posted by NC, the gathering pressure prompted some of the biggest platforms, including Uber and Deliveroo, to launch a “Charter of Good Work”. As  Yves wrote in her preamble to the piece, the initiative amounted to little more than “an empty charter to pretend to deal with the job conditions of gig workers.”

Almost two years later, Spain’s centre-left government has taken action into its own hands, which could prompt other European countries to follow suit. Its Riders’ Law establishes that food delivery riders are employees rather than self-employed workers. It forms part of the government’s ongoing campaign against so-called “false self-employment”. Here’s Wikipedia’s definition of the term:

“False self-employment is a situation in which somebody registered as self-employed, a freelancer, or a temp is de facto an employee carrying out a professional activity under the authority and subordination of another company… [It is] often a way to circumvent social welfare and employment legislation, for example by avoiding employer’s social security and income tax contributions. While a modern ‘gig economy’ encourages more casual employment practices in the interests of labour flexibility, the extent to which this disguises precarious employment and denial of rights is of growing concern to authorities.”

In Spain, it was the Supreme Court that was first to act against abuses in the gig economy, ruling in September last year in favour of a former worker for Spain’s largest food delivery company, Glovo. The court argued that “the relationship between a rider and the Glovo business is of a professional nature.” As El País notes, “it was the first time that Spain’s top court had recognised food-delivery workers as employees, rather than being self-employed.”

Bypassing the Law

When the government followed suit by passing the Riders’ Law after six months of consultation with unions, industry groups and deliver rider associations, companies in the sector were given three months to formalise their delivery riders’ employment status. But many have refused to play along.

Deliveroo, which listed in London earlier this year, said it was pulling out of the market due to the high levels of investment needed and uncertainty over future returns. In the process the company has left 100 full-time employees and around 3,700 self-employed delivery workers in the lurch. Reports suggest the workers will receive 45 days of salary per year worked and a minimum compensation of €1,000.

For Glovo, Spain is its domestic and most important market. As such, it is not going anywhere.  Instead, the company has simply chosen to ignore the law whenever it suits it. The Barcelona-based company, whose largest shareholder is German food-delivery giant Delivery Hero, has hired 2,000 new workers for its own online supermarkets or business customers with which it has struck deals. But its other food couriers, who number between 8,000 and 10,000, still remain self-employed, six months after the law was passed. The company, which raised €450 million of fresh capital in April, has also expanded to smaller towns in Spain’s rural provinces and is now operating in 400 municipalities, according to El Confidencial.

But it still won’t abide by the Riders’ Law. And the government is making it pay. Last week, the Labour and Social Security Inspectorate fined the company €8.5 million for nor regularising the contracts of its delivery riders in the city of Seville.

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