The Spanish on-demand delivery app Glovo, which has since end of last year Germany’s Delivery Hero is majority-owned and fined 79 million euros (~$79 million) for labor law violations related to the classification of couriers, the local press reported yesterday.
El Pais reported that a record sanction was issued for a company for finding that a startup had 10,614 workers falsely classified as “autonomous” (also known as self-employed) in Barcelona and Valencia after the Ministry of Labor discovered that the couriers were in an employment relationship with the company.
Labor Minister Yolanda Diaz accused Glovo of violating workers’ rights and obstructing the Department’s inspection. El Pais reported. A minor part of the fine was issued for this obstruction – most (63.2 million euros) related to misclassified couriers working in Barcelona (where more than 8,300 drivers were found to be falsely classified as self-employed), and a smaller part ( 15.7 million euros) issued by about 2,300 misclassified riders in Valencia.
The total fine was equivalent to more than 13% of Glovo’s 2021 revenue, according to the newspaper.
Glovo has previously been subject to lesser sanctions for similar violations of labor laws, following inspections in other regions of Spain, including Tarragona, Girona, Lleida and Seville.
The self-employment classification means riders will not receive the full benefits provided to employees. Avtonomos also typically have to make payments to the government for social security—payments Glovo would otherwise have to make if those tens of thousands of passengers were classified as employees.
There have been regular protests in Spain against “unreliable” work on platforms like Glovo since they started operating in the country. As well as last yearThe government has implemented a labor law reform that applies specifically to platform couriers, also known as the Passenger Law, which recognizes couriers as employees in an attempt to combat the fictitious classification of self-employment.
However, according to Glovo, the violations for which Glovo was punished were before the law came into force.
The representative of the company sent the following statement, in which he confirmed that he intends to challenge the fine:
Glovo was notified of proposals by the Spanish Labor Inspectorate for retrospective social security payments and a fine of up to 79 million euros for the period 2018 to 2021 on the grounds that GlovoThe model for hiring riders during this period did not comply with the law.
These checks were carried out before the implementation of the Equestrian Law in Spain, so Glovo intends to challenge this proposal and expects a court decision only in the coming years. Glovo remains fully committed to complying with Spanish labor law and the new Riders Law.
Glovo’s spokeswoman also clarified that the punishment is related to checks carried out between May 2018 and August 11, 2021 (while the Spanish equestrian law came into force on August 12, 2021).
He also stated that the amount of the fine was not final, stating that it took into account “potential social security contributions” as well as fines – implying that if he could successfully challenge the Department’s assessment by convincing the court that all (or some ) of these riders were not misclassified, this could conceivably reduce the amount of the fine.
However, prior to labor law reform, Glovo had had mixed success in the courts defending its model against labor classification issues.
AT September 2020, Spain’s Supreme Court rejected his classification of delivery couriers as self-employed, deeming them to be in an employment relationship with the platform. So it remains to be seen how successful attempts will be to lift government sanctions through the courts.
We have contacted the Department of Labor to request more details on the fine, but they have not responded at the time of writing.
The Spanish government is optimistic about its labor reforms – with Diaz Recently denied criticism in parliament for the far-right Vox party, saying the country now has more workers with stable permanent contracts than ever before.
However, since the Passenger Law went into effect, Glovo has continued to work with self-employed couriers instead of moving all drivers to employees, claiming it has adapted the model to ensure it fits. His stance drew complaints from competitor Uber Eats, which initially switched to a subcontractor model, but last month it was informed explore the revised self-employment model. (Deliveroo completely left the Spanish market last year.)
Ryder Act compliance checks are clearly time-consuming, so it could be years before any such “revised” self-employment patterns are found to be infringing (or otherwise) violations, allowing the platforms to operate freely in the meantime (if they are at risk of future fines).
Consequently, rider advocacy groups have called for tougher wording of the law to prevent platforms from giving rise to self-serving interpretations and simply starting new cycles of years-long litigation over employment classification decisions.
At the same time, the European Union is in the process of reaching an agreement on bill create a pan-European framework aimed at combating fictitious self-employment on digital platforms by introducing a rebuttable presumption of employment. Thus, free gig platforms, whose models depend on the rejection of workers’ rights, seem to be operating on credit in the EU.
Glovo and its parent company Delivery Hero, meanwhile, also have a separate issue after they were subjected to antitrust scrutiny by the European Union. this summer.
It is not clear whether the preliminary antitrust reviews will lead to a full-scale investigation or not.
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