Glovo fined $78M for labor breaches in Spain

Germany's Delivery Hero has majority ownership of Spain's on-demand delivery app, Glovo, which has been fined over 80 million dollars for violating labor laws.

The Department of Labour found that 10,614 workers were wrongly classified as self-employed in Barcelona and Valencia, and the company was fined a record amount.

According to El Pais, the labor minister accused Glovo of harming the rights of workers. More than 8,300 riders were found to have been wrongly classified as self-employed in Barcelona, and a small portion of the fine was issued for this obstruction.

According to the newspaper, the total size of the penalty was more than a third of the revenue for the year.

Smaller amounts have been given for similar labor violations in other regions of Spain.

Riders wouldn't get the full benefits provided to employees if they were classified as self employment. If these tens of thousands of riders had been classified as employees, the payments would have to be made.

Since they started operating in Spain, there have been protests over the work on platforms. The Riders Law was passed by the government last year in order to combat bogus classifications of self-employment.

According to Glovo, they have been sanctioned for violating the law before it came into effect.

The spokeswomen for the company confirmed in the statement that they intend to challenge the penalty.

Glovo was notified of Spanish Labour inspection proposals for retrospective social security payments and a fine of up to EUR 79 million for the years 2018 to 2021, based on the grounds that Glovo’s rider employment model during this timeframe was not legally compliant.

These inspections occurred prior to the introduction of Spain’s Riders’ Law, which is why Glovo intends to challenge the proposal and expects a judgment only in the coming years. Glovo remains fully committed to complying with Spanish labour regulations and the new Riders’ Law.

The penalty relates to the inspections that took place between May and August of 2011. Spain's Riders Law came into effect on August 12th.

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It said that the cited amount of the fine is not final and that it accounts for potential Social Security contributions and penalties.

The courts have had mixed results in defending the model against labor classification challenges.

Spain's Supreme Court rejected the classification of delivery couriers as self employed in September 2020 because they were in a labor relationship with the platform. It is not yet known how much success it will have in trying to unpick the government's sanction.

The Department of Labour did not respond to our request for more information about the penalty.

The Spanish government is bullish about its labor reforms, with Daz recently rebutting criticism in parliament from the far right, by saying the country now has more workers with stable, permanent contracts than ever before.

Since the Rider Law came into effect, Glovo has continued to operate with self employed riders, even though it has adapted the model to make sure it complies. Last month, it was reported that Deliveroo was looking at a revised self employment model, after complaints from its rivals.

It could be years before any revised self-employment models are found to be in violation of the Rider Law, so the platforms are free to operate in the meantime.

There have been calls by riders rights groups for the wording of the law to be tightened up in order to prevent platforms from arriving at self-serving interpretations.

The European Union is in the process of hammering out agreement on draft legislation to establish a pan-EU framework aimed at tackling bogus self employment on digital platforms. Free-riding gig platforms that depend on workers rights look to be operating on borrowed time in the EU.

Delivery Hero was targeted for antitrust inspections by the European Union this summer.

Preliminary antitrust inspections may or may not lead to a full blown investigation.

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