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Glovo fined $78M for labor violations in Spain • Technology Flow

Spain’s homegrown on-demand delivery app, Glovo – majority owned by Germany’s Delivery Hero since late last year – has been fined €79 million (~$79 million) for violating labor laws related to the job classification of couriers, local press reported yesterday.

El Pais reported that the company was issued a record sanction for misclassifying the startup as having 10,614 workers.Autonomous” (aka self-employment) in Barcelona and Valencia, after the Department of Labor found that the couriers were in an employment relationship with the company.

Labor Minister Yolanda Diaz accused Glovo of undermining workers’ rights and obstructing the department’s inspection. El pies reported. A minute portion of the fine was issued for this obstruction – in relation to misclassified couriers working in Barcelona (where more than 8,300 riders were found to be misclassified as self-employed) and a smaller portion (€63.2 million (€15.7 million)) was issued on nearly 2,300 misclassified riders in Valencia. .

The total amount of the penalty is more than 13% of Glovo’s 2021 revenue, according to the newspaper.

Glovo has previously been granted smaller sums for similar labor violations following inspections in other parts of Spain, including Tarragona, Girona, Lleida and Seville.

The self-employed classification means that riders do not receive the full sweep of benefits provided to employees. Autonomous It’s also generally required to make payments to the state to contribute to Social Security coverage — payments Glovo would have to make if these tens of thousands of riders were classified as employees.

There have been regular protests against ‘dangerous’ work in Spain since platforms like Glovo started operating in the country. And last year, the government passed a reform of labor laws that apply specifically to delivery couriers on platforms — aka, Riders’ Law — that recognizes couriers as employees to combat spurious classifications of self-employment.

But according to Glovo, Glovo violations are now sanctioned before the law goes into effect.

A company spokesperson sent the following statement in which it confirmed it intends to challenge the penalty:

Glow Spanish labor inspection proposals for retrospective social security payments and fines of up to EUR 79 million for the years 2018 to 2021, based on GlowThe rider employment pattern of this time period is not legally compliant.

These inspections took place before the introduction of the Spanish Raiders Law, hence Glow It intends to challenge the proposal and expects a ruling only in the coming years. Glow Fully committed to complying with Spanish labor regulations and the new Riders Act.

A Glovo spokesperson also mentioned the penalty for inspections conducted between May 2018 and August 11, 2021. (The Spanish Raiders Act took effect on August 12, 2021.)

It also states that the amount of the cited fine is not final – it causes “potential social security contributions”, as well as fines – if it can successfully challenge the assessment of the department by convincing the court (or some) ) these riders are not misclassified, possibly reducing the size of the penalty.

But Glovo has had mixed fortunes in the courts defending its model against labor classification challenges prior to labor law reform.

In September 2020, Spain’s Supreme Court rejected the classification of delivery couriers as self-employed – finding them to be in a labor relationship with the platform. So it remains to be seen how far it will succeed in trying to remove the government sanction through the courts.

We reached out to the Labor Department to ask for more details about the penalty but it did not respond at the time of writing.

The Spanish government is bullish about its labor reforms – with Diaz Recently the criticism has been reversed He told parliament from the far-right Vox party that the country now has more workers with stable, permanent contracts than ever before.

But Glovo has continued to work with self-employed couriers rather than convert all riders to employees since the rider law came into effect — a model it says it has adopted to ensure compliance. Its stance led to complaints from rival, Uber Eats, which initially moved to a subcontractor model – but, last month, was reported to be exploring a revised self-employment model. (Deliveroo exited the Spanish market entirely last year.)

Inspections for compliance with Rider Law legislation obviously take time – so it can take years before such ‘modified’ self-employment models are found in violation (or otherwise), while the platforms are free to operate (with the threat of future fines if within).

Thus, there have been calls by riders’ rights groups to tighten the wording of the law to prevent platforms from resorting to self-serving interpretations and kicking off fresh rounds of multi-year litigation over employment classification decisions.

At the same time, the European Union is in the process of agreeing on draft legislation to establish a pan-EU framework aimed at tackling bogus self-employment on digital platforms – by introducing a presumption of denial of employment. So models of free-riding gig platforms based on swerving workers’ rights seem to be operating on borrowed time in the EU.

Glovo and its parent company, Delivery Hero, meanwhile, have something special on their plate as well — after being targeted by antitrust inspections by the European Union this summer.

It is not clear whether preliminary antitrust inspections will lead to a full-scale investigation.

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