Another fine for Spanish on-demand delivery app and dark store operator, Glovo, which has been fined nearly €57 million (~$62 million) for violating local labor laws by wrongfully employing more than 7,800 of its to classify delivery couriers in Madrid as confident in service, per local daily newspaper El Diario.
Citing sources familiar with the Labor Department’s investigation into Glovo, the newspaper reports that the fine breaks down into a €32.9 million fine for breaching labor laws; €19 million in unpaid social security contributions for the riders it falsely claimed as self-employed; and €5.2 million for visa violations, as the inspectors found that Glovo employed a number of foreigners without work permits.
The fine is just the latest in a series for the Barcelona-based delivery platform, founded in 2015. The newspaper estimates the current account at more than € 200 million.
Most recently, Glovo was fined $79 million last September — including for misclassifying delivery drivers as self-employed (the so-called automatic errors) — in that case for a total of more than 10,000 riders active in two cities: the home city and Valencia.
It has also previously issued smaller fines for labor violations in other regions, including Tarragona, Girona, Lleida and Seville.
Glovo confirmed the final sanction. However, the delivery platform continues to contest all penalties for labor law violations spokeswoman told businessupdates.org it will appeal the latest “penalty proposal,” as she put it.
As is the general rule for delivery platforms in the gig economy, Glovo scaled up the use of a fast urban delivery service in the sweat of thousands of couriers it didn’t classify as employees – in an effort to get ahead of laws that were made long before the emergence of digital platforms and the tight algorithmic management of a distributed workforce enabled by mobile technology.
However, as legal challenges by workers and unions have multiplied – dealing a series of blows to a model that critics a sweat shop — Lawmakers in Europe are waking up to technology-driven efforts to ‘platformize’ the circumvention of labor laws designed to protect workers from exploitation and pushback.
For example, in 2020, the Spanish Supreme Court dealt a major blow by ruling against the classification of riders as self-employed. And that followed, in 2021as the country’s lawmakers agreed on a labor law reform designed to force delivery platforms to hire couriers – the so-called ‘Riders Act’.
The Spanish coalition government has also recently proposed further reforms – allowing the bosses of unruly gig economy platforms who break the law and continue to exploit workers through misclassifications of self-interest to receive up to six years in prison.
All the sanctions Glovo has received so far because of the automatic errors issue is related to the labor model it claimed to operate before the Riders Law came into effect.
The answer since August 2021, when the Rider reform came into effect, has not been to end the practice of claiming delivery couriers are self-employed. Rather, it says it has tweaked its model – claiming to be compliant despite continuing to work with dozens of ‘self-employed’ riders doing the hard work of delivering customers’ stuff. (It also seems to use some riders who are outsourced and employed by third parties).
This model reboot has led to criticism that Spain’s equestrian law isn’t working as intended – along with calls for greater clarity to prevent platforms from using operational tweaks as a tactic to bring legal challenges back to ground zero, leaving workers in the same predicament rights limbo.
Glovo’s claims of compliance with the reformed labor rules have yet to be concretely tested. But in comments reported by El Diario Spanish Labor Minister Yolanda Díaz speaks harshly to the sector — warned last fall that she will ask the Public Prosecution Service to investigate “rebellious” multinationals that try to evade the obligation to hire delivery drivers.
The newspaper also reports that the government is looking into prosecuting Glovo under the new penal code.
Zooming out, EU lawmakers have also turned their attention to the sector in recent years, following a 2021 proposal from the European Commission to introduce a rebuttable presumption of employment for gig workers across the EU. But the legislative plan continues to divide the bloc’s legislators and it remains unclear when (and even if) these differences can be resolved (also given the relatively short time left for this current Commission) — a necessary step if the proposal (however it may be amended) is to become pan-EU become law.
That said, with a number of Member States becoming increasingly active in the field of agency workers’ rights, it is clear that the pressure on EU legislators to find a way to agree on harmonized rules – and further fragmentation of the internal market on workers’ rights – is unlikely to decrease.
