Australia markets open in 2 hours 33 minutes
  • ALL ORDS

    7,225.20
    -27.10 (-0.37%)
     
  • AUD/USD

    0.7626
    +0.0003 (+0.04%)
     
  • ASX 200

    6,974.00
    -21.20 (-0.30%)
     
  • OIL

    59.63
    +0.31 (+0.52%)
     
  • GOLD

    1,732.60
    -12.20 (-0.70%)
     
  • BTC-AUD

    78,679.78
    -373.16 (-0.47%)
     
  • CMC Crypto 200

    1,285.33
    -9.25 (-0.71%)
     

Spain agrees on labor reform that will recognize delivery platform riders as employees

Natasha Lomas
·7-min read

Spain's government has reached an agreement with trade unions and business associations over labor reforms that will see delivery platform couriers recognized as employees, it said today.

Once such a law is passed, the development could have major ramifications for platforms operating in the market -- which include the likes of Deliveroo, Glovo and UberEats, to name a few.

"The Ministry of Labor and Social Economy, the trade union organizations CCOO and UGT and the business organizations CEOE and CEPYME have reached an agreement to establish the employment status of workers dedicated to the delivery or distribution of any consumer product or merchandise through platforms digital," the ministry said in a statement (which we've translated from Spanish)

"The agreement recognizes the presumption of employment of workers who provide services through digital delivery platforms, in line with the Supreme Court ruling," it added.

"The presumption of employment is recognized for workers who provide paid distribution services through companies that manage this work through algorithmic management of the service or working conditions, through a digital platform."

 

Agreement on the reform means the government can now start to move forward with the legislative process after many months negotiating on exactly how to change labor laws.

The timing looks especially interesting as the European Union is also considering how to improve conditions for gig workers more broadly -- so Spain's plan to legislate, ahead of other EU countries, to recognize a subset of gig workers as employees could be influential in shaping wider regional policy.

Wider reforms in Spain aimed at supporting growth of digital business also come with a strong social inclusion component, with the government saying no one should be left behind in a drive to modernize.

The labor reform agreement follows a number of legal challenges in Spain in recent years over the classification of delivery riders. There have been varying outcomes in the courts but last year Spain's Supreme Court ruled against homegrown delivery platform, Glovo, in a case relating to the employment classification of a courier -- putting a stamp of finality on the matter as it also declined to refer questions to Europe's top court.

Delivery platforms in the market have suggested the impact of the planned reform could result in thousands of couriers losing their source of income.

Up to 30,000 couriers are reported to provide services on delivery platforms in Spain.

There have also been accusations that platforms are being unfairly singled out as a politically easier target vs other more established industries which also rely on labor provided by 'autónomos' (self-employed) workers.

However delivery startups have been less vocal about what a legal requirement to put couriers on the payroll would mean for their business model -- or, indeed, their (ongoing) quest for profitability.

Responding to news of Spain's labor reform agreement, Mark Tluszcz, CEO at Mangrove Capital Partners -- who has been a long time critic of the gig platform business model -- told TechCrunch: "We have long taken the view that gig platforms would have to go through significant structural changes driven by individual countries’ laws. Unless gig workers are recognized as employees, we risk creating a subclass of workers that don’t have adequate rights or social coverage. The pandemic has clearly illustrated the need to ensure all workers have protections and it is increasingly difficult for gig platforms to argue otherwise."

Workers must see algorithmic workings

In an interesting additional component to the reform agreement announced today, the government said the incoming legislation will require that workers' legal representatives are informed of the criteria powering any algorithms or AI systems that are used to manage them and which may affect their working conditions.

Its statement specifies that this includes algorithmic systems that are related to access to employment and for any rating systems that monitor performance or profile workers.

This component looks like it's taking inspiration from a number of recent legal challenges in Europe which have focused on ride-hailing platforms' algorithmic management and drives' access to data the platforms hold on them.

James Farrer, a former Uber driver who successfully challenged the company's employment classification in the UK -- where the Supreme Court recently held that the challenging drivers are workers -- and who is also involved in the more recent algorithm and data access challenges, has set up a not-for-profit with the aim of establishing a data trust for drivers for the purpose of collective bargaining.

Spain's unions appear to be taking a similar tack by pushing for access to the algorithmic rules that are used to manage couriers as a tool to tackle the power asymmetry between platforms and workers.

A spokesperson for Uber sent us this statement in response to the Spanish government's announcement:

"Over the past few weeks, thousands of couriers across the country have come together to stand against this proposed regulation that would deprive them from the independence they value most. At Uber, we are fully committed to raising the standard of work and giving independent workers more benefits while preserving flexibility and control. We want to work with all relevant parties across Spain to improve independent work, instead of eliminating it."

Deliveroo also sent us this statement:

“This proposal goes against the interests of riders who value flexible work, restaurants who benefit from delivery services and customers who value on-demand delivery. Thousands of riders who took to the streets to protest their desire to remain self-employed have had their voices ignored.

"Delivery platforms have put forward constructive proposals to enable riders to work flexibly with additional security and have warned that forced reclassification will lead to less work for riders, will hurt the restaurant sector and will restrict the areas where platforms can operate. Unfortunately these messages have also been overlooked.

"Nothing has been finalised and we will continue to argue that the Government should provide riders with flexibility and security, which is what they want. We will continue to engage with the Spanish Government to seek alternative ways forward. We urge the Government to listen to riders and urgently think again.”

Glovo declined to make a statement at this time. Update: Co-founder Sacha Michaud has now sent this statement:

"The position of the labour ministry is rather radical and is not in line with the actions taken by other EU member states, such as Italy and France, to address similar issues.

"Today, the government is debating over 11B regarding financial help for retailers, yet at the same time, it is putting up barriers and creating additional difficulties for the services that have acted as a life support system to those very same retailers during one of the most difficult periods of economic turmoil in history, passing a law that will negatively affect the operations of delivery platforms.

“During the last year, delivery platforms have been an essential service in dealing with the wide variety of challenges thrown up by Covid-19 — and the pandemic is showing no signs of being consigned to history any time soon. Our partners, 90 per cent of whom are local, independent restaurants and stores, have relied on platforms like ours to survive.

“We believe that regulation is necessary but it has to take into account and consider the views of both the platforms and the workers, none of whom have been approached to be a part of the solution.”

In recent weeks, Uber has been lobbying for deregulation for platform workers in Europe ahead of the EU's consultation process on improving gig work -- seeing the possibility of a pan-EU framework as an opportunity to reshape regional employment rules to better mesh with modern working patterns. However the move has led to criticism that it's trying to lower EU standards.

Early Stage is the premier ‘how-to’ event for startup entrepreneurs and investors. You’ll hear first-hand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, product market fit, PR, marketing and brand building. Each session also has audience participation built-in – there’s ample time included for audience questions and discussion. Use code “TCARTICLE at checkout to get 20 percent off tickets right here.