Gig economy: Rider revolution forcing changes in legislation
Ruth Green, IBA Multimedia JournalistThursday 18 November 2021
As courts across Europe continue to grapple with employee classification rights in the gig economy, some jurisdictions are legislating in a bid to resolve this contentious issue in the food delivery sector.
In May, the Spanish Parliament passed legislation that compels food delivery platforms like Deliveroo, Uber Eats and Barcelona-based start-up Glovo to classify all their riders as employees instead of self-employed freelancers. Companies were given until 12 August to comply with the new so-called ‘Rider Law’, which entitles riders to receive social security protections and other benefits like holiday and sick pay that are not normally afforded to self-employed workers.
The legislation was introduced in the wake of a Supreme Court judgment in September 2020, which ruled that riders for Glovo should be treated as employees. This decision followed a series of cases in Spain’s regional courts regarding the employment status of independent contractors working in the food delivery sector.
Apart from gleaning revenue from an increase in social security payments, the legislation was designed to prevent further litigation in this area, says Juan Bonilla Blasco, Co-Chair of the IBA Employment and Industrial Relations Law Committee and a labour and employment partner at Cuatrecasas in Madrid. ‘There was a misclassification case that went to the Supreme Court, but there were also tonnes of cases that were still looking to go to the higher-level court,’ he says. ‘The government enacted this legislation to avoid thousands of cases that might come up in the future after the Supreme Court decision.’
However, Bonilla Blasco says it may prompt new claims over historic misclassification and is likely to lead to ‘significant business decisions’ for food delivery platforms. Deliveroo has already announced plans to exit the market. In a statement two weeks before the law came into force, the company said that ‘a disproportionate level of investment’ would be required to remain in a market with ‘highly uncertain long-term potential returns’. The company is undertaking an ongoing collective consultation process with its Spanish workforce.
The legislation requires platforms to be transparent with trade unions about the algorithmic formula they use to manage riders, assign orders and set fees for delivery services. However, there have been reports that some companies are modifying their algorithms to force riders into a bidding war over delivery fees. In September, Pepe Álvarez, the General Secretary of Unión General de Trabajadores – one of Spain’s leading trade unions – said the ‘need to regulate algorithms’ presented ‘a new challenge for the defence of workers’ rights.’