Delivery firm Glovo riders in Spain to become employees

App-based food delivery firm Glovo's freelance riders in Spain will be hired as employees following pressure from the government to give them labour contracts, its German owners Delivery Hero said Monday.

The announcement comes a day before Glovo's founder and head, Oscar Pierre, is due to appear before a Barcelona judge who is investigating possible violations of Spain's labour laws, according to a judicial source.

"Glovo management decided to change from a freelance model to an employment based model for its delivery riders in Spain to avoid further legal uncertainties leading to an increase of contingencies," Delivery Hero said in a statement.

Spain in 2021 became the first European Union (EU) nation to give food delivery riders labour rights, requiring that they be recognised as employees instead of being considered self-employed freelancers.

This means app-based food delivery firms like Glovo have to pay their riders -- who get around mostly on bikes and motorcycles -- employee contributions for benefits like sick leave and protections against dismissal.

After the law came into effect, Glovo agreed to employ riders for its online supermarkets but kept those delivering restaurant meals as freelancers under a new statute that it said strengthened their autonomy.

This led Spain's labour ministry to slap the company with fines totalling 205 million euros ($215 million) for violating the law. The European Commission is also investigating Glovo for labour law violations.

"No matter how big it is, no matter how much power it has, no big technology can impose itself on democracy. Today democracy has won in our country," Labour Minister Yolanda Diaz told reporters.

"The principle of legality has been imposed and finally, I insist, this company is going to regularise and comply with its obligations," she added.

- Share price slump -

Founded in Barcelona in 2024, Glovo is now present in 25 nations. It was purchased in 2022 by Berlin-headquartered Delivery Hero.

The Glovo website does not say how many riders work for the company but Spanish media estimate there are thousands.

The change in "operation model" will be limited to Glovo's activities in Spain and will dent Delivery Hero's 2025 core profit by 100 million euros ($105 million), the company said.

Shares in Delivery Hero fell 11.51 percent to 34.28 euros in early afternoon trade in Frankfurt following its announcement.

Apart from Glovo, Just Eat and Uber Eats dominate the food delivery market in Spain, having gained market share after Britain's Deliveroo exited the country in 2021 just days before the "Rider Law" was due to take effect.

Gig work, which became mainstream thanks to ride-hailing and food-delivery platforms such as Uber and Deliveroo, has come under greater scrutiny in recent years, with several countries taking steps to workers in the sector.

The European Union in October adopted a directive requiring member states to classify people who work for online platforms as employees under certain conditions.

But the EU left it up to each member state to decide what criteria must be met. Campaigners had been pushing for EU-wide criteria.

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