Glovo, a Spain-based delivery platform startup, is facing legal disruption in its home market after the country's Supreme Court ruled against its classification of delivery couriers as "autonomous" (i.e. self employed) -- finding riders are instead in a laboural relationship with the platform.
It's the latest in a string of legal rulings around the classification of Glovo riders in the country in recent years, some of which it has won. Although more recently momentum has been in the opposite direction, with a High Court decision late last year that also judged riders to be workers.
Today the country's Supreme Court also refused to refer a preliminary question to Europe's top court, arguing the defining characteristics of its contracts with riders concur, so it's not clear where Glovo's appeal can go next. A second ground for appeal was rejected for a formal compliance reason, per a judiciary press release (in Spanish).
In the PR -- ahead of the release of the full judgement -- the judiciary branch writes that the Plenary of the Fourth Chamber of the Supreme Court maintains Glovo is "not a mere intermediary in the contracting of services between businesses and distributors".
"It is a company that provides delivery and courier services, setting the essential conditions for the provision of said service. And it is the owner of the essential assets to carry out the activity. For this, it uses delivery people who do not have their own and autonomous business organization, who provide their service inserted in the employer's work organization," it adds (via Google Translate).
We've reached out to Glovo with questions about how it intends to respond to the ruling.
In a statement reported by El Mundo, it has called for policymakers to update regulation around gig worker platforms, writing: "Glovo respects the judgment of the Supreme Court and awaits the definition of an adequate regulatory framework by the Government and Europe."
At the EU level, the bloc's lawmakers have signalled an awareness of concerns about conditions for gig workers.
Setting out an "Agenda" for her five-year term late last year, Commission president Ursula von der Leyen said she would look at ways of improving the labour conditions of platform workers -- although her suggested policy focus was a pretty soft one, of "skills and education". So Europe's courts may end up doing the heavy lifting on gig worker rights.
One key question is how viable is the "on-demand delivery" model if the full cost of labor moves onto the balance sheet? It would certainly change the unit economics in markets where platforms can't legally sidestep the costs of employing the thousands of humans they rely on to move packets around. (Hence some of these startups are shelling out on R&D to replace human riders with delivery drones/robots.)
In Glovo's case, the company was in the news last week after it announced the sale (for $272 million) of its LatAm business to German rival Delivery Hero -- further concentrating its operations in the European market, after it exited the Middle East at the start of this year.
Last year it told us it was focused on trying to achieve profitability in 2021. Any such push would be complicated by requirements to reclassify large numbers of delivery riders as workers. So the Supreme Court ruling looks like it could have major implications for Glovo's business.
Update: Glovo has now sent us this statement:
We respect the decision of the Supreme Court, however, it's important to note that this case regards a specific situation relating to an individual courier from 2016. We still consider the debate surrounding our model and labour classifications to be ongoing, as there are several judgements, most notably the previous judgement by the European Court of Justice, that validate our model.
As a company, we’re awaiting a defined regulatory framework by the Spanish government and other European organisations, similar to those passed in France and Italy. We firmly believe that any such regulation should be based upon open dialogue and should consider the views and opinions of all stakeholders.
Asked what steps it will be taking in response to the ruling, it added: "In all the countries in which we operate worldwide our business model meets and complies with all legal requirements. We believe that what is needed is a new regulatory framework which confers more social rights upon autonomous workers but protects the flexible nature of work that’s fundamental to the on-demand economy."
It also said it's consulting with its legal counsel to assess further legal options available to it.