Spanish delivery startup Glovo may have to pay up to €400m in legal costs related to the employment status of its couriers. That’s the estimate of its parent company Delivery Hero, which published the figure in its latest half-year financial report yesterday.
These potential costs relate to investigations by Spanish authorities that could reclassify the company’s self-employed riders as employees, which could lead to an order for Glovo to pay fines and retrospective taxes and social security contributions “in an overall range between approx €200 million and €400 million,” says the Delivery Hero report.
In August 2021, the Spanish government signed off on a piece of legislation known as the “Riders’ Law” that established a “presumption of employment” between platforms and couriers, but since then Glovo has continued to use freelance couriers via subcontracting agencies.
Delivery Hero’s report points out that such a reclassification could be challenged in the courts, but that Glovo “could have to provide bank guarantees” until there’s a final verdict.
Glovo told Sifted: "Glovo has always maintained and welcomes an open dialogue with the Spanish Ministry of Labor. There is no court decision in relation to the labor model in Spain, launched in August 2021. We are confident in the legality of the model, adapted to the Supreme Court Ruling, the Rider law and the doctrine of the Court of Justice of the European Union."
German multinational Delivery Hero acquired a majority stake in early 2022. Delivery Hero revenue rose 27% on year to €4.84bn in the first half of 2023, in part due to the contribution from Glovo’s business.