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Deliveroo and Glovo braced for Spain’s crackdown on gig economy

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Spain is set to become the first country in Europe to bring in legislation that will recognize riders working for companies like Glovo and Deliveroo as employees.

There have been complaints by some riders working for both companies about their working conditions and that has prompted the government to take action.

CGTN Europe accompanied one of them on his delivery route around Madrid.

Julio Cesar is one of 13,000 Glovo riders based in Spain. The work is hard, the hours are long and during the height of the pandemic it carried a high element of risk to his health.

 

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Spain is set to become the first country in Europe to force delivery services like Deliveroo and Glovo to recognize workers as employees. /CGTN

Spain is set to become the first country in Europe to force delivery services like Deliveroo and Glovo to recognize workers as employees. /CGTN

 

Throughout the lockdown, Julio and his colleagues from Glovo and the other companies were out on the streets delivering food while the public were confined to their homes.

The Spanish government now wants to protect the rights of these food delivery riders.

It has announced a deal that will recognize them as employees of companies like Glovo, Deliveroo and Uber Eats. It means they will be entitled to paid holidays and sick pay.

It will also mean extra costs for the delivery companies and for riders like Julio, those extra costs will eventually affect him and his fellow riders.

“It will affect our incomes for sure, we will be having extensive shifts but we won’t see the effect of that in our payroll, we will work more and earn less for sure, that’s why I say this will slow us down,” he told CGTN Europe.

 

Deliveroo and Glovo riders currently get paid per delivery. The exact delivery fee varies per order and includes a variable distance fee, with drivers made aware of the fee payable before accepting the order. /FrankAugstein

Deliveroo and Glovo riders currently get paid per delivery. The exact delivery fee varies per order and includes a variable distance fee, with drivers made aware of the fee payable before accepting the order. /FrankAugstein

 

Spain’s ruling socialist coalition says the legislation, the first of its kind in the EU, is designed to crack down on the so-called “gig economy,” which relies on hundreds of thousands of independent workers for app-based services such as food delivery or car rides.

Glovo co-founder Sacha Michaud told CGTN Europe the Spanish government needed to be more open minded when dealing with companies like his.

“The government has a strict way of looking at this. They are not open to listening, working with the platforms and finding a solution for us. Which is a way of maintaining flexibility but giving the workers more social rights.”

 

It looks like there will be a domino effect.

 –  Gig economy expert Miguel Soldan expects other EU countries to copy Spain’s approach to the gig economy.

 

The status of those working in the gig economy is a question that’s being discussed across Europe, not just in Spain. 

Earlier this year, two former Uber drivers in the UK won their case against the taxi company, with Britain’s top court ruling that Uber drivers were workers and not independent contractors.

Industry expert Miguel Soldan from Madrid’s IE Business School feels the Uber decision and the new legislation in Spain will have far-reaching consequences across Europe.

“It looks like there will be a domino effect and shortly other countries in the EU will make similar decisions to the ones made by the Spanish government with the council and support of the unions,” he told CGTN Europe.

For riders like Julio, although they welcome the extra job security the new legislation is supposed to give them, many will be reluctant to lose the freedom and flexibility they currently enjoy.

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Gig economy can serve 90 mn jobs, add 1.2% to GDP over ‘long term’

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The gig economy can serve up to 90 million jobs in the non-farm sectors in India with a potential to add 1.25 per cent to the GDP over the “long term”, a report said on Tuesday.

The gig economy, where workers get hired typically for short durations, can lead to transactions of over USD 250 billion over the long term, the report by the consultancy firm BCG said.

The firm said gig economy is not a new concept but has seen greater adoption following the advent of technology.

A few years ago, when concerns were being raised about a ‘jobless’ growth, the government had pointed to the growth in gig economy jobs.

In the short-to-medium term, nearly 24 million jobs in skilled, semi-skilled and shared services roles could be delivered via gig economy, including nearly 3 million shared services roles and around 8.5 million roles meeting household demand, it said.

A majority 70 million ‘gigable jobs’ are in the construction, manufacturing, transportation and logistics, and personal services sectors, it said adding that these will be primarily driven by small business and household demand.

The consultancy said its estimates are based on a detailed mapping of job-types across industry sectors to identify opportunity areas and barriers to unlocking demand for gig-based services.

The potential of the gig economy was determined using interviews with corporations, including large corporations and medium, small and micro enterprises (MSMEs), a survey of over 600 urban households, and inputs from industry experts.

Over the long term, there will be around 35 million skilled and semi-skilled jobs across sectors, it added.

The report added that five million jobs can get delivered via shared services roles like facility management, transportation, and accounting, and 12 million can arise from household demand for services, while 37 million unskilled jobs can come from across various sectors of the economy.

The gig economy could create about one million net new jobs over the next two-three years by aligning near-term incentives of employers and workers, it said.

It said gig workers are typically younger, work fewer hours a day, are relatively less educated, and more often serve as secondary contributors to household income.

Also Read: Indian economy on recovery path; GDP likely to return to positive territory: IMF



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Gig economy platforms warned about safety compliance

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The gig economy sector has been put on notice after a compliance blitz carried out by SafeWork NSW highlighted widespread breaches of the state’s mirror work health and safety laws.

Six food delivery platform operators were served with improvement notices during the campaign for failing to inform and instruct their riders around safe work practices and appropriate safety equipment.

All but one of the riders observed in the Sydney metropolitan area were found be engaging in unsafe practices, according to Better Regulation Minister Kevin Anderson.

Over 90% of the riders had inadequate personal protective equipment. Approximately 60% of the riders were unable to demonstrate or refer to safety protocols that had been provided to them.

“What we’ve seen is disgraceful – riders out in the dark without high-vis, wearing thongs, cutting in front of trams, using mobile phones and giving passengers a lift while on the job,” Mr Anderson stated.

“The message to operators is clear – safety must always come first, and we won’t hesitate to prosecute anyone who puts workers lives at risk. Lift your game, improve your systems and make sure riders are aware of how to stay safe on the roads or you will be caught, you will be fined and you will be called out.”

Explore further on Pinpoint — [¶37-005] Do online platforms have a WHS duty?

Source: SafeWork NSW, Gig economy warned to prioritise driver safety, 29 March 2021, accessed 31 March 2021.

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A roadblock to the gig economy? UK Supreme Court classifies Uber drivers as “workers”

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In a landmark ruling, the UK Supreme Court has unanimously held that private hire vehicles drivers who provide their services through the Uber app were “workers” for the purposes of UK employment legislation: Uber BV and others (Appellants) v Aslam and others (Respondents) [2021] UKSC 5.  Earl Deng and Allison Wong discuss the decision and its implications for the gig economy in Hong Kong.

Hong Kong is known for being an employer-friendly jurisdiction, so it may come as a surprise to many that as long as 14 years ago, the Hong Kong Court of Final Appeal held in Poon Chau Nam v Yim Siu Cheung [2007] 1 HKLRD 951 that the status of an “employee” working under a contract of service under section 5(1) of the Employees’ Compensation Ordinance, Cap. 282 did not depend on the mere existence of a contract or necessitating dominant control over the worker in question, but must instead be ascertained as a matter of overall impression and to be determined on a case-by-case basis.

Since Poon, the rise of the gig economy through app or web portals has further muddied the waters with innovative business models and service agreements where the service provider no longer directly engages the worker to provide a service for its customers, but instead purports to act as a matching agent between a service providing worker and the ultimate paying customer and taking a portion of the fees.

The Arguments

In Uber, the appellants argued that pursuant to its service agreements which both the driver and the customer accepted and separately entered into, Uber’s role was simply as a booking agent for independent contractors who provide transportation services (“Driver”) and that the contract for transportation services was between the Driver and the end user (“Rider”).

The Supreme Court unanimously rejected Uber’s arguments on two grounds.

On agency, the Supreme Court rejected that any agency relationship arose on the facts, whether on the wording of the service agreements or any evidence of overt acts by the principal (i.e. Driver) to confer the necessary authority to Uber to act on its behalf.

On contract, the Supreme Court upheld its previous decision in Autoclenz v Belcher [2011] UKSC 41; [2011] ICR 1157 and clarified the theoretical justification for it.  Like PoonAutoclenz held that whether a contract gives rise to a relationship of employment is not to be determined by the ordinary principles of contract, but to adopt a test that “focuses on the reality of the situation where written documentation may not reflect the reality of the relationship”.  However, instead of focusing on the exceptional nature of employment contracts, the Supreme Court held that the rights asserted by workers under employment legislation are not contractual rights but rights under legislation, and therefore the Court is to determine whether for the purpose of that specific legislation, the claimant was an employee.

The Court went on to hold that the purpose of the employment legislation in the UK is to protect vulnerable workers from exploitation by providing minimum standards and conditions of work and therefore it would be inconsistent against this legislative background to use the contract as a starting point to determine whether an individual falls within the definition of a worker.

On the facts, the Court emphasised certain aspects of the relationship between Uber and the Drivers which tend to show that there was a relationship of employment, including:

(i) the fixed nature of Drivers’ remuneration with no bargaining power on the part of Drivers;

(ii) the fact that Uber dictated the terms of services;

(iii) Uber’s control over Drivers on their performance via inter alia cancellation penalties and performance metrics;

(iv) restrictions on Drivers from establishing any relationship with Riders.

Significance to Hong Kong

At first blush, this decision together with the CFA’s judgment in Poon suggest that the gig, literally, is up.

However, and like all “overall impression” cases, Uber BV case was confined to its facts and the evidence before the Court.  Uber BV’s position remains that the case is confined to a group of drivers in 2016 under those terms of service agreement.

In Australia, the Full Bench of the Fair Work Commission held in Amita Gupta v Portier Pacific & Uber Australia Pty Ltd [2020] FWCFB 1698 that workers delivering through the Uber Eats platform were not employees due to:

(i) lack of control over working hours;

(ii) no exclusivity to platform;

(iii) no requirement to wear a uniform, bear logos, or represent herself as a representative of Uber.

Deputy President Colman also noted that the factual matrix did not require the Court to consider whether there was an employment relationship as Uber was simply a commercial intermediary between restaurants, customers and deliverers. That judgment is now on appeal.

Also of note is the decision of the Supreme Court not to express any concluded view on arguments put forward by Uber that they were simply a payment agent (but which failed to establish on the facts and evidence), providing some support to Deputy President Colman’s views.

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