Posted By Jessica Weisman-Pitts
Posted on December 2, 2024
By Paolo Laudani
(Reuters) -Delivery Hero will hire freelance riders at its Glovo unit in Spain as full-time employees, the food delivery firm said on Monday, warning of a 100 million euro ($105 million) hit to earnings and sending its shares down almost 10%.
Between 2022 and 2023, Spain fined Glovo for not formally hiring riders. Glovo had appealed the fines imposed by the labour ministry in court and has won some of the cases, a spokesperson for Glovo told Reuters.
Delivery Hero said in a statement that Glovo management had decided to change its employment model “to avoid further legal uncertainties leading to an increase of contingencies”. It confirmed its 2024 guidance.
Its shares were down 9.7% at 1118 GMT, the biggest fallers on Europe’s STOXX 600.
“While this announcement illustrates progress, it doesn’t mark a firm conclusion to the ultimate costs associated with claimed historic breaches, nor does it lower the amount payable (it raises it),” UBS analysts said.
“As such (it) is not the announcement we believe the market was hoping for. We see it as small negative.”
MOVING TO COURTS
Glovo’s fleet has about 15,000 delivery people in Spain and most are self-employed, the spokesperson for the company said.
The company’s co-founder and CEO Oscar Pierre is due to appear in court later this week for violations of gig workers law, another spokesperson said.
In a post on social media platform X with a link to Glovo’s decision, Spanish Labour Minister Yolanda Diaz said: “No large company is above a law. Democracy wins. A young person with a cell phone in their hand is not an entrepreneur.”
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 late 2021.
Shares in Just Eat Takeaway were up 1.2%.
“For Just Eat… we see this development as a small positive given they are already employing the riders in Spain, bringing the costs base of their peer to par,” JPMorgan said in a note.
Adding to Glovo’s legal woes, the Spanish arm of Just Eat said in a statement published on Monday it had filed a lawsuit for unfair competition against Glovo on Nov. 29, claiming a total 295 million euros’ worth of damages.
($1 = 0.9517 euros)
(Reporting by Paolo Laudani in Gdansk, additional reporting by Inti Landauro in Madrid, Editing by Friederike Heine and Jan Harvey)
