Richard Grogan: Spanish court declares gig economy company workers are employees

Richard Grogan: Spanish court declares gig economy company workers are employees

Richard Grogan

Employment law solicitor Richard Grogan of Richard Grogan & Associates examines a recent Spanish court ruling on gig economy workers.

On the 27th November, the High Court of Justice in Spain ruled that riders of Glovo, who are a competitor of Deliveroo, are employees and are therefore not self-employed. Glovo operates on a similar business model to that of Deliveroo.

The interesting aspect of this case is that the Spanish courts changed their previous criteria after ruling in September 2019 that Glovo riders were self-employed. The decision on the 27th November was taken in a plenary session. We understand that this is done for the sake of legal certainty and is aimed to provide a unified basis for the High Court of Justice in Madrid.

They held that the Glovo Riders are employees because:

  1. Their invoices are drafted by Glovo.
  2. The fact that the invoices were drafted by Glovo indicates a lack of infrastructure for riders to organise themselves with their own means.
  3. Their fee for each service is fixed by Glovo. The riders cannot negotiate it.
  4. The riders are unable to decide the price that clients should pay for the service.
  5. Glovo benefits from the result of the rider’s work.
  6. The app is owned by Glovo and as such riders cannot provide services as such.
  7. While mobile phones and bicycles are owned by the riders, these are secondary means of production.
  8. The riders are required to deliver to clients within 60 minutes.
  9. The riders are geolocated. On that basis their activity is controlled.
  10. They are subject to Glovo’s disciplinary power because if they reject orders the algorithm automatically excludes them from the most advantageous timeframes.
  11. In addition their contracts include termination clauses which are in practice disciplinary offences.

While each case must be looked at on its own and while the decision in Spain is not binding on other employment courts, it is relevant.

It is interesting that similar arguments could well be made here in Ireland in relation to a number of entities that provide delivery services. While not all of them could be argued, a significant number could be.

The issue of the gig economy is one that does need to be looked at. We have written about this previously in our newsletters and are again raising the issue.

While the Department of Employment Affairs and Social Protection says that they intend looking at this area, the reality of matters is that that Department is so terrified of doing anything which could upset multinationals that we have a situation where there are significant numbers of individuals who have no employment rights.

The argument from the Department is that this method of work suits certain individuals. The reality of matters is that of these individuals, many do not pay tax. There is no USC paid. There is no employers’ PRSI paid. There is a significant loss of income to the State. The argument which is coming forward from the Department just does not stand up.

It would suit many employees currently to be classified as self-employed. Their employers would pay no USC or employers’ PRSI for them. They would not be subject to any deduction of USC or tax. For many this would suit them down to the ground.

The current system which we have in Ireland is one where there is significant sums of money due by way of tax, employers’ PRSI and USC which the State is not recovering. These business models undermine employee rights. Saying it suits certain people is irrelevant. If that argument was taken to its logical conclusion, it would suit most people not to pay any tax.

The reality of matters is that the relevant Department really has no interest whatsoever in protecting employee rights. Their approach towards workers is questionable to say the least.

I don’t blame Minister Regina Doherty. The problem arises because of the mandarins in the Department, many of whom, from the interaction with that Department, are individuals who seem devoid of any interest whatsoever in protecting employee rights.

They have come out in 2019 and referred to the fact that they have brought in legislation relating to banded hours contracts and banning zero hour contracts.

However, they don’t point out – and it has been pointed out by us – that the legislation in relation to zero hour contracts has been drafted in such a way that virtually anybody can circumvent the legislation as regards zero hour contracts with some creative drafting. As regards banded hours contracts, the system is so cumbersome that effectively any employer can delay an employee getting those rights for months with no negative impact on the employer.

It will be interesting to see whether any action is taken by the Government in 2020 to address the issue of the gig economy.

Richard Grogan: Spanish court declares gig economy company workers are employees

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