Madrid (AFP) - App-based food delivery firm Glovo’s freelance riders in Spain will be hired as employees following pressure from the government to give them labour contracts, its German owners Delivery Hero said Monday.

The announcement came a day before Glovo’s founder and head, Oscar Pierre, was due to appear before a Barcelona judge investigating possible violations of Spain’s labour laws, according to a judicial source.

“Glovo management decided to change from a freelance model to an employment-based model for its delivery riders in Spain to avoid further legal uncertainties leading to an increase of contingencies,” Delivery Hero said in a statement.

Spain in 2021 became the first European Union nation to give food delivery riders labour rights, requiring that they be recognised as employees instead of being considered self-employed freelancers.

This means app-based food delivery firms like Glovo have to pay their riders – who get around mostly on bikes and motorcycles – employee contributions for benefits like sick leave and protections against dismissal.

After the law came into effect, Glovo agreed to employ riders for its online supermarkets but kept those delivering restaurant meals as freelancers under a new statute that it said strengthened their autonomy.

This led Spain’s labour ministry to slap the company with fines totalling 205 million euros ($215 million) for violating the law. The European Commission is also investigating Glovo for labour law violations.

Glovo has appealed the fines. It argues the infringements cited by the labour ministry took place before the new law came into effect.

“No matter how big it is, no matter how much power it has, no big technology can impose itself on democracy. Today democracy has won in our country,” Labour Minister Yolanda Diaz told reporters, adding “the principle of legality has been imposed”.

- Share price slump -

Founded in Barcelona in 2024, Glovo is now present in 25 countries. It was purchased in 2022 by Berlin-headquartered Delivery Hero.

Glovo employs nearly 15,000 people in Spain, the majority as freelancers, a company spokeswoman said.

The company sent a message to all its riders on Monday morning to inform them of the upcoming change to their status.

“Glovo will continue to focus on Spain, its home country and main market,” the company said in a separate statement.

Delivery Hero said the change in the “operation model” will be limited to Glovo’s activities in Spain and will dent the German firm’s 2025 core profit by 100 million euros.

Shares in Delivery Hero fell 11 percent to 34.48 euros in mid-afternoon trading in Frankfurt following its announcement.

- ‘Unfair competition’ -

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 2021, just days before the so-called “Rider Law” was due to take effect.

Just Eat, which began employing its riders after the law come into force, filed a lawsuit against Glovo on Friday, accusing it of “unfair competition” and demanding 295 million euros in damages.

Gig work, which became mainstream thanks to ride-hailing and food-delivery platforms such as Uber and Deliveroo, has come under greater scrutiny in recent years, with several countries taking steps to protect workers in the sector.

The EU in October adopted a directive requiring member states to classify people who work for online platforms as employees under certain conditions.

But the bloc left it up to each member state to decide what criteria must be met. Campaigners had been pushing for EU-wide criteria.