Spain passed ground-breaking legislation on Tuesday in protecting freelance workers and clamping down on employers who financially benefit from hiring rather than employing them.
The legislation aims to protect the rights of freelance workers and gives companies 90 days to comply with the new laws. It is one of the first laws in Europe dealing with the rights of ‘gig economy’ workers.
Spain’s Labour Minister, Yolanda Díaz, announced the aims and benefits of the new legislation, saying that it ‘places us at the forefront of a technological change that cannot leave labour rights behind’. She went on to highlight that ‘no other country in the world has dared to pass a law like this’.
Companies like Uber Eats, along with Spanish start-ups Deliveroo and Glovo, will be forced to hire an estimated 17,000 freelancers as employees over the next three months.
Spain has taken a big step to regulate the way algorithms affect labour. All people must be able to know the way in which technology affects their work. This is the first legislation at an international level that sets this type of transparency, towards fair labour relations. pic.twitter.com/xSs731Qg5P— Yolanda Díaz (@Yolanda_Diaz_) May 11, 2021
The legislation was brought in to address the issues around freelance workers lacking the benefits associated with long-term job contracts, whilst at the same time still paying the government an average monthly fee of around 280 euros in social security.
Companies have benefitted from treating these workers as freelancers, therefore eliminating the need to pay social security or providing benefits such as holiday pay or maternity leave.
The legislation follows Spain’s Supreme Court ruling last year that companies must hire these freelance workers as employees.
The ruling was specifically aimed at companies using this business model as a loophole to reduce the costs normally associated with employing workers and is used widely in the so-called gig economy, largely in the fast-food industry.
Díaz explained that the court’s decision was centred around how treating a delivery worker in the fast-food industry was crucial to the outcome, saying ‘a young person on a bike with an app isn’t an entrepreneur.’
There were mixed reactions from both freelance workers and the companies affected by the new laws.
Yesterday’s announcement was followed by a protest by thousands on streets in cities across Spain, by those freelance workers who are fearful that the new legislation could actually eliminate their jobs and citing their preference for the flexibility associated with their freelance roles.
Uber was critical of the new regulations, saying that it ‘will directly hurt thousands of couriers who use food delivery apps for much-needed flexible earnings opportunities and made it clear they do not want to be classified as employees’.
Further potential court battles are expected, as a number of riders’ associations and labour experts say that the changes do not completely resolve the legal situation.
However, most delivery companies are preparing for the change and seeking new business models that may work in the future.
Just-Eat, the Spanish branch of Take Away, is hiring some of its workers and using workers from transport companies to support at times of peak demand. Glovo is beginning to hire riders through temporary employment agencies.
The legislation will also require companies to explain to their staff about how their workload sharing algorithms work, so that workers understand the motivation behind business decisions.
This was not welcomed by the APS Association, with Uber Eats and Deliveroo amongst its membership, saying ‘this measure will not only affect the development of Spain’s digital economy poorly but is a violation of the basic principles of business and industrial freedom’.
Just Eat were more praising of the legislation, saying that it places ‘Spain as a European reference point’ in terms of developing a sustainable digital economy.
The app-based food delivery industry in Spain is reportedly worth 700 million euros to the economy and there is concern that that new legislation could impact on future revenues.
Díaz, however, dismissed the criticism, saying ‘just as workers shouldn’t fear advances in technology, companies shouldn’t fear labour rights’.
With the deadline set for compliance by mid-August, companies who have relied on the gig-economy labour force will be reorganising their approach and business models to ensure that their profits are maintained despite these legislative changes.