Delivery Hero questions Glovo's continued presence in Spain due to fines
Social Security is demanding 450 million in fines from the company for false self-employment.
BarcelonaThe German company Delivery Hero, owner of Glovo, has questioned Glovo's continued operation in Spain due to the costs that would be incurred by the fines imposed on its work model and the reclassification of its delivery drivers as employees rather than self-employed. The company made this clear in its first-quarter earnings report, published this Thursday.
"Regarding the existing reclassification risks of delivery drivers at the group's consolidated subsidiary Glovoapp23 Spain, which may expose this subsidiary to additional social security contributions and penalties, we emphasize that, if these risks were to materialize in full, these payments could not be satisfied within its operational business activities without the additional financial support of Glovo Spain, which must continue as a going concern," the company warns.
450 million euros
On July 31, Social Security demanded payment of €450 million from Glovo in fines and social security contributions for the reclassification of its delivery drivers, who are required by the Spanish Rider law to be considered employees rather than self-employed workers. According to Delivery Hero's first quarter earnings report, in July of that year, it began receiving final decisions on the reclassification of its delivery drivers from the Spanish authorities and the demand for payment of its Social Security obligations.
However, this €450 million figure could fall short. The company estimates that, as of June 30 of this year, contingencies related to the risk of job reclassification of its delivery drivers would range between €562 million and €923 million, primarily related to Spain and the business model Glovo introduced in August 2021. "If, as a result of the investigations, the group could face claims in Spain for Social Security contributions, late payment surcharges, and fines, as well as VAT claims totaling between approximately €520 million and €860 million," the report states.
The German platform assures that Glovo will not recognize the reclassifications, but maintains the possibility of continuing to defend the self-employed status of its delivery drivers through all available channels, "fulfilling payment requests in the second half of 2025." "Although Delivery Heros strives to fully comply with the regulations in each country, the legal status of platform workers is a controversial issue in the regulatory arena, as the characteristics of this relatively new type of work do not fit the definitions of an employee," the company claims.
Delivery Hero states that it has not recognized any provisions in its accounts, considering that the reclassification of the delivery fleet is "unlikely" and will defend any legal case that may arise.
