Deliveroo Begins The Procedures To Stop Operating In Spain

Deliveroo Begins The Procedures To Stop Operating In Spain

Deliveroo has started the procedures to stop operating in Spain. This has been transmitted this Friday to its more than 100 office workers, whose consultations to terminate them via the employment regulation file ( ERE ) will begin in September.

The British delivery company thus begins its ‘exit operation’ from Spanish cities, after studying the short-term future of the market and concluding that, given the competition with Glovo and UberEats and the added costs of complying with its obligation to work for the ‘riders’, it is not worth it to continue operating in Spain.

The decision has been announced just two weeks before the entry into force of the new ‘ Rider law’, which will prevail from August 12. Currently Deliveroo is active in 70 Spanish cities and operates with some 2,500 distributors , according to the latest data from the company itself; who have already been informed that they will soon be disconnected from the application.

Glovo will directly hire 2,000 riders and will complement its fleet with freelancers
“The company has come to the conclusion that achieving and maintaining a top-tier market position in Spain would require a very high level of investment with a very uncertain long-term potential return that could affect the economic viability of the market for the company. “, said the firm in a statement this Friday. Consultations will begin in September and the exit process could be completed by the end of the year.

Deliveroo emulates the move it already made in Germany in August 2019 and reverts to other markets, where it has a more consolidated position and its operating margins allow it to accumulate more capital. The firm founded London in 2013 and which landed in Spain in 2015 thus ends its history in this market.

Those six years of activity have been marked by strong competition both with JustEat, heir to the ‘Red Refrigerator’ and at that time the leader in the home delivery market, as well as with the rest of new applications, such as Glovo and UberEats.

Contested labor model
Also due to the controversy and litigation in relation to its labor model for the delivery men, on which the Labor Inspectorate, multiple courts and even the Supreme Court have ruled and vetoed; concluding that their distributors operated until now as false freelancers.

This has had economic consequences, beyond reputational ones, for the company, since operating with self-employed distributors implied a lower cost for the company and a lower contribution to the Social Security coffers.

Which, in turn, has caused the Labor Inspection actions in the main Spanish cities, such as Barcelona or Madrid , to require millionaire payments from the company in terms of overdue contributions. Costs, on the other hand, that parties such as the PP or PDECat -with different proposals- tried to amnesty , without success.

Glovo, Deliveroo and UberEats test three new models to resign themselves to the ‘Rider law’
Deliveroo’s movement comes two weeks before the entry into force of the new ‘Rider law’, which forces digital platforms to adapt their work models. Now, with the obligation to hire or subcontract its distributors, Deliveroo has used the calculator and has seen that labor costs increased and it was not worth it to continue operating in Spain.

The ‘Rider law’ has accelerated a transition that was inevitable, given the previous court decisions that already forced companies to renounce those organizational models. Here the recipe that each firm has applied varies. Deliveroo is leaving, Glovo has opted for a mixed model, with salaried delivery drivers and other freelancers; while UberEats is betting on outsourcing delivery operations to third parties.

Deliveroo, everything started with you
The history of the turquoise blue backpack company has been permeated by this labor conflict. Deliveroo’s ‘riders’ were the first to organize a strike against the company’s working conditions; in the summer of 2017. While Deliveroo was the first of the platforms to land in Spain, before Glovo or UberEats.

In fact, the RidersXDerechos union movement sprouts from that strike , the engine of protests in the delivery sector and without which the mediatization and development of a ‘Rider law’ would not be understood, which has not satisfied said movement. Well, they consider that it does nothing more than recognize a job that was already reflected in the sentences and leaves the door open to outsourcing the service,

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